The report from GP Bullhound, the technology investment bank, Enterprise Software: Revolutionising the Modern Workplace, is released today. The software market is no longer confined to a few dominating vendors, but finally willing to embrace the best products – even from previously unknown software providers.
While the overall valuations in the software markets have declined throughout the last years, from recurring revenue multiples of above 7.0x revenues mid of 2014 to below 4.0x beginning of 2016, we see signs of recovery and a shift towards a more sustainable valuation approach.
Looking specifically at European investment activity, despite market uncertainty around Brexit, the UK has maintained its leading position. 26 per cent of all enterprise software M&As and 23 per cent of private placements take place in the UK, followed by Germany and France.
The report also includes the findings of a survey of more than 150 enterprise software professionals around purchasing decisions and business-reliance on enterprise software services.
Crucially for enterprise software providers, the results show the growing importance of the end-user on service adoption. 60 per cent of respondents said that the impact of C-level executives on purchasing decisions was low. Whilst 80 per cent said that ease of use was the most important factor.
Julian Riedlbauer, Partner at GP Bullhound, commented: “There has never been a better time for Enterprise Software challengers to compete with leading legacy software vendors. This has created numerous strong fast growing businesses, that quickly reach noticeable size all across Europe.”