M&A sector report Nordic software and IT services transactions market - Nordic software and IT services Q1-2021
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M&A sector report Nordic software and IT services transactions market Q1-2021
Letter from the editors
T he strong M&A market continued in the
Nordics in Q1, particularly within the
software segment, where the deal volume in a
This quarter’s market trend is cybersecurity
where we argue that cybersecurity sits where IT
once did: as a bolt-on, not fully integrated into
quarter reached new heights, with 62 deals being organisations. However, as we’ve seen with IT,
announced. The sustained high M&A pricing this can change, and we expect that cyber- Highest software deal volume in a
SaaS trading multiples at 14x
levels within software also continued in Q1 with a security becomes “something that you can’t opt- quarter over the last 5 years
NTM EV/Sales
median EV/Sales multiple of ~5x for the last out of”.
twelve months as per end of the quarter.
Investors are increasingly considering
Next twelve months (NTM) software trading cybersecurity measures and systems when
multiples have declined from previous record evaluating whether to invest in a company or
high levels, to 14x EV/Sales both for the Deloitte not. A key evaluation is whether cybersecurity is
Nordic and the Deloitte Global index. As interest Third level
addressed in a holistic manner rather than on
Nordic IT services index Spotlight trend
rates have increased, companies with SaaS
business models and high growth and low FCF
Fourth level
top of a company’s services or products.
trading at 12x NTM EV/EBITDA Cyber Security
margins, have experienced a dip in valuations in The Q1-2021 report reflects Fifth level
transactions
Q1. NTM sales estimates have remained stable at involving a Nordic target registered by
quarter-end Q1, compared to year-end 2020. Mergermarket, as well as our transaction
experience and insights into key industry trends.
The Nordic IT services market has had a strong
Carsten V. Haukås Kasper Svold Maagaard
start to 2021 with 19 M&A transactions in Q1.
NTM trading multiples in Q1 have been relatively Corporate Finance Head of Nordic TMT,
chaukas@deloitte.no Corporate Finance
stable from year-end 2020, increasing 4% and
kmaagaard@deloitte.dk
14% for the Deloitte Global and Nordic indices
respectively.
Looking at the investor base, we see that Kasper Harbitz Erichsen Kjersti A. Stathopoulou
international buyers continue to show interest in
Corporate Finance Cyber Leader, Norway
Nordic companies also in Q1, particularly within
kerichsen@deloitte.no kstathopoulou@deloitte.no
the software segment
© 2021 Deloitte AS 2
TABLE OF
CONTENTS
01
Market trends
02
Software
03
IT services
04
Deloitte Insights
• Cyber security trends • Public market data • Public market data • Case studies
• M&A activity • M&A activity • Sector team & contact details
• Suggested further reading
© 2021 Deloitte AS
01 Market trends © 2021 Deloitte AS 4
Cyber security products and services to move from ‘bolt-on’ status to the heart of core operations
Market trends
Fragmented market
Kjersti Stathopoulou, Cyber Partner in Deloitte Norway, points out
that cyber-security sits where IT once did: as a bolt-on, not fully Today’s Nordic cyber market is fragmented and complex, and not set up for a hybrid world with
integrated into organisations; but as we’ve seen with IT, that can a mix of on-premise, cloud and SaaS solutions, or to support digital transformation and speed
change. Kjersti believes the CISO’s role will evolve, and rise in to market
prominence, as cyber-security becomes “something that you can’t
opt out of”. Kjersti also forecasts that with a continued increase in Cyber, a bolt-on
regulations – in the context of a global economy, growing threats
and digitalisation – the evolution may even occur at a faster pace. Larger enterprises have begun incorporating security as part of their core business, however for
Third level
The path to technological transformation and even greater data smaller businesses security is still very much a bolt-on and they are currently underserved by
consumption offers no U-turns, meaning that as security Fourth level the security vendors
awareness grows, cybersecurity will be integrated in the DNA of
the business, Fifth level
Cyber delivery model
As cyber services become more integrated, a move towards more SaaS-like delivery models is
expected, much like the development seen within the ERP market. Cyber as a Service will
reduce complexity at the expense of functionality, exemplified through the move from
traditional SOK-services to a more standardized and automated solution utilising AI and ML
Kjersti A. Stathopoulou
Partner | Cyber Leader Market opportunities
Deloitte Norway There are huge opportunities within cyber solutions and products today, where costly
solutions, in particular within automation, are hampering adoption. As each vendor secures its
services and data, there are additional opportunities for players seeking to secure and
coordinate across the entire value chain
© 2021 Deloitte AS 5Investments in security are at an all-time high, yet cyberattacks are still on the rise, both in number and
sophistication
Driving forces SMEs lagging Investor focus
• Advances in technology is the main driver for • Large multinational companies are undergoing • Investors are increasingly considering
economic growth but have also led to a higher great efforts to strategically transform their cybersecurity measures and systems when
number of incidents of cyberattacks cyber capabilities, but the small/midmarket evaluating whether to invest in a company or
• The leading trends such as e-commerce,
Third level businesses are lagging behind in the not
investment upgrade
mobile payments, cloud computing, Big Data Fourth level • A key evaluation is whether cybersecurity is
and analytics, IoT, AI, machine learning, and • The SME’s lower maturity can be explained by addressed in a holistic manner rather than on
social media, all increase cyber risk for users
Fifth level
the lack of trained personnel to manage and top of a company’s services or products
and businesses respond to threats and economic backbone
• An effective cyber solution for emerging
• While all other tech sectors are driven by • The SME businesses however can more easily technologies helps businesses take advantage
reducing inefficiencies and increasing adopt good cyber capabilities due to their less of the digital transformation and at the same
productivity, cybersecurity spending is driven complex technology infrastructure, which in time stay in control of cybersecurity risks not
by cybercrime turn can be a significant cost-savings measure only within the operational environment – but
throughout the connected products and
services that power business
Increasing demand for cyber security services as investors focus more on holistic security measures when evaluating businesses
© 2021 Deloitte AS 6Digital identities are the new firewall
Market trends
Leading source of attack Complexity of multiple digital identities
• Identity continues to be the leading attack vector for cyber criminals, with many • Organizations must not only deal with their own digital identity, but also with
organized crime groups exploiting weaknesses in consumer and enterprise Identity the digital identities of employees, co-workers, customers and other
controls stakeholders—as well as the digital identities of devices and applications
• Digital identities are becoming the foundation of a rapidly evolving technology- • In the era of cyber everywhere, the operating environment for identity
based and data-driven economy and society. It is a trend across organizations of all management will likely become increasingly complex – with greater business
kinds; private companies, government bodies and civil society organizations, and expectations to meet, new technologies to integrate, multiple data privacy
the people and organizations they serve regulations and an increased number of people and devices to manage
Third level
Fourth level
At the centre of business models Fifth level Market development
• It is vital for all C-Suite executives, and their equivalents in government, to put the • In the market, security professionals are recommending identity-management
digital identity at the centre of their data-driven business models and operations solutions, such as facial recognition and biometric identification. As an example of
and understand its impact. It is their decisions that will determine if their the latter, Amazon One has introduced palm reading as the main payment
organization can differentiate itself from others and lead change - or be left method in their grocery stores, moving away from the traditional payment
behind concept to identity technology
• If an organization gets their digital identity right it leads to more efficiency, • Nevertheless, most companies still use usernames and passwords as the exclusive
revenue and transformational benefits with an enhanced user experience for means of logging in, demonstrating the high reliance on traditional authentication
colleagues, and a differentiating digital journey for customers or citizens methods and low market preparedness, challenging the market to grow
Digital identity should be at the core of any data-driven organisation
© 2021 Deloitte AS 7There is a market acceleration to adopting the Zero trust concept
Market trends
In the wake of COVID-19 and the resulting accelerated shift to remote work environments, an increasingly mobile workforce now expect to be able to work from
anywhere. CEOs expect that more than one-third of their employees will continue to work from home a year from now1. This requires a renewed focus on
security, and stricter control of device access, assuming nothing should be automatically trusted and verifying actions before granting access
Zero trust – a philosophical shift Third levelShift in enterprise environments Accelerating business integrations
Fourth level
Zero trust is a new way of thinking about security based Sophisticated cyberattacks and shifting enterprise Zero trust is fast becoming the modern standard for
on the principles of “never trust, always verify”. The Fifth level
environments have undermined the traditional and managing infrastructure, networks, and data in a more
zero-trust approach is not a product, solution, or somewhat flawed castle-and moat approach to secure manner. The conceptual framework secures the
platform - it’s a philosophical shift in the way enterprises cybersecurity. modern enterprise environment by challenging companies
think about security2. to fully redesign their organization's security approach,
Organizations expanding in high-risk geographies/markets people skills, processes and supporting technology through
Zero trust provides a vehicle for cyber to become closer are looking for ways to segment particular business units simplification, integration, and automation.
to the business and entire organizations and/or geographies to control the blast radius of an attack to
prevent the ability for security breaches to move lathery in Zero trust accelerates business integration and enables
the environment businesses to drive down costs – aligning the way companies
do security and the way they do business
Source: 1) Deloitte CEO Survey 2021 2) Deloitte Tech Trends 2021
© 2021 Deloitte AS 8Finding out how to balance the promise of IoT connected devices with potential security hurdles will
continue to be a mega-trend in the near future
As cyberattacks grow in frequency and sophistication, organizations need to outsmart cybercriminals. With the proliferation of remote work and the steady advance of
the IoT, potential vulnerabilities are multiplying, and IoT technology demands a strengthened focus on cybersecurity for businesses. The volume and diversity of devices
(IoT, ICS / OT, etc.) connected to an enterprise network are constantly increasing with the number of connected devices on the Internet expected to exceed 50 billion in
20201. The pandemic has reshaped the way technology companies work, with further increased cloud adoption and associated underlying security risks. Moving to the
cloud accelerates the need to create secure IT environments that support emerging technologies such as IoT, edge computing, AI, and 5G.
AI - a key tool in routine surveillance Third level Utilities lagging behind 5G as a cybercrime enabler
Fourth level
As it gets harder to monitor this growing attack surface, The energy and utility companies have historically been 5G is an emerging technology and its goals are to meet
deploying AI-based and other sophisticated automated Fifthonlevel
lagging behind the cybersecurity upgrade/ investments increasing data and communication requirements to also
technologies for routine surveillance is becoming essential. compared to other market sectors such as the financial include the capacity for tens of billions of connected devices
industry. that will make up the internet of things (IoT).
With accelerating innovation in markets, there is growing a
convergence between Information Technology (IT) and Deloitte is expecting an increased interest from nation-state What is unique and attractive about 5G for nation-state
Operational Technology (OT) environments. Together with actors towards the inside of networks and Industrial Control actors is the fact that there will be so many connected IoT
connected devices, cyber will help businesses scale and Systems (ICS), and through the growing connectivity of devices, which provide an opportunity to collect and gather
increase their abilities to meet customer demands. Internet-of-Things (IoT) devices as a means of deterrence and countless amounts of classified information, personal
positioning in case of a conflict information, and even surveillance opportunities. Humans in
combination with IoT has become a growing target for
cybercrime
Source: 1) Cisco
© 2021 Deloitte AS 902 Software © 2021 Deloitte AS 10
02 Software
The transaction volume in the Nordic software M&A market has
14x The global SaaS index traded at approx. 14x next twelve-
month revenues at the end of Q1, approx. 6x sales above
the 5-year average
continued in the first quarter of 2021
Software company valuations globally have dipped somewhat in Q1,
from all-time high valuations at around ~17x Sales (NTM) to approx.
~14x Sales (NTM) per quarter-end Q1-21
14x The Nordic SaaS index traded at approx. 14x next twelve-
above the 5-year average
Third
month revenues as at quarter-end level 8x sales
Q1, approx.
Fourth level Nordic transaction multiples continue at high levels, and available
transaction data showcases a median EV/Sales multiple last twelve
Fifth level months of ~5x Sales
6x The global SaaS Index has outperformed the broader market
over the last 5 years and has returned 600% over that period
In the Nordics, strategic buyers continued to be highly acquisitive
and were involved in 38% of software transactions, while financial
investors and PE-backed companies accounted for 31% each
5x Nordic software transactions concluded at a median
EV/Sales multiple of ~5x for the last twelve months (per
31/03)
© 2021 Deloitte AS 11The Nordic SaaS index traded at 13.6x NTM sales at the end of Q1-2021, while the Global SaaS index
traded at 13.7x NTM sales
18x
Dec 2018: Trade war between US & Mar-2021: Multiples are up approx. 96%
16x China leading to overall market and 114% over the last twelve months
correction, including software for the Global and Nordic indices
valuations respectively
14x
12x
10x
Mean Global 8.5
8x
Mean Nordics 6.5
6x
As interest rates have moved up,
4x companies with SaaS business models
and typical high growth and low FCF
margins, have taken a hit on valuations
in Q1. NTM sales estimates have
2x
remained stable in Q1-21 compared to
year end 2020.
0x
03-2016 09-2016 03-2017 09-2017 03-2018 09-2018 03-2019 09-2019 03-2020 09-2020 03-2021
Note: LTM multiplies applied in the rare case that NTM
EV/Sales NTM (Global) median EV/Sales NTM (Nordic) avg. multiplies are not available
Source: S&P Capital IQ
© 2021 Deloitte AS 12Nordic and global SaaS indices outperforming Nasdaq and MSCI Nordic the last five years; global SaaS
company underperforming broader indices last six months
Deloitte SaaS indices vs Nasdaq Composite and MSCI Nordic - L6M Deloitte SaaS indices vs Nasdaq Composite and MSCI Nordic– L12M Key take aways
145 230
220
140 215
135 136 200
130 185
124
125 170 166
121 155 Over the last five years, the Global and
120 149 Nordic SaaS indices has strongly out-
115 119 140
147 performed both the MSCI Nordic and
110 125
Nasdaq index
105 110
100 95
95 Third level
10-2020 11-2020 12-2020 01-2021 02-2021 03-2021
Fourth level
Deloitte SaaS indices vs Nasdaq Composite and MSCI Nordic – L3Y Fifth level
Deloitte SaaS indices vs Nasdaq Composite and MSCI Nordic – L5Y The SaaS indices have accelerated the
out-performance during the Covid-19
675 875 downturn, however, both indices have
underperformed in Q1-21, when
775
575 compared to the broader market
531 667
675
475
575
529
375 475
375
275 273
275 277 The overall strong performance of the
175 187
133
175 151
SaaS indices underlines the continued
75 75 strong demand for software
companies
09-2018
05-2019
03-2021
06-2017
09-2017
06-2019
03-2021
03-2018
05-2018
07-2018
11-2018
01-2019
03-2019
07-2019
09-2019
11-2019
01-2020
03-2020
05-2020
07-2020
09-2020
11-2020
01-2021
03-2016
06-2016
09-2016
12-2016
03-2017
12-2017
03-2018
06-2018
09-2018
12-2018
03-2019
09-2019
12-2019
03-2020
06-2020
09-2020
12-2020
Deloitte Nordic SaaS index Deloitte Global SaaS index Nasdaq Composite MSCI Nordic
Source: S&P Capital IQ
© 2021 Deloitte AS 13Record high deal volume within software across the Nordics in Q1-21
M&A Transaction volume
The high deal volume across the Nordic countries continued within software in Q1-2021
# Deals
681 71 92 111 130 144 183
62
60
52 7
47 16
10 43 11
41
38 7
5 34 35 34 7
2 9 33 17
31
27 28 27 12
10 12 7 8 5 21
23 23 24 23 8 13
20 2 8
19 19 18 6 19 18 4 7 19 10
17 17 3 9 1 5 11 2 6 13
15 3 6 15 9 3 17
3 3 9 5 2 12
3 4 2 4 9 12 8 6 14
8 6 12 10
8 Third level
7 5 6 5 5 10 6 10
8 6 9 11 21
3 4 6 7 4 6 14 16
7 4 5 7 6 11 10 12 13 11
5 7 6 8 8 9 9
2
Q2
2
Q3
5
Q4
5
Q1
3
Q2
4
Q3
2
Q4
5
Q1
4
Q2
Fourth
4
3
Q3
Q4 Q1
level
Q2 Q3 Q4
5
Q1
5
Q2 Q3 Q4
5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2014 2015 2016
Fifth level
2017 2018 2019 2020 2021
Norway Sweden Denmark Finland
The strong M&A market continued in Q1- The number of software transactions
Continued high deal volume in Q1-21 in Q1-21 recorded a record high number of
21, with record highs for a first quarter of involving Finnish companies reached
Sweden with the second-highest first deals in a quarter in Denmark with a 42%
the year and a YOY growth of 45% record highs in Q1-21 with YOY growth of
quarter recorded over the time period growth compared to Q1-20
compared to Q1-20 129% compared to Q1-20
Financial sponsors and PE-backed Strategic investors accounted for 54% of Strategic and PE-backed investors Strategic investors accounted for 44% of
companies accounted for 38% each the deals in Q1-21, with PE-backed accounted for 35% of the deals each, the deals, with financial sponsors and PE-
whilst strategic buyers completed 25% of companies and financial sponsors with financial sponsors completed 29% of backed companies accounting for 38%
the deals in Q1-21 accounting for 31% and 15% respectively the transactions and 19% respectively
Swedish PE and private equity backed International investors accounted for 4 Danish software companies attracted Finnish software companies continue to
companies accounted for 3 deals while deals in the quarter while Swedish buyers significant interest from international attract interest from other Nordic
international private equity backed completed 8 deals. Norwegian buyers investors, completing 12 of the deals Q1-21. investors and international investors,
investors completed 2 deals in Q1-21 accounted for 1 deal in Q1-21 Other Nordic investors completed 5 deals accounting for 5 and 9 deals respectively
Note: 1) Full year 2014 Source: Mergermarket, Deloitte analysis
© 2021 Deloitte AS 14Significant deal activity across the Nordics from both financial and strategic investors
Selected Nordic software transactions
& others
Bliksund AS
Digital Teaching
Tools Finland Ltd
Unikum
Datasystem AB & others
<
Alder AB
Visma, Vitec, TSS and Confirma continue to A high profiled transaction in Q1 was HG’s acquisition of Ferd acquired Norkart from the Algeroy Family in Q1 at a
execute their M&A strategies across the Nordics Trackunit, a SaaS-based IoT solution and machine insights valuation believed to be above NOK 1b. Norkart reported
and are among the most active acquirers' quarter provider to the global construction equipment industry, from revenues of NOK 338m in 2020 with a growth of approx. 12% on
after quarter throughout the Nordics GRO Capital and Goldman Sachs Merchant Banking Division average over the past five years
Source: Mergermarket, Deloitte estimates
© 2021 Deloitte AS 15Nordic software transactions concluded at a median EV/Sales multiple of 4.7x last twelve months
Transaction multiples
Q1-21
7,8x
6,9x 6,8x
6,4x
6,1x
5,7x
5,0x 5,2x
4,4x 4,4x 4,3x
Med. EV/Sales: 4.7x
3,1x 3,1x
2,3x
1,8x 1,7x
NOKm
Target
Loxysoft
C ountry
Enterprise value 1,556 150 317 118 100 152 147 71 261 143 220 103,622 1,406 30,124 103 308
Year 2021 2021 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020
Stake 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 70%
Revenue (LFY) 502 81 52 27 20 67 36 9 51 86 32 15,347 218 6,990 33 54
EBITDA (LFY) n.a 10 13 2 n.a n.a n.a 7 5 n.a (1) 4,148 38 1,388 2 n.a
EBITDA-margin (LFY) n.a 12% 25% 9% n.a n.a n.a 73% 10% n.a -4% 27% 17% 20% 7% n.a
EBIT-margin (LFY) n.a n.a 24% 9% n.a 6% n.a 58% 9% n.a n.a 11% 15% n.a n.a n.a
Acquirer
Source: Mergermarket, Deloitte estimates
© 2021 Deloitte AS 1603 IT services © 2021 Deloitte AS 17
03 IT services
The Nordic IT services index traded at 12.1x next twelve- The Nordic IT services M&A market continues to perform strongly,
12x month EBITDA at the end of Q1, 1.2x above the 5-year
average and nearly 1.8x NTM EBITDA at the end of March
2020
trading at above-average historical multiples and with high M&A deal
activity
Both the Global and the Nordic IT services indices are trading above
The Nordic IT services index has returned a total of 185% the 5-year average NTM EBITDA (1.1x and 1.2x respectively) after a
1.9x index (51%)
Third levelthe Nasdaq
over the last 5 years, slightly outperforming
index (177%) and solidly outperformingFourth
the MSCI Nordic
level
strong rebound from the Covid-19 dip in March 2020
M&A activity within the Nordic IT services industry has been fairly
Fifth level stable last five years, with an average of ~19 deals every Q1 from
2016 to 2020.
19 A total of 19 transactions have been completed within the
Nordic IT services space in Q1-2021 In the Nordics, strategic buyers continued to be highly acquisitive
and were involved in 47% of the IT services transactions, while PE-
backed companies and financial investors accounted for 42% and
11% respectively
8.5x Nordic IT services transactions concluded at a median
EV/EBITDA multiple of ~8.5x LTM
© 2021 Deloitte AS 18For Q1-2021, the Nordic IT Services index ended at 12.1x next twelve month EBITDA, while the Global IT
Services index ended at 11x next twelve-month EBITDA
18x
Dec 2018: Trade war between US &
16x China leading to overall market fall, Mar-2021: Multiples are up approx. 80%
including IT Services valuations. and 64% last twelve months for the
Strongest decline observed in the Nordic and Global indices respectively
14x Global IT service index
12x
Mean Nordics 9.9
10x
8x
Mean Global 9.7
6x
4x
2x
0x
03-2016 09-2016 03-2017 09-2017 03-2018 09-2018 03-2019 09-2019 03-2020 09-2020 03-2021
Note: LTM multiplies applied in the rare case that NTM
EV/EBITDA NTM (Global) median EV/EBITDA NTM (Nordic) median multiplies are not available
Source: S&P Capital IQ
© 2021 Deloitte AS 19Strong performance last 6 months, the Nordic IT services index slightly outperforming the Nasdaq during
the last five years
Deloitte IT services indices vs Nasdaq Composite and MSCI Nordic - L6M Deloitte IT services indices vs Nasdaq Composite and MSCI Nordic– L12M Key take aways
140
138 175 174
135
165
158
130 126
155
149
125 124
145
121 147
120 135 Over the last five years the Nordic IT
115 125 services index has slightly out-
110 115 performed the Nasdaq, meanwhile the
Global IT services index has under-
105 105
performed during the same period
100 95
95 Third level
10-2020 11-2020 12-2020 01-2021 02-2021 03-2021
Fourth level
Deloitte IT services indices vs Nasdaq Composite and MSCI Nordic – L3Y Fifth level
Deloitte IT services indices vs Nasdaq Composite and MSCI Nordic – L5Y The IT services indices has performed
in line with the broader Nasdaq index
215 325 during the Covid-19 downturn,
195 however the IT service indices have
285
195 out-performed Nasdaq as of Mar-2021
187 275 277
175 176
239
155 225
135 133 175
115 151
125 The overall strong performance of the
95 IT Service indices underlines the
75 75 continued strong demand for IT
services companies
03-2018
05-2018
07-2018
09-2018
11-2018
01-2019
05-2019
07-2019
09-2019
01-2020
03-2020
05-2020
07-2020
09-2020
11-2020
03-2021
03-2016
06-2016
09-2016
12-2016
03-2017
09-2017
12-2017
03-2018
06-2018
09-2018
03-2019
06-2019
09-2019
12-2019
03-2020
06-2020
12-2020
03-2021
03-2019
11-2019
01-2021
06-2017
12-2018
09-2020
Deloitte Nordic IT services index Deloitte Global IT services index Nasdaq Composite MSCI Nordic
Source: S&P Capital IQ
© 2021 Deloitte AS 20Strong quarter in the Nordics within IT services, primarily driven by Sweden
M&A Transaction volume
The high IT services deal volume across the Nordic countries continued in Q1-2021
# Deals
171 21 43 48 60 51 55
21
19 19
18 18
17 17 4 17 1
2 3
3 14 14 14 14 4
3 3
12 6 5 4
5 1 11 2
4 4 4 3
9 7 9 1 9
8 2 8 6 3 8 5 8
1 1 4 4 11
6 1 5 2 4 8 1 9
3 5 2 2 6 5 3
1 4 2 6 2 10 4 2
2 2
1
3
2 3 2 4 1
6
Third5
level
4
4 3
3 4 7
1
1
5
4 1
7
3 1 2 1 2 3 3 2 4 4 4 3 3 4 3 3
Q2
1
Q3
2
Q4
1
Q1
2
Q2
1
Q3
2
Q4
1
Q1
2
Q2 Q3
Fourth
Q4
1 level
Q1 Q2
2
Q3
1
Q4
2
Q1
1
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2014 2015 2016
Fifth level
2017 2018 2019 2020 2021
Norway Sweden Denmark Finland
M&A deal volume involving Norwegian The number of deals in Q1 involving The number of transactions involving
Q1-21 recorded a record high number of
targets in Q1-21 on par with Q1-20 with a Danish companies were in line with Finnish IT services companies were in line
deals in a quarter in Sweden
total of 3 deals previous quarters with Q1-20
Strategic investors accounted for 64% of
PE-backed companies accounted for 67% PE-backed investors accounted for 75%
the deals in Q1-21, with PE-backed Strategic investors completed the only
whilst strategic buyers completed 33% of of the deals, with financial sponsors
companies and financial sponsors transaction in the quarter
the deals in Q1-21 completing 25% of the transactions
accounted for 27% and 9% respectively
International investors accounted for 4 Finnish investors continue to complete
Majority of deals by Norwegian investors International investors completed 2 of
deals in the quarter whilst Swedish most deals in Finland within IT services
completing 2 deals in Q1 whilst Swedish the deals Q1-21. Danish and Norwegian
buyers completed 5 deals. Danish and which are similar to deals completed in
investors completed 1 deal buyers completed 1 deal each
Finnish buyers completed 1 deal each 2020
Note: 1) Full year 2014 Source: Mergermarket, Deloitte analysis
© 2021 Deloitte AS 21Continued high deal activity within IT services across the Nordics
Selected Nordic IT services transactions
Vaekstpartner
Kapital ApS
Blue Idea ApS 5 High
Innovations AB
Kyberleijona Oy
& others
Visolit, Nordlo and Funn continued to acquire during Goldman Sachs agreed to acquire a majority stake in IT Relation continues its expansion by agreeing to
the first quarter, adding services, capacity and/or Advania, alongside management, VIA Equity, and acquire Emineo for an undisclosed value. Emineo will
geographies to their existing offering other reinvesting shareholders be merged with Miracle42, a subsidiary of IT Relation
Source: Mergermarket, Deloitte estimates
© 2021 Deloitte AS 22Nordic IT services transactions concluded at a median EV/EBITDA multiple of ~8.5x LTM
Q1-21
14,1x
10,8x 10,9x
9,3x
Med. EV/EBITDA: 8.5x 7,7x
6,7x 6,7x
5,8x
NOKm
Climber
Target
International AB
Country
Enterprise value 106 82 208 3,695 1,435 78 89 406
Year 2021 2020 2020 2020 2020 2020 2020 2020
Stake 100% 100% 100% 100% 69% 100% 100% 100%
Revenue (LFY) 79 133 358 1,779 12,159 41 74 378
EBITDA (LFY) 16 11 36 262 133 12 10 37
EBITDA-margin (LFY) 20 % 8% 10 % 15 % 1% 29 % 13 % 10 %
EBIT-margin (LFY) n.a 5% n.a 12 % 1% 25 % 12 % 8%
Acquirer
Investment AB Stockwik
Arawak Forvaltning AB
Source: Mergermarket, Deloitte estimates
© 2021 Deloitte AS 2304 Deloitte Insights © 2021 Deloitte AS 24
Deloitte CF acted as exclusive financial adviser to GRO Capital and Boyum IT in the sale to Volpi Capital
Case study
Description of the transaction Transaction overview
Seller
• Boyum IT Solutions was founded in 2003 by the founder and current CEO Mikael Boyum
• The company is a leading software solution provider in the SAP Business One ERP ecosystem
GRO Capital is a leading North European
targeting the upper SME segment globally
Background • Boyum IT has succeeded in establishing an unmatched distribution network of +650 partners
private equity fund with an exclusive
focus on mature B2B software and tech-
through an attractive product offering and comprehensive partner enablement
enabled companies with strong growth
• Today, the company serves a large customer base with +8,000 end-customers in +110 countries
prospects
acted as exclusive
financial advisor to Target
GRO Capital and
• In 2016, the Danish B2B software investor GRO Capital acquired a 49.9% stake in Boyum IT the founder of
• Since the acquisition, Boyum has been on an impressive organic and inorganic growth path, Boyum IT
Boyum IT Solutions is a Danish leading
doubling revenues from 2016 - 2020, while building a professional and international
software solution provider in the SAP
organization
Situation Business One ERP ecosystem, targeting
• The inorganic growth was facilitated by two vertical add-on software companies, which were
the upper SME segment globally
acquired in 2016 (Beas) and 2018 (Produmex)
• Beas: Advanced manufacturing software tailored to 13 distinct industry verticals
• Produmex: Logistics/warehouse management software
Buyer
Volpi Capital is a specialist European
lower mid-market private equity firm.
• After 4 years of co-ownership, GRO Capital and Mikael Boyum signed an agreement to sell a Volpi targets ambitious businesses using
majority stake to Volpi Capital, a UK PE investor focusing on tech-enabled B2B software enabling technologies to disrupt
Outcome • Deloitte Corporate Finance advised GRO Capital and the founder of Boyum IT Solutions on the traditional B2B value chains
sale of the majority stake for an undisclosed value to Volpi Capital
Source: Mergermarket, press releases from GRO Capital and Volpi Capital
© 2021 Deloitte AS 25Deloitte CF acted as exclusive financial adviser to Hg in the acquisition of Trackunit
Case study (March 2021)
Description of the transaction Transaction overview
Buyer
• Trackunit , a Danish company founded in 1998, is today a global market leader within SaaS
and IoT solutions, specialising in off-highway fleet management in the construction sector
• The company connects all moving parts of the construction industry, collects and analyses Hg Capital is a leading UK-based private
Background machine data in real-time to provide its customers with actionable insights
equity investor specialising in software
and services, and primarily seeking to
• Trackunit has achieved a vast customer base of +6,000 customers across OEMs, rentals and acquire controlling interests in Northern
contractors, and counts +7,000 daily active users generating ~1.9bn data points daily European-based businesses
acted as exclusive Target
financial advisor to
Hg Capital
Trackunit is a SaaS-based IoT solution and
• In 2015, GRO Capital and Goldman Sachs Merchant Banking Division acquired Trackunit from machine insights provider to the global
the founders construction equipment industry. It
Situation • GRO Capital and Goldman Sachs have worked with Trackunit’s management to scale the collects and analyses machine data in
company globally by building a sizeable US business, strengthening the company’s European real-time to deliver actionable, proactive
presence, and gaining a foothold in Asia and predictive information to customers
Seller
GRO Capital is a leading North European
PE fund with an exclusive tech focus
• After +5 years of co-ownership, GRO Capital and Goldman Sachs agreed on selling the
company to Hg Capital, a UK-based PE investor specializing in software and services Goldman Sachs is a leading global
• Deloitte Corporate Finance advised Hg Capital on the acquisition of a controlling interest in investment bank raising capital in equity,
Outcome Trackunit for an undisclosed value credit and real estate to invest in a
• Hg Capital will leverage its deep sector expertise within software and telematics to further diverse range of companies
support Trackunit’s growth trajectory and international expansion
Source: Mergermarket, press releases from Hg Capital and GRO Capital
© 2021 Deloitte AS 26Deloitte professionals covering TMT in Norway
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© 2021 Deloitte AS 27Deloitte professionals covering TMT in Denmark
Contact details
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© 2021 Deloitte AS 28Deloitte professionals covering TMT in Sweden
Contact details
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© 2021 Deloitte AS 29Deloitte professionals covering TMT in Finland
Contact details
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© 2021 Deloitte AS 30Further insights into market trends can be found in other Deloitte publications
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