by Scott Denne
The value of acquisitions in the low-code application development software market is rising. With Temenos’ $559m purchase of Kony, we’ve now recorded more deals and higher total value in this corner of the software market than all of 2018.
In reaching for Kony, Temenos, a developer of banking software, gets both a generic low-code tool and a portfolio of prebuilt digital banking applications. Although few low-code acquisitions we’ve tracked are vertically specific, applications developed with these tools often replace vertical-specific applications. That has helped bring private-equity investors, which have demonstrated an affinity for vertical software companies, into the space. Sponsors have printed three of the last five low-code vendor purchases.
Since these tools are often the foundation for multiple applications within an enterprise, they tend to have low churn rates – something that appeals to both strategic acquirers and sponsors. Kony, for example, has about a 5% attrition rate. So far this year, $1.7bn have been spent across four acquisitions in this market, according to 451 Research‘s M&A KnowledgeBase. That’s up from $1.3bn in three deals in 2018.
Part of the reason for the rise is that buyers are reaching for larger targets. Kony projects its topline will grow to $120m in 2020. Quickbase, Nintex and Mendix were all nearing or above $100m in their recent sales. (Subscribers to 451 Research’s M&A KnowledgeBase can access our estimates of those transactions by clicking on the links in the company names.)
Acquisitions of low-code app development vendors (includes disclosed and estimated deal values)