Atlassian inks its biggest buy with $425m collaboration software deal

Contact: Scott Denne

Atlassian has stormed into the New Year with its largest acquisition to date – the $425m pickup of collaboration software maker Trello. With this deal, Atlassian has printed at least a dozen purchases yet, until now, spent little money to do so. And though today’s transaction is an outlier for the project management software vendor, it continues the uptick in collaboration software M&A that we saw in 2016.

The Australia-based acquirer will pay $360m in cash for Trello, the remainder of the price tag being restricted stock and options. Compare that with the approximately $30m it shelled out across its previous four acquisitions. Atlassian is spending that kind of cash because Trello should give it another bridge to move its own collaboration products beyond the software developer market – the target’s task management software was built for a general business audience and boasts 19 million free and paying users.

A notable reason why Atlassian hasn’t spent significant sums prior to this deal is because few companies fit with its business model – it doesn’t have any sales staff. That limits the pool of potential targets because buying any enterprise software vendor with a sales team (and most of those commanding a nine-figure price have one) would be a risky integration process.

Having now spent a significant sum on office software, Atlassian joins others that have pushed acquisitions of collaboration and project management tools to a near record as mobile devices, remote workforces and SaaS delivery models conspire to change how work gets done. According to 451 Research’s M&A KnowledgeBase, buyers spent $3.7bn on purchases in this segment in 2016. That’s more than twice the spending of any year since 2007, when a single transaction – Cisco’s $3.2bn reach for WebEx – accounted for nearly all of the deal value. By contrast, no acquisition in 2016 crossed the $1bn mark.

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Posted in M&A