SaaS and cloud M&A on the up in 2017

Cloud adoption continues to accelerate industry consolidation


Merger and acquisition activity in the cloud industry has picked up in the first half of 2017, according to a new report published by analyst firm Hampleton.

The report, titled "SaaS and Cloud M&A Overview 1H 2017", said the acceleration of cloud adoption continues to drive deals, as legacy vendors like Oracle and SAP acquire assets to speed up their transition to the cloud.

In a bid to boost its enterprise credentials, Google joined the list of this year's most active acquirers. With ten deals announced, it's placed on par with serial acquirers such as Oracle and slightly below Salesforce, which announced twelve deals during this period, according to the analysts.

The report said that the rate of Salesforce's deal making in 2016 placed emphasis on consolidation and that these buys have helped expand its breadth of cloud-based services beyond basic CRM. Salesforce has invested more than $4 billion across eight acquisitions last year. The analysts said that Salesforce would be easing off larger deals in 2017 to concentrate on "smaller acqui-hires' or bolt-on acquisitions of niche technology such as artificial intelligence instead".

Among the top trends in cloud and SaaS this year, according to Hampleton, are real-time enterprise collaboration, which the analysts said remained "a bright spot for M&A consolidators". There's also a wider variety of targets emerging as collaboration tools shift further towards mobility, said analysts.

The report also said that virtual and augmented reality software set to play a greater role in deal-making decisions and there was a "huge optimism surrounding artificial intelligence and its subset, deep learning".

"Legacy vendors' hunt for niche players is intensifying, laser focused on specific industries such as machine learning or digital marketing," said the report.

"Non-traditional buyers such as Cisco and GE, as well as private equity investors, continue to be aggressive in this space."

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