The global economic slowdown took a toll on information technology M&A in July.

The month saw 169 U.S. transactions in the sector, down 41.1% year over year. July buyers exhibited "newfound conservatism," according to a report from 451 Research analyst Brenon Daly.

"The combination of decades-high inflation coupled with a slowdown in overall business has buyers rethinking their shopping. In the current environment, acquisitions that bring additional risk to an already-risky time aren't likely to get done," Daly said in the report.

None of July's U.S. information technology deals were valued at over $500 million, in contrast to the megadeals that propped up aggregate values earlier in the year.

The largest sector deal announced in July was Panopto Inc.'s $3-per-share bid for Kaltura Inc., which would combine the two video communications software companies in a transaction valued at $398.9 million.

The July 28 announcement is Panopto's second offer for Kaltura after the target rejected a prior offer "without engaging in a meaningful dialogue," according to Panopto's deal filing.

To execute the updated offer, Panopto will tap equity from one of K1 Investment Management LLC's investment funds. Private equity firm K1 Investment owns a majority stake in Panopto as of April 2021.

The bid assumes a modest enterprise value for Kaltura, at 1.8x its trailing-12-month revenue, below the 2.9x average multiple for technology deals announced this year through Aug. 9, according to 451 data. The application software sector typically demands a premium valuation, averaging 3.7x trailing-12-month revenue for the year through Aug. 9.

* Review terms of July's largest U.S. information technology deal on S&P Capital IQ Pro. * Use our Transactions Statistics page to run a custom screen of M&A by industry or geography.

 

Kaltura began trading on the Nasdaq stock exchange in July of last year, opening at $10 per share. More recently, however, the stock traded as low as $1.39 in May. Shares of Kaltura have stayed below Panopto's $3 offer price since the deal announcement, closing Aug. 9 at $2.38 per share.

July's low deal values and volumes mark a sharp reversal from the trends that have defined 2022. Record deal metrics for 2022 were holding through the middle of the year. As recently as June, technology acquirers were announcing 11-figure transactions. One of the biggest transactions of all time, Broadcom Inc.'s $72.97 billion bid for VMware Inc., was announced in May.

451 Research is part of S&P Global Market Intelligence.