August saw a modest recovery in IT deal activity from July's plummet, but volumes remained compressed compared to earlier in the year.

Sector deal volumes dropped 23.8% year over year during the eighth month of the year to 198 U.S. transactions, as tracked by S&P Global Market Intelligence. That represents the second-lowest monthly deal count of the year behind July, which saw 175 transactions.

The bounce up from August was good news for M&A advisers. Despite the modest volumes relative to other recent months, August still tracked four IT transactions of more than $1 billion. July did not land a single deal over $500 million.

August also saw a return of private capital leading IT deal activity. Vista Equity Partners Management LLC's $9.81 billion bid for tax-compliance software firm Avalara Inc. was the top announcement of the month, continuing the private equity firm's expansion in the sector.

Vista Equity grew its asset portfolio by nearly 50% between 2019 and 2021, with IT comprising 75% of its holdings, according to S&P Global Market Intelligence. Its transactions have also been getting larger. Vista Equity in 2021 participated in 68 transactions valued at $20.81 billion in total.

So far in 2022, the firm has notched 33 transactions valued at $38.66 billion. Three of the five largest transactions in Vista Equity's history were announced in 2022. Its largest deal to date was the $17.18 billion acquisition of enterprise solutions vendor Citrix Systems Inc. announced in January. That transaction is the second largest across the sector year-to-date.

The deal to acquire Avalara is Vista Equity's second-largest deal announcement in its history and the seventh-largest IT transaction of the year across buyers, according to S&P Global Market Intelligence.

Vista Equity's bid for Avalara comes at a hefty price tag, valuing the enterprise at 10.6x its trailing-12-month revenue. That is about twice the January valuation for Citrix. The deal comes as Avalara's stock has taken steps into the red through the course of the year, down almost 32% year-to-date as of Aug. 1.

* Review terms of August'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.

 

Again highlighting private equity's energy in a generally sleepy marketplace, Vista Equity will also be involved in the third-largest transaction of the month as it sells its interest in cybersecurity firm Ping Identity Holding Corp. to Thoma Bravo LP in a transaction valued at $3.01 billion. Vista Equity leads the seller group engaging Thoma Bravo; the deal will include Ping's public shares as well.

Thoma Bravo has been a leader in information technology M&A. The firm more than doubled its portfolio size between 2019 and 2021, ending the period with $105.81 billion in assets under management. More than 74% of its holdings were classified as IT investments.

Ping was also not faring well on the stock market prior to the deal announcement, down 25% for the year through Aug. 1. However, Thoma Bravo's bid valued the cybersecurity firm at a healthy multiple of 9.1x its trailing-12-month revenue.