M&A sector report

Nordic software and IT services market

Q2-2023
Letter from the editors

T he M&A activity level in the Nordics increased

from last quarter during the second quarter of
2023, recording a total of 116 transactions within
software and IT services.
The number of software transactions in Q2-23
concluded at 95, an increase from the 88 deals
recorded in Q1-23. The 95 transactions recorded in Q2-
23 is on par with the most active quarter in the software
space since 2016 (the historical period covered in this
report).
Global IT services stocks valuations increased over the
quarter, trading at 9.7x EV/NTM EBITDA compared to
9.0x at the end of the previous quarter. Nordic IT
services stocks valuations decreased over the quarter,
trading at 7.6x EV/NTM EBITDA compared to 8.6x at the
end of Q1-23. Nordic SaaS trading multiples Continued strong software and
at 3.3x NTM EV/Sales IT services deal volume
Please note that per Q1-23 and Q2-23, the Nordic and
Global SaaS and IT service indices compositions have
been updated to reflect delistings, IPOs and other
relevant considerations.

The Nordic IT services transaction market experienced Third level

The Q2-23 report reflects transactions involving a
a significant increase in volume in the last quarter, with
21 deals recorded, up from 13 deals completed in Q1- Fourth level
Nordic target registered by Mergermarket, as well as
our transaction experience and insights.
Nordic IT services index Nordic software transactions
trading at 7.6x NTM EV/EBITDA LTM EV/Sales of 4.7x
23. Fifth level
By recent transactions as per end of Q2-23, the Nordic
M&A software pricing level is at a median EV/Sales
multiple of 4.7x. For IT services, the current pricing level
is at a median EV/EBITDA of 12.0x. Kasper Harbitz Erichsen Kasper Svold Maagaard

Corporate Finance Corporate Finance

SaaS multiple valuations continued their downward kerichsen@deloitte.no kmaagaard@deloitte.dk
trajectory for global and Nordic stocks during the
quarter. The NTM EV/Sales valuations for the Deloitte
Nordic SaaS index concluded at 3.0x, with valuation
below the L5Y mean of 5.1x. The Deloitte Global SaaS
Carsten V. Haukås Andreas Barfod
index concluded at 4.6x NTM Sales, significantly below
the L5Y mean of 8.8x. Corporate Finance Corporate Finance
abarfod@deloitte.no
chaukas@deloitte.no

© 2023 Deloitte AS 2
TABLE OF
CONTENTS

01
Software
02
IT services
03
Deloitte Insights
• Public market data • Public market data • Recent Deloitte credentials
• M&A activity • M&A activity • Sector team & contact details

© 2023 Deloitte AS
01 Software

© 2023 Deloitte AS 4
01 Software

Key statistics Q2 2023

The Nordic SaaS index traded at The Global SaaS index traded at

95
transactions completed within the
3.0x 4.6x
NTM sales at quarter-end Q2 NTM sales at quarter-end Q2
Nordic SaaS space Third level
Fourth level
Fifth level

The Nordic SaaS index decreased

1 st 2.3% 4.7x
LTM Nordic software transaction
most active M&A quarter since 20161 over the last three months
EV/Sales multiples median2

Notes: 1) Start of historical lookback-period for this report. 2) Selected 9 transactions last 13 months with available data

© 2023 Deloitte AS 5
Software multiple valuations stabilised through H1-23, with the Nordic SaaS index ending at ~3.0x whilst
the global index ended at ~4.6x NTM EV/Sales
EV/Sales NTM
Q2 23
16x

14x

12x

10x
Mean Global 8.8

8x

6x
Mean Nordics 5.1

4.6x
4x

3.0x

2x

0x
06-2018 12-2018 06-2019 12-2019 06-2020 12-2020 06-2021 12-2021 06-2022 12-2022 06-2023

Note: LTM multiplies applied in the rare case that NTM

EV/Sales NTM (Global) median EV/Sales NTM (Nordic) median multiplies are not available

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 6

Nordic and Global SaaS indices are rising after a significant decline over the last year

Various indices (startpoint: 100)

450
Endpoints:

400
Deloitte
Nordic SaaS L3M: -2.3%
index L6M: 2.6%
350 LTM: -10.1%
196
300
Nasdaq
L3M: 12.8%
Composite
L6M: 31.7%
250
LTM: 25.0%
180
200

MSCI Nordic L3M: -1.8%

L6M: 4.9%
150
LTM: 14.4%
125
100
Deloitte
Global SaaS L3M: 8.5%
index L6M: 23.3%
50
LTM: 15.7%
126
0
06-2018 12-2018 06-2019 12-2019 06-2020 12-2020 06-2021 12-2021 06-2022 12-2022 06-2023

Deloitte Nordic SaaS index Deloitte Global SaaS index Nasdaq Composite MSCI Nordic

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 7

High growth multiples currently trading slightly above medium growth SaaS companies; low growth
companies continuously trading at a discount compared to high and medium growth SaaS companies
EV/Sales development for low, medium and high growth selections of global software companies
35x

Endpoints:

30x High growth (>40%1):

7.2x

25x Medium growth (15-40%1):

6.5x

Low growth (<15%1):

20x
3.0x

15x

10x

5x

0x
06-2018 12-2018 06-2019 12-2019 06-2020 12-2020 06-2021 12-2021 06-2022 12-2022 06-2023

Low growth Medium growth High growth Note 1: Expected YoY growth from previous year to current year, rebalancing every year in the historical period

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 8

Rule of 40 metric, split into growth categories explaining valuation premiums for global software
companies
Low Medium High
(below 40%) (40% - 60%) (above 60%)

Median Ro40 24% 46% 69%

Median EV/Sales 3.8x 6.6x 10.6x

EV/Sales (2023e)

30x Size of bubble indicate market capitalizarion

25x

R² = 0.6915
20x

15x

10x

5x

0x
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Ro40
Note: LTM multiplies applied in the rare case that NTM
Low growth companies Medium growth companies High growth companies multiplies are not available

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 9

Deal volume increased in Q2 compared to previous quarter

Deal volume across the Nordic countries within software (target region)

92 111 130 144 183 247 290 183

95 95
89 88

70
60 62 59 56 56
52 50
47
41 43
38 35
31 34 34 33
27 28 27
23 23 24 23
19 18

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Third
Q2 Q3
level
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2016 2017 2018 Fourth level 2019 2020 2021 2022 2023

Fifth
Norway
level
Sweden Denmark Finland

High M&A activity for financial investors during Q2 Majority of Nordic buyers of Nordic software companies in Q2 23
Type of buyer Region of buyer

93 95 93 95
89 88 89 88

23 8 23
70 18 70 22 30
62 62 43
59 56 56 59 56 45 56
23 46 50 29 50
19 13 36 11 34 32
20 27 27 18 20
13 16
20 66 65
24 32 33
22 22 50
43 38 38 44
34 35 36 35 32 36 34
19 25
15 13 14 15
Q1-2021 Q2-2021 Q3-2021 Q4-2021 Q1-2022 Q2-2022 Q3-2022 Q4-2022 Q1-2023 Q2-2023 Q1-2021 Q2-2021 Q3-2021 Q4-2021 Q1-2022 Q2-2022 Q3-2022 Q4-2022 Q1-2023 Q2-2023

PE Strategic PE backed Nordic International

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 10

Selected transactions in the Nordic software market in Q2-23

Valuation Europe AB
Private equity firm Private equity firm Provider of software solutions Private equity firm Software company

Digital signature and identification Mobile design and development

agency Software development company Software company Software provider
solutions

Beginning End
Q2 Q2

Operator of Frankfurt Stock Exchange Private Equity firm Global Private Equity firm Private Equity firm

Provides software logistics solutions in

Financial technology company Cyber security company Software provider
the oil & gas industry

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 11

Selection of Nordic software transactions concluded at a median multiple of 4.7x EV/Sales

15.8x

9.6x
7.8x 8.1x

4.7x
Med. EV/Sales: 4.7x 3.5x
2.6x
1.4x 1.3x

NOKm

Target

Country

Enterprise value 41 603 59 437 5 966 2 578 647 1 664 3 935 890

Year 2023 2023 2023 2023 2022 2022 2022 2022 2022

Stake (100% (100% 14% (100% 100% 100% 100% 100% 100%

Revenue (LFY) 5 353 7 94 4 605 1 791 237 100 387 249

EBITDA (LFY) 1 226 (5) (14) (331) 228 (131) 20 (71) 32

EBITDA-margin (LFY) 23 % -70 % -15 % -7 % 13 % -55 % 20 % -18 % 13 %

EBIT-margin (LFY) 20 % -89 % -17 % -13 % 10 % -77 % 14 % -82 % -1 %

Acquirer
Viking Venture
Management AS

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 12

02 IT services

© 2023 Deloitte AS 13
02 IT services

Key statistics Q2 2023

The Nordic IT services index traded at The Global IT services index traded at

21
transactions completed within the
7.6x 9.7x
NTM sales at quarter-end Q1 NTM sales at quarter-end Q1
Nordic IT services space Third level
Fourth level
Fifth level

The Nordic IT services index decreased

7.1% 3 rd 12.0x
Nordic IT services transaction EV/Sales
over the last three months most active quarter since 2016
multiples median1

Note 1: Most recent 7 transactions recorded with available data

© 2023 Deloitte AS 14
For Q2-23, the Nordic IT Services index ended at ~7.6x next twelve month EBITDA, while the Global IT
Services index ended at ~9.7x next twelve-month EBITDA

Q2 23
16x

14x

12x

Mean Global 10.2

10x
9.7x
Mean Nordics 9.9

8x
7.6x

6x

4x

2x

0x
06-2018 12-2018 06-2019 12-2019 06-2020 12-2020 06-2021 12-2021 06-2022 12-2022 06-2023

Note: LTM multiplies applied in the rare case that NTM

EV/EBITDA NTM (Nordic) median EV/EBITDA NTM (Global) median multiplies are not available

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 15

Slow quarter for Nordic and Global IT services indices, with Nordic and Global L3M development at -7.1%
and 0.8%, respectively
Various indices (startpoint: 100)

300
Endpoints:

Deloitte
250 Nordic IT L3M: -7.1%
Serv. index L6M: 8.1%
LTM: 3.4%
221
200
Nasdaq
L3M: 12.8%
Composite
L6M: 31.7%
LTM: 25.0%
180
150

Deloitte
Global IT L3M: 0.8%
Serv. index L6M: 1.8%
100 LTM: -3.5%
167

50 MSCI Nordic L3M: -1.8%

L6M: 4.9%
LTM: 14.4%
125
0
06-2018 12-2018 06-2019 12-2019 06-2020 12-2020 06-2021 12-2021 06-2022 12-2022 06-2023

Deloitte Nordic IT services index Deloitte Global IT services index Nasdaq Composite MSCI Nordic

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 16

Deal volume increased in Q2 compared to previous quarter

Deal volume across the Nordic countries within IT services (target region)

43 48 60 51 55 72 47 34

35

21 21
18 18 19 19
17 17 17
14 14 14 14 15
12 12 13
11 11
9 9 8 8 8 8
6 7
4 5

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Third
Q2 Q3
level
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2016 2017 2018 Fourth level 2019 2020 2021 2022 2023

Fifth
Norway
level
Sweden Denmark Finland

Strategic and PE-backed companies accounted for the majority the activity in Q2 Majority of Nordic buyers of Nordic IT services companies in Q2 23
Type of buyer 35 Region of buyer 35
3

14
21 21
19 19
3
15 6 15
8 13 6 32 13
14 12 11 12 11
4 4 1
2 8 2 4 8 2
6 5 7 12 6 18
9 5 5 3 13 5 2
1 7 1 11 12
7 3 1 3 8 9
5 3 6 6 5 5 6
2 2 1 2 2 3
Q1-2021 Q2-2021 Q3-2021 Q4-2021 Q1-2022 Q2-2022 Q3-2022 Q4-2022 Q1-2023 Q2-2023 Q1-2021 Q2-2021 Q3-2021 Q4-2021 Q1-2022 Q2-2022 Q3-2022 Q4-2022 Q1-2023 Q2-2023
PE Strategic PE backed Nordic International

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 17

Selected transactions in the Nordic IT services market in Q2-23

IT security company Provider of accounting, oayroll and IT Provider of IT network and security
Provider of IT services
services solutions

Automation of infrastructure in cloud, Provider of IT, cloud services and data

IT security company IT consultency firm
data center, network, and IT security security services

Beginning End
Q2 Q2

Provider of accounting, oayroll and IT

IT services consulting Providewr of IT services Private equity firm
services

Provider of cloud-based data backup

Cyber security company IT consulting IT services and solutions company
services

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 18

Nordic IT services transactions concluded at a median EV/EBITDA multiple of 12.0x

19.3x 20.2x

14.2x
12.0x
Med. EV/EBITDA: 12.0x 10.4x 9.7x
8.9x

NOKm
Cybercom
Target
Intressenter AB

Country

Enterprise value 125 458 96 2,220 100 2,491 66

Year 2022 2022 2021 2021 2021 2021 2021

Stake 100% 100% 100% 100% 100% 100% 100%

Revenue (LFY) 42 73 63 1,529 110 1,879 33

EBITDA (LFY) 14 24 9 229 8 124 5

EBITDA-margin (LFY) 33 % 32 % 15 % 15 % 8% 7% 14 %

EBIT-margin (LFY) n.a 31 % 15 % 7% 5% n.a 14 %

Acquirer

© 2023 Deloitte AS Sources: Mergermarket, Deloitte, S&P CapitalIQ, NKP 19

03 Deloitte Insights

© 2023 Deloitte AS 20
Deloitte is one of the most active advisors within the TMT sector in the Nordics

In the sale of sold to sold to acquired by sold to sold to sold to

Obsidian Group Accent

Netsecurity Insightsoftware Infranode Trill Impact AnaCap
to Equity
Findos

acted as exclusive acted as exclusive acted as exclusive acted as exclusive acted as exclusive acted as exclusive acted as exclusive
financial adviser to financial adviser to financial adviser to financial adviser to financial adviser to financial adviser to financial adviser to
Capidea Data Equipment Power ON Infranode Kimbrer Computer CataCap AnaCap

Broad process Broad process Broad process Broad process Partnership agreement Broad process Focused process

Danish digital marketing Norwegian IT security Software development Danish supplier of IT Danish logistic software and Payment solution
Infrastructure company
company provider company hardware system integrator business

© 2023 Deloitte AS 21
Deloitte Corporate Finance acted as exclusive financial adviser to the shareholders of Data Equipment in
the merger with Netsecurity, creating one of the largest IT security companies in Norway
Description of the process Financials - Data Equipment

Situation NOKm 6% 7%
5% 5%

The sale of Data Equipment was a result of a strategic review, where the shareholders of 2019A 2020A 2021A 395
30%
the Company initiated a process to find a new partner to support Data Equipment's
growth ambitions in a high growth market 261 271
CAGR
180

12 18 14 18
By partnering with the highly competent technical organization of Data Equipment, the Å
Energi Invest backed Netsecurity enables accelerated growth, positive synergies and a 2019A 2020A 2021A 2022A
strong position in the Norwegian IT security market
Revenue EBITDA EBITDA margin

Outcome Transaction summary

In April 2023, the parties signed an agreement to merge Data Equipment and Transaction entity
Netsecurity, creating one of the largest IT security companies in Norway, under the
Netsecurity name
+
Leading adviser and competence partner within design,
implementation and delivery of complex IT security and One of the leading IT
Deloitte Corporate Finance acted as exclusive financial advisor to the shareholders of network solutions and services security companies in
Data Equipment in the process Norway, with 600+
Buyer Merger customers and combined
23B revenues of ~NOKm
800
IT security company delivering best-of-breed technology Highly competent
products and services, and is a provider of one of the organization, with more
leading next generation SOCs in Norway than 150 employees

© 2023 Deloitte AS Sources: Press releases, Deloitte insights 22

Deloitte professionals covering TMT in Norway

Corporate Finance Advisory M&A Strategy M&A Transaction Services M&A and Business Transformation

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+47 91 555 035 +47 959 20 982 +47 907 26 899 +47 905 34 970
chaukas@deloitte.no smalde@deloitte.no askjoy@deloitte.no jogullaksen@deloitte.no
Linkedin Linkedin Linkedin Linkedin

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Corporate Finance Transaction Services Technology Due Diligence
+47 906 50 679 +47 952 68 729 +47 938 89 949
kerichsen@deloitte.no nmaldan@deloitte.no orodland@deloitte.no
Linkedin Linkedin Linkedin

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Corporate Finance
+47 901 02 027 Audun Frøland Mari Wetlesen
M&A Tax M&A Legal Services
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Linkedin
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Please visit us at: Deloitte Corporate Finance Deloitte Corporate Finance Deloitte Norway
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© 2023 Deloitte AS 23
Deloitte professionals covering TMT in Denmark

Corporate Finance Advisory Other Deloitte professionals covering TMT in Denmark

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Deloitte professionals covering TMT in Sweden

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© 2023 Deloitte AS 25
Deloitte professionals covering TMT in Finland

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© 2023 Deloitte AS 26
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