Strong Tailwinds for ‘Cloud’ M&A

Client Briefing Note:

IBM’s announced acquisition of Red Hat in a deal with an enterprise value of roughly $34 billion at a hefty premium triggered a recovery in cloud stocks. The reason this particular transaction acted as such powerful a trigger is because it reinforced a pattern that the market has come to expect: transformational deals, outsized tech valuations and continued anxiety among the majors to remain competitive and perhaps even relevant.

This briefing note looks at the recent trends in 'cloud' M&A, the impact on acquisition valuation multiples and the expectations for further consolidation among cloud software companies in 2019.

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