Sep 6, 2023

Application Development & Deployment M&A Update – August 2023

AppDev Market
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Software Development Extends to Operations, Buoys M&A in AppDev Market

The Application Development (AppDev) & Deployment sector has demonstrated significant economic resilience through year-to-date (YTD) 2023, buoyed by heightened demand for software solutions. Notably, the global AppDev Software market size registered at $203 billion in 2022 and is forecasted to reach $748.8 billion by 2028 through a compound annual growth rate (CAGR) of 24.3%, according to Grand View Research.1 The rising demand for software solutions has been primarily driven by the democratization of the application lifecycle management process, as organizations have increasingly relied on operations teams to develop, test, deploy, and monitor applications. As a result, the Low-Code/No-Code subsegment has greatly benefited, enabling operations teams with little-to-no coding experience to deliver custom software applications. This trend has materialized in substantial merger and acquisition (M&A) opportunities and market share gains for subsegment participants. Notably in 2022, Low-Code/No-Code accounted for 58.6% of the global AppDev Software, according to the Grand View Research report. Low-code/no-code development capabilities have permeated most major end markets reliant on software, including Information Technology (IT) Services, Telecom, Business Services, Financial Services, and Healthcare.

FDA Deepens Technology Modernization Through Low-Code/No-Code

The Healthcare industry has made material advancements in its IT infrastructure, led by the U.S. Food & Drug Administration’s (FDA) three-part action plan; the Technology Modernization Action Plan (TMAP), Data Modernization Action Plan (DMAP), and Enterprise Modernization Action Plan (EMAP). Through the TMAP, the FDA has deployed advanced low-code/no-code tools for scientific and medical reviewers to develop custom applications for the collection and analysis of regulatory information, according to the FDA.2 Given the breadth of the FDA’s overview and data intake, low-code/no-code platforms empower reviewers to customize applications based on their specific segment with limited IT training. “Technology on its own is not going to get the job done. We are a data-driven organization, and we’ve got a lot of data fragmentation and siloed issues. So, increasingly we’re focusing on the data side,” said FDA CIO, Vidyut Desai, in a press release.3 Desai has considered a low-code/no-code platform as a “very powerful environment” to mitigate the FDA’s data silo hurdles, according to the press release.

AppDev and deployment software and services providers continue to attract strong interest from buyers across the strategic and private equity spectrum, driven by a continuing need for solutions in digital transformation and democratized application development. Capstone expects this segment to out-perform the broader technology M&A market in terms of both transaction volume and enterprise value multiples.

David DeSimoneManaging Director, Capstone Partners

M&A Volume Reaches New Heights in the AppDev Market

M&A activity in the AppDev & Deployment sector has continued at a strong pace, with 201 transactions announced or completed through YTD 2023. This marks an increase of 66.1% compared to YTD 2022, demonstrating the resilience of sector deal flow despite economic headwinds. A persistent strategic and private equity buyer pool has contributed to elevated M&A activity, with both buyer groups engaging in competitive bid processes to capitalize on digital transformation tailwinds. Strategic buyers have continued to account for the majority (69.7%) of sector M&A transactions to-date, led by private strategics (51.2% of YTD deals) horizontally consolidating competitors to gain market share and bolster workforces in anticipation of an economic recovery. Private equity firms have maintained their presence in the space, comprising 30.3% of deals to-date. Although add-on transactions have continued to account for the majority of sponsor dealmaking, platform acquisitions have risen 2.3% year-over-year (YOY), indicating private equity firms have not shied away from mature, large-scale targets.

Despite the continued domination of the Services segment, M&A volume in the Software segment has increased 53.8% YOY in YTD 2023, with 60 transactions announced or completed. Driven by a fragile IT labor market, buyers in the sector have placed heightened value on software providers, leading to robust segment valuations. From 2021 through YTD, average Software segment M&A purchase multiples have come In at 5.6x EV/Revenue and 12.9x EV/EBITDA, outpacing the Services segment (1.8x EV/Revenue, 11.0x EV/EBITDA) and the broader AppDev & Deployment sector (3.2x EV/Revenue, 11.6x EV/EBITDA) during the same period. Scalability, interoperability, and automation have continued to be key investment criteria among acquirers in the Software segment.

Private Equity Firms Increasingly Target North America-Based Businesses

Private equity firms operating in the AppDev & Deployment sector have increased their presence in the North America market, with 63.9% of sector private equity targets YTD based in the U.S. and Canada. This has largely been driven by the vast amounts of dry powder available, in which the majority is held in U.S.-domiciled funds. As of year-end 2022, global dry powder stood at $1.2 trillion with $775.6 billion controlled by U.S. funds, according to PitchBook and Capstone's Q1 2023 Capital Markets Update. Due to a difficult lending environment, private equity firms in the broader M&A market have largely focused on smaller add-on acquisitions to bolster current portfolio businesses. However, North American and international sponsors in the AppDev & Deployment sector have continued to chase platform acquisitions, namely targeting software providers with recurring revenue models, interoperable platforms, and scalable low-code/no-code technology. Capstone expects the defensibility of the Software segment to uphold sector private equity activity in North America through year-end 2023.

Software Segment Acquirers Prioritize Low-Code/No-Code Providers

Acquirers in the Software segment have increasingly prioritized targets with low-code/no-code offerings to capitalize on the democratization of application development and heightened revenue opportunities. Of note, total revenue in the global Low-Code market is projected to reach $26.9 billion by year-end 2023, marking an increase of 19.6% compared to 2022, according to Gartner's latest forecast.4 Driven by the high cost of IT talent, the Citizen Automation Development Platform (CADP) sub-segment is expected to grow at the fastest pace, with a 30.2% YOY revenue growth forecast for 2023. Dealmaking in the space has largely materialized in tuck-in acquisitions and private equity platform deals with sponsors planning to implement inorganic growth strategies for the new portfolio companies. Several recent, notable low-code/no-code transactions are outlined below.

  • Silver Lake Technology Management to Acquire a Minority Stake in Software AG (April 2023, $2.7 Billion) – In April 2023, private equity firm Silver Lake Technology Management announced its offer to acquire a 25.1% stake in Software AG (XTRA:SOW) for $34.92 per share, which would have brought Silver Lake's total holdings to 30.1%, according to a press release.5 Despite Bain Capital-backed Rocket Software's counteroffer of $39.28 per share, Software AG's management board supported Silver Lake's offer, which spurred Rocket Software to sell its original ~10% stake to Silver Lake, bringing Silver Lake's total holdings to ~41% as of June 19, 2023, according to a press release.6 As a result of the transaction, Software AG's enterprise value reached $2.7 billion, equivalent to 2.5x EV/Revenue and 17.2x EV/EBITDA. The bidding war and subsequent transaction demonstrates private equity's heightened interest in the Software segment, especially for providers that contribute to the democratization of application development. Software AG offers a variety of low-code platforms for operations teams including integration Platform-as-a-Service (iPaaS), application programming interface management, data integration, process mining, business process management, and application deployment.
  • Tempo Software Acquires Amovos (April 2023, Undisclosed) – Tempo Software, a leading provider of portfolio management solutions for software development organizations, acquired Amovos in April 2023. Terms of the transaction were undisclosed. Amovos, an Atlassian Marketplace partner, offers custom digital dashboard solutions for the management of Jira and Confluence applications. The acquisition is expected to expand Tempo's Atlassian-based product suite, providing users with no-code data visualizations and a more efficient application lifecycle management process. "Data visualization and reporting capabilities are essential to any Strategic Portfolio Management solution and help our customers to make informed decisions and improve their product development processes. Through it, we enable organizations to see their entire process clearly and to gain insights into optimizing their plans, capacity, and costs,” said Mark Lorion, CEO at Tempo Software, in a press release.7 The transaction is also anticipated to accelerate Tempo's revenue growth, building upon the $100 million in annual recurring revenue (ARR) reported in 2022, according to the press release.
  • Jitterbit Acquires Zudy (March 2023, Undisclosed) – In March 2023, Jitterbit acquired no-code application development platform Zudy for an undisclosed sum. Zudy's enterprise-grade platform, Vinyl, enables businesses to build fully integrated, bi-directional applications from on-premise deployment without a single line of code. To-date, Zudy has served 150 enterprise customers, with Vinyl being utilized to develop more than 3,500 applications, according to a press release.8 "In addition to the added scale and enhanced ARR profile, this acquisition further differentiates Jitterbit’s capabilities, while enhancing our ability to meet the application development and automation needs of businesses across industries with offerings to serve both on-premise and cloud environments," said George Gallegos, CEO at Jitterbit, in the press release.
  • Francisco Partners Management Acquires Sumo Logic (February 2023, $1.4 Billion) – Private equity firm Francisco Partners Management acquired Sumo Logic in a take-private deal for an enterprise value of $1.4 billion, equivalent to 4.6x EV/Revenue (February 2023). Under the terms of agreement, Sumo Logic stockholders received $12.05 per share, representing a ~57% premium over Sumo Logic's unaffected closing stock price on January 20, 2023, according to a press release.9 Sumo Logic provides a variety of cloud and software management solutions, including a no-code software deployment application for developers and operations personnel. With more than $45 billion in assets under management, Francisco Partners plans to implement a buy-and-build strategy, adding scale to the business namely through add-on acquisitions, according to the press release.

To discuss M&A appetite for low-code/no-code developers, provide an update on your business, or learn about Capstone's wide range of advisory services and AppDev & Deployment sector knowledge, please contact us.


Max Morrissey, Manager, was the lead Market Intelligence contributor to this article.


  1. Grand View Research, "Application Development Software Market Size,", accessed July 17, 2023.
  2. U.S. Food & Drug Administration, "FDA's Technology Modernization Action Plan,", accessed July 17, 2023.
  3. GovConWire, "FDA Emphasizes Low-Code/No-Code…,", accessed July 17, 2023.
  4. Gartner, "Gartner Forecasts Worldwide Low-Code Development Technologies Market to Grow 20% in 2023,", accessed July 17, 2023.
  5. Reuters, "Silver Lake Adds to Software AG Stake Amid Acquisition Bid,", accessed July 17, 2023.
  6. U.S. News, "Rocket Gives up Counteroffer for Software AG, Sells Stake to Silver Lake,", accessed July 17, 2023.
  7. Tempo, "Tempo Agrees to Acquire Old Street Solutions (Amovos),", accessed July 17, 2023.
  8. Jitterbit, "Jitterbit Expands Low-Code Development Capabilities with Acquisition of Zudy,", accessed July 17, 2023.
  9. Francisco Partners, "Sumo Logic to be Acquired by Francisco Partners,", accessed July 17, 2023.

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