IT Industry News - November 2020

What happened last month in tech?

Overview

Global Job Markets

Company News

Merger & Acquisition Activity

Overview

A Little History of previous year’s Novembers

Five years ago, November 2015 saw Expedia pay $3.9 billion for HomeAway as a vehicle to better compete with Airbnb. Zayo Holding Group became the first foreign company to own a Canadian telco after paying $465 million for Allstream. Other, smaller deals saw Apple buy Faceshift, a motion capture company whose technology was used in a Star Wars movie; and Lightspeed POS bought SEOshop, increasing its size as a competitor to Shopify. Other deals saw Ingram Micro grow its Brazilian presence with the purchase of ACAO; PCM bought Edmonton-based services firm Acrodex; Data centre company CentriLogic bought infrastructure company Advanced Knowledge Networks; solution provider Scalar Systems bought another Toronto company, professional services firm Eosensa; and Washington-based New Signature bought Toronto-based Microsoft Partner, Imason.

In November 2016, Broadcom acquired Brocade Communication Systems for $5.9 billion; Adobe purchased multi-channel programmatic video platform TubeMogul for $540 million; IT services and outsourcing provider Wipro Limited bought IT cloud consulting firm Appirio for $500 million; Oracle announced its plans to acquire DNS solution provider, Dyn Inc.; SoftwareOne acquired and integrated House of Lync; and Avnet completed an acquisition of Hackster.

Three years ago, in November 2017, the big M&A activity for the month saw investment firm Thoma Bravo pay $1.6 billion for Barracuda networks. McAfee also made an acquisition, Skyhigh Networks which used to be an Intel company. Smaller deals saw Talend buy Restlet and Qualys buy Netwatcher.

November 2018 was a busy month in the M&A space, with lots of action! The largest deal saw SAP shell out $8 billion for experience management company Qualtrics. Not far behind was Commscope paying $7.4 billion for telecommunication equipment maker Arris. Vista Equity partners paid $1.94 billion for cloud software company Apptio; and private equity fund CVC paid $1.8 billion for a global IT and managed services provider, ConvergeOne Holdings. The final billion-dollar deal saw Blackerry make its largest acquisition to date, paying $1.4 billion for AI cybersecurity startup Cylance. In other deals, Thoma Bravo bought security testing vendor Veracode for $950 million; LinkedIn paid $400 million for a surveying startup, Glint; power management company Eaton paid $300 million for Turkish company Ulusoy Elektrik; and Citrix shelled out $200 million for intelligent portal company Sapho. There were plenty of big name companies out shopping with no price tag named. Accenture bought a German design agency Kolle Rebbe; Apple bought AI company Silk Labs; HPE bought big data company Bluedata; Oracle bought Talari Networks; Cisco bought networking company Ensoft; Microsoft bought another AI company, startup XOXCO; Red Hat (recently purchased by IBM) bought storage startup NooBaa; VMware bought Kubernotes startup Heptio; Symantec bought a couple of companies, Appthirty and Javelin Networks; and DXC bought a couple of companies, TESM and BusinessNow.

Last year, November 2019 saw quite a few "big dollar" deals. The biggest saw Apollo Global taking TechData private in a deal worth $5.4 billion. Google sold its Stubhub subsidiary to Viagogo for $4.05 billion; Xerox sold its stake in Fuji Xerox such that Fujifilm will own the whole entity at a cost of $2.3 billion; Google paid $2.1 billion for Fitbit; and Opentext paid $1.4 billion for security company Carbonite. That is a lot of $ billion deals for one month! Other deals saw Proofpoint pay $225 million for threat management company ObserveIT; DXC picked up solution providers, Virtual Clarity and Bluleader; Rackspace bought professional services company Onica, and Mimecast picked up DMARC Analyzer.

Which brings us back to the present

November 2020 continued the trend of M&A activity that we have seen these last few months, despite or perhaps because of the pandemic. Certainly, there are distressed companies "out there", but many companies are also just continuing to pursue their long term strategies.

The biggest deals this month saw Adobe shell out $1.5 billion for Workfront, a work management software company; Coupa Software paid $1.5 billon for AI powered supply chain design and planning company Llamasoft; Telus International also bought AI capability with their $1.2 million purchase of Lionbridge AI; and Palo Alto Networks paid $800 million for security vendor Expanse.

Security company FireEye paid $186 million for cybersecurity investigation automation company Respond; and Connectwise paid $80 million for cybersecurity company Perch Security. IBM made a couple of acquisitions; TruQua Enterprises is an SAP consulting company and Instana an application performance monitoring company with AI capability.

There were plenty more deals including Cisco buying cloud company Banzai Cloud; Splunk bought network monitoring company Flowmill; Ping Identity bought developer Symphonic Software; cybersecurity company Barracuda bought remote access company Fyde; StorCentric bought storage company Violin Systems; and another cybersecurty deal saw Acronis buy CyberLynx.

Apple was in the news this month, settling a case related to their throttling performance on iPhones to encourage users to upgrade.

Around the world we continue to deal with the pandemic. There is promising news of vaccines, which will bring some relief as they are rolled out. Economic indicators and job numbers have been improving for several months, but we are seeing rising cases and more lockdowns so the recovery is forecast to slow down.

Global Job Markets

The number of jobs in Canada rose by 83,600 in October, an increase of 0.5%, Statistics Canada reported. The increase brought total employment to nearly 18.6 million. Canada’s unemployment rate fell to 8.9% in October from 9.0% in September.

The unemployment rate for Organisation for Economic Co-operation and Development countries fell slightly to 7.3% in September 2020. This is down from the 7.4% rate recorded in August 2020. The rate remains 2.1% higher than in February, before the COVID-19 pandemic hit the labour market.

Monthly gross domestic product in the UK grew by 1.1% in September 2020 from August 2020 as lockdown measures continued to ease during the period, according to data from the Office for National Statistics. This is the fifth consecutive monthly increase following a record fall of 19.5% in April 2020. September 2020 GDP is now 22.9% higher than the April 2020 low. However, it remains 8.2% below the levels seen in February 2020, before the full impact of the coronavirus pandemic.

More companies attempted to recruit in the third quarter compared to the second, but activity remained below pre-COVID levels, according to the British Chambers of Commerce Quarterly Recruitment Outlook report conducted in partnership with Totaljobs. The report found 37% of firms attempted to recruit in the third quarter compared to 25% in the second quarter.

The number of employed persons decreased by 2.0% in the euro area and by 1.8% in the EU in the third quarter of 2020 when compared to the same quarter last year, according to data from Eurostat, the statistical office of the EU. The decreases are an improvement after the 3.1% decrease recorded in the euro area and 2.9% decrease recorded in the EU during the second quarter of 2020. When compared to the previous quarter, the number of employed persons increased by 0.9% in both the euro area and in the EU in the third quarter of 2020. These were the strongest increases observed since time series started in 1995. In the second quarter of 2020, employment had decreased by 2.9% in the euro area and by 2.7% in the EU.

IT jobs in the US rose for the second month in a row in September after taking a hit from the pandemic in the spring, according to a report by the TechServe Alliance, a trade association of the IT and engineering staffing and solutions industry. IT employment was up by 0.47% to nearly 5.2 million jobs in September.

Job growth in the US is expected to slow in the coming months as COVID-19 cases rise in the US, The Conference Board reported. Its Employment Trends Index rose in October from September; however, it was the smallest increase in the index since May. The index also remains down 11.1% from last October.

Economists downgraded their forecast for growth in US gross domestic product for the remainder of this year and the first nine months of 2021, according to the Philadelphia Federal Reserve’s Survey of Professional Forecasters for the fourth quarter. However, they don’t believe the US unemployment rate will be as high as forecast in their third-quarter report, and US payrolls are projected to grow at a faster clip.

The US manufacturing sector expanded in October, according to the Institute for Supply Management’s "Manufacturing ISM Report on Business." There was good news in the report for manufacturing employment as well, with the employment index entering expansion territory for the first time in more than a year.

The US private sector gained 365,000 jobs in October when compared to September, according to the ADP National Employment Report. However, October’s additional jobs reflected a slower rate of gain than in previous months.

The US Conference Board Leading Economic Index rose in October but still points to more moderate growth in the final months of this year. The Conference Board also reported COVID-19 remains a concern.

Economic activity in Mexico has improved since June, according to a report by the US Federal Reserve Bank of Dallas. Mexico’s GDP forecast for 2020 was revised upward in October to a decline of 9.3% from a decline of 9.8% forecast in September. The Federal Reserve Bank of Dallas cited data from Banco de México.

Company News

Merger & Acquisition Activity

Adobe Paying $1.5 Billion for Workfront

Creativity and marketing technology provider Adobe plans to acquire Workfront, a developer of a work management platform aimed at the marketing community. The acquisition, which Adobe valued at $1.5 billion, is aimed at bringing Workfront’s technology for helping marketers manage content, plan and track marketing campaigns, and execute workflows to the Adobe Experience Cloud.

Coupa Software Pays $1.5 Billion for Llamasoft

Coupa Software has acquired LLamasoft , a leader in AI-powered supply chain design and planning, in a deal worth around US$1.5 billion. LLamasoft’s technology is used by leading customers, such as Boeing, Danone S.A., Home Depot, and Nestle. Coupa says the acquisition will strengthen its supply chain capabilities, enabling businesses to drive greater value through Business Spend Management (BSM).

Telus International Pays $1.2 Billion for Lionbridge AI

Telus International, a Telus subsidiary that offers global customer service outsourcing and digital IT services, has acquired Lionbridge AI for CA$1.2 billion. Lionbridge AI is a subdivision of Lionbridge Technologies that specializes in data collection annotation, validation, and linguistics, all of which fall under Telus International’s service wheelhouse. In the acquisition press release, Telus International specifically addressed Lionbridge AI’s annotation solution, a data labelling system for texts, images and videos in different languages so they can be used with AI systems.

Palo Alto Networks Paying $800 Million for Expanse

Palo Alto Networks has agreed to purchase attack surface management vendor Expanse for $800 million to gain visibility into exposed and untracked assets in the customers’ ecosystem. The Santa Clara, Calif.-based platform security vendor said its proposed blockbuster acquisition of San Francisco-based Expanse will allow customer CISOs to see their organization in the same way an attacker does when probing for points of weakness.

FireEye Pays $186 Million for Respond

FireEye has purchased cybersecurity investigation automation startup Respond Software to deliver extended detection and response capabilities to a broader set of customers. The Milpitas, Calif.-based platform security vendor said adding Mountain View, Calif.-based Respond Software’s cloud-native artificial intelligence platform to its Mandiant Advantage platform will allow for automating investigations at machine speed.

ConnectWise Buys Perch Security for $80 Million

After another year spent suffering bruising attacks on its MSP customers — and their clients — ConnectWise has acquired Perch Security, a cybersecurity company with an in-house Security Operations Center, for $80 million. Perch Security is based in Tampa, Fla., and has partnered with ConnectWise for a number of years, offering its brand of co-managed threat detection to customers for an added fee.

IBM Buys TruQua Enterprises

IBM plans to acquire TruQua Enterprises, a solution provider focused on the SAP ecosystem. With the acquisition of Chicago-based TruQua, IBM is getting a leader in SAP-based transformations in the financial, planning and analysis business. TruQua works with customers’ CFOs and controllers to help them implement and optimize financial-focused technology.

IBM Buys Instana

In its second acquisition this week, IBM unveiled its plan to purchase application performance monitoring (APM) specialist Instana to boost IBM’s artificial intelligence automation capabilities. Instana, which made Gartner’s 2020 Magic Quadrant for Application Performance Monitoring, offers end-user and infrastructure monitoring as well as analytics that leverages AI to manage application performance in microservice architectures. The Germany and Chicago-based startup can also audit applications used in container orchestration.

Cisco Buys Banzai Cloud

Cisco looked to boost a rapidly expanding portfolio of cloud-native technology developing under its roof with its agreement to buy Hungary-based Banzai Cloud. Banzai will add to a slate of emerging technologies being nurtured within the networking giant’s Emerging Technologies and Incubation group, the team incubating projects around cloud-native networking, security and edge computing environments for modern distributed applications. The startup founded in 2017 fits in well with Cisco’s vision of amassing talent from around the world to drive innovation around enterprise digital transformations.

Splunk Buys Flowmill

Big data company Splunk has struck a deal to acquire network performance monitoring (NPM) technology developer Flowmill in a move that will expand the capabilities of the Splunk Observability platform. Splunk, which operates with the tagline "data-to-everything," develops a portfolio of software used to collect, index and analyze machine-generated data for a range of tasks in IT operations, IT security, DevOps and more. Flowmill, based in Palo Alto, Calif., was founded in 2016. The company’s software is used to help IT managers gain visibility into the behaviour of distributed applications in containers, within virtual machines and on bare metal. It can help detect cloud infrastructure problems, analyze application interactions and reduce network transfer costs.

Ping Identity Buys Symphonic Software

Identity management technology developer Ping bought intelligent authorization technology developer Symphonic Software. Ping Identity is looking to combine its Zero Trust identity-defined security with Symphonic’s technology for confirming external authorization into an integrated offering. Symphonic Software was founded in Edinburgh, Scotland, after its founders saw no easy way to easily authorize external users of an application, such as making sure a user is over 18 years old.

Barracuda Buys Fyde

Barracuda has purchased early-stage remote access vendor Fyde to apply a Zero Trust approach to safeguarding applications, workloads and devices. The Campbell, Calif.-based cybersecurity vendor said its acquisition of Palo Alto, Calif.-based Fyde will provide employees and contractors working from home on BYOD equipment with quick and secure access to cloud or on-premises applications and workloads.

StorCentric Buys Violin Systems

StorCentric, the storage vendor built on the back of a number of acquisitions of smaller storage vendors, has acquired the once-imperiled Violin Systems, an early leader in all-flash storage. Violin Systems adds a midrange all-flash storage array offering that sits between StorCentric’s Nexsan hard drive-based and hybrid flash-based arrays and its Vexata high-performance all-flash storage arrays.

Acronis Buys CyberLynx

Acronis has purchased Israel-based cybersecurity consultancy CyberLynx to gain more capabilities around everything from IT security audits and penetration testing to post-event cyber forensics services. The Schaffhausen, Switzerland-based cyber protection vendor said its acquisition of CyberLynx will increase the amount of training available for customers to increase their security posture. CyberLynx’s expertise in threat simulation and analysis will allow Acronis to better assist MSPs and MSSPs as they protect their clients and serve as the last line of defense against the latest threats.

Electric Buys Sinu

Electric, a provider of real-time support and IT management for SMBs, has acquired managed service provider Sinu. The acquisition gives Electric and Sinu, both based in New York, the opportunity to quickly expand their businesses.

Trace3 Buys Groupware Technology

Solution provider Trace3 is expanding its geographic footprint with the acquisition of fellow solution provider Groupware Technology. With the acquisition of Campbell, Calif.-based Groupware, Irvine, Calif.-based Trace3 gains a strong presence in the Northern California and Arizona IT markets along with sophisticated cloud-focused technology and support capabilities.

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IT Industry News – November 2020

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