Capstone Headwaters Reports: M&A Activity in the Enterprise SaaS & Cloud Industry Expected to Remain Strong

November 13, 2020

Boston, MA – Capstone Headwaters released its Q3 2020 Enterprise SaaS & Cloud Update today, reporting merger and acquisition (M&A) activity reached a record of 2,564 deals totaling over $150 billion in value over the last twelve months.  M&A activity soared in Q3 to 945 deals, exceeding the prior quarterly record by nearly 300 deals while doubling Q2 volume.  However, deals for the quarter tended to be smaller transactions at weaker multiples.  Capstone Headwaters expects M&A activity to remain strong as many deals have returned to market and valuations are recovering quickly to pre-COVID levels, presenting a motivation for sellers.  

“M&A activity in the SaaS space has recovered quickly from the impact of COVID and we expect M&A activity and valuation levels to return to pre-COVID levels in Q4,” commented David Michaels, Managing Director and Head of Capstone's Technology, Media & Telecom Group.  “In fact, we may see M&A activity increase from pre-COVID levels in Q4 as private equity firms race to deploy capital before year end to make up for lost time.”

In Q3, initial public offering (IPO) activity exploded to unprecedented levels with 20 deals in the quarter.  Public valuations have rebounded from Q1 lows relatively quickly with the majority of SaaS companies trading above pre-COVID valuations despite continued risk to the economy. While SaaS & Cloud 200 companies are typically better positioned than most businesses to survive lockdown measures, or even benefit from them, it is surprising to see the majority of companies trade above pre-COVID valuations, driving concerns of a double dip if COVID-19 infection rates increase and reopenings reverse.


Capstone Headwaters is one of the largest and most active independent investment banking firms in the United States.  The firm has a rich 15+ year history of achieving extraordinary results for middle market entrepreneurs, business owners, investors, and creditors.  Capstone offers a fully integrated suite of corporate finance services, including merger & acquisition, debt & equity placement, corporate restructuring, valuation & fairness opinion, financial advisory, and ESOP advisory services.  Headquartered in Boston, the firm has 150+ professionals across 16 offices in the U.S., with and an international presence including over 450 professionals in 40 countries. With 16 dedicated industry groups, the firm delivers sector-specific expertise through large, cross-functional teams on a global basis.  Capstone has been named “U.S. Middle Market Investment Bank of the Year” for the past 9 consecutive years and is consistently recognized as one of the top investment banking firms to work for. For more information, visit

For More Information Contact the Key Report Contributors: 

David Michaels 
Managing Director 

Teak Murphy