Vertical B2B Software Dominates the Lower Middle Market Rank Sector Percent of Buyer Mandates Rank Which software sub-sectors are seeing the most buyer and investor interest in the lower middle market? We analyzed mandates from over 1,600 buyers on Axial, and ranked each sub-sector according to its relative share. Top 10 Software Sub-Sectors in Lower Middle Market M&A Software sales also grew at a 10 percent compound annual growth rate from 2015 to 2018 versus non-software categories, which grew just 3 percent during the same period. According to the NPD Group’s 2019 review, software was the top purchase intention for small businesses last year, with 66 percent planning to spend on the category, up 7 percent from 2018. The demand for B2B application software is the primary growth driver. Last year, the total number of software deals closed increased 6.75%, while average deal size decreased 18.6%, according to Solganick & Co. Software continues to be a growing segment of deal activity for lower middle market buyers and investors, and the data reveals an increasing number of smaller deals getting done in the space. Email us at If you have questions, ideas, or additions. This is the second report in an ongoing series, and we’d love to hear your feedback.
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In addition to the market map, w e’ve included a full report below with first-hand commentary and analysis from four of these top Axial members on sector trends and forecasts (below). The data driving the heatmap incorporates member closed transaction data, as well as Axial platform activity that assesses firms’ software experience and specialization benchmarked against 5,000+ of their peers. The market map above shows the top 50 most active firms - see the full list at the end of this article. In addition, we analyze the data to reveal which software sub-sectors are seeing the highest levels of current demand (rather than historical closure data) from financial investors and corporate acquirers.
Who are the most active software investors and advisory firms in the lower middle market today? In this report, we unpack insights from anonymized private transaction activity on the Axial platform to surface the network’s 25 most active software investors and 25 most active software advisory firms.