---
title: "The Largest Software Acquisition in History"
description: "Broadcom's $70B VMware acquisition signals opportunity in public SaaS. Analysis shows software companies trading at decade-low multiples, down 65% from 2019 peaks."
categories: ["SaaS"]
keywords: ["Broadcom acquisition","VMware acquisition","software mergers and acquisitions","public SaaS market","enterprise value multiples","private equity","corporate raiders","M\u0026A trends","technology acquisitions"]
ai_summary: "Broadcom's $70B acquisition of VMware highlights a unique opportunity in the public SaaS market amid declining valuations."
date: 2022-05-26
lastmod: 2026-07-31
canonical_url: https://www.tomtunguz.com/vmware-broadcom-acquisition/
author: "Tomasz Tunguz"
---

Yesterday, [Broadcom announced it will acquire VMWare](https://www.broadcom.com/company/news/financial-releases/60271) for $70b, the largest software acquisition in history.

Remarkably, this goliath union transpires during the deepest bear market of the last ten years. This merger also suggests a wave of acquisitions may punctuate 2022, in particular, take-privates.

Public companies can't hide from the 70% collapse in multiples the way startups can. Publics are marked to market daily. Big acquirers walking through the aisles of the stock exchanges are staring at buy-one-get-one-free specials.

Software companies haven't been this cheap to buy for a decade. VMWare traded at a 4.4x enterprise-value-to-forward-revenue (EV/NTM)  multiple down from 7.3x in 2019, a fall of 65%, consistent with its peers by growth rate.

| Ticker | Growth Rate | EV/NTM Multiple | 
| -----  | ----: | ----: | 
| VMW    | 9%   | 4.4x | 
| DBX    | 12%  | 3.6x| 
| BOX    | 13%  | 4.5x|
| ZUO    | 14%  | 2.7x |
| AYX    | 14%  | 5.5x | 
| Average | 12% | 4.14 | 

*VMW traded at 4.4x before the acquisition. The sale pushed it to 6.6x*

If VMWare is attractive, shouldn't these other companies entice a cash-rich acquirer? Or a flush private equity firm desirous of a SaaS company's consistent cash flow? Interest rates may be increasing, but they're still low enough to make leveraged buy-out math work. 

Plus, publics are "always on sale." Anyone can submit a valid offer. Even more, public company boards are subject to intenser scrutiny and more frequent shareholder lawsuits, which makes them likelier to consider a sale, even if there's just one offer. 

Look no further than Elon's on-again, off-again pursuit of Twitter as a real-time example of the tight-rope public companies must navigate after receiving unsolicited bids; and the destabilizing winds that a lack of other suitors and oppressive shareholder scrutiny bring.  [Acquisition targets are weakened after the market hears of an offer](https://tomtunguz.com/what-ive-learned-ma/), and weaker still after they agree to terms and await a definitive agreement. 

In this environment, with valuations plummeting, plus uncertainty and fear rampant in the market, we might see a vibrant M&A market for public companies and perhaps the reemergence of [the Barbarians at the Gate](https://en.wikipedia.org/wiki/Barbarians_at_the_Gate), the [corporate raiders](https://en.wikipedia.org/wiki/Corporate_raid).