Bank Of America's Favorite M&A Possibilities In The Software Space

Bank of America expects the software space to see M&A transactions in 2017 similar to that of 2016, with salesforce.com, inc. CRM, ServiceNow Inc NOW, Splunk Inc SPLK, Tableau Software Inc DATA and Cornerstone OnDemand, Inc. CSOD seen as potential targets.

Strong Software M&A Momentum In 2016

The year 2016 had its fair share of M&A transactions. Last year's M&A scene was dominated by private buyouts of publicly traded vertical software companies. Among the biggest software deals announced in 2016 were Microsoft Corporation MSFT $26 billion acquisition of LinkedIn, salesforce.com's buyout of Demandware for $2.8 billion and salesforce.com's purchase of Krux for $700 million.

How BofA's 2017 M&A Target Stocks Fared In 2016

• Salesforce.com has lost 8.04 percent in the past year and was down a steeper 10.3 percent for the second half of 2016.
• ServiceNow, though losing 10 percent over the past year, has recovered nicely in the second half of 2016, gaining 15.92 percent during the period.
• Shares of Splunk has fallen roughly 9 percent for the year but a more modest 2.33 percent in the second half.
• Tableau Software plunged close to 54 percent for the year, although the decline for the second half of 2016 has been more modest at about 12 percent.
• Cornerstone OnDemand was on a tear in 2016, rising close to 23 percent for the year and about 10 percent for the second half of the year.

Going by the valuation, Tableau Software, salesforce.com and Splunk present attractive opportunities given that these might be better bargains for a suitor or leave more of a possible premium for an investor in the stock.