FILE PHOTO: Smartphone with Slack logo stands in a shopping cart on a keyboard in front of displayed Salesforce logo in this picture illustration taken December 1, 2020. REUTERS/Dado Ruvic/Illustration/File PhotoClose to half the U.S. deals in the sector included a stock consideration last year, the highest percentage since 2016, versus only 27per cent in 2019, according to financial data provider Refinitiv.By comparison, 39.5per cent of deals across all sectors used stock last year.
The popularity of stock as currency for deals has been fueled by the soaring valuations in the sector, dealmakers said. The NASDAQ 100 Index is trading at 39.5 times its price-to-earnings, the highest since 2000, as investors bet on firms benefiting from the expansion in cloud computing and remote working in the aftermath of the COVID-19 pandemic.
When identity management company Okta Inc clinched a US$6.5 billion deal earlier this month for rival Auth0, it used just its shares to fund the purchase. The deal valued Auth0 at about 26 times forward revenue multiple, compared to a forward revenue multiple valuation of about 28 times revenue for Okta.