SaaS M&A data continues to be healthy

A fantastic investment bank called Software Equity Group is out with their Snapshot of the SAAS M&A market for Q1 2017.  They put a report out like this quarterly and it’s loaded with great data.  A few items from the report that stood out to me are as follows:

 

-“9 SaaS companies were purchased by Oracle over the last 12 months, making them the most active buyer. These acquisitions support Oracle’s cloud strategy and bolsters their market position to better compete with SAP, Salesforce and Microsoft’s aggressive cloud strategies.” The most active SaaS buyers were Oracle, SalesForce, Vista, Cisco, GE, LDC, Descartes, Thoma Bravo, and Verizon.  Notably, Vista and Thoma Bravo are major private equity funds, not strategics. 

 

-SaaS M&A deal volume reached 206 transactions in Q1 2017, a 14.4% increase over Q1 of 2016.   For the 12 months ended March 2017, the median revenue multiple was 4.2x.  Last quarter it was 3.8x.  34% of SaaS sellers in Q1 2017 had vertical business models, meaning they focused on a very specific customer/industry.

 

 

-There continues to be a significant premium for size.  Over the last 3 years, approximately 39% of SaaS sellers have been acquired for greater than 5x revenue.  Likewise, 33% were acquired for 3x or less.  The table below shows the premium that can be earned for size.  

 

   

Big thanks to Software Equity Group (www.softwareequity.com) for compiling the data and making it public.  The full report is well worth the read.

 

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