Q3 SaaS M&A multiples

Software Equity Group is an investment bank that puts out excellent research on SaaS markets. They’re also a great group of bankers. They just released their latest report on Q3. A summary is below but the full report may be found at https://softwareequity.com/research/.

M&A volume was still healthy in Q3. “The quarter’s 492 deals virtually mirror 3Q21’s 498 transactions, a period considered to be a great market with little concern about the economy or inflation. Through the first three quarters of 2022, total SaaS deal activity is up 35% over 2021.”


Q2 was also strong. “Overall, the volume of SaaS M&A deals….remain strong. The second quarter of 2022 was exceptionally strong, with 580 SaaS M&A deals — the second-highest transaction count on record, trailing only 1Q22.”

But Q3 multiples were down 35% YOY, to 5.2x. “SEG continues to see valuations remain elevated for companies demonstrating durability,” but that decline is stark especially relative to Q2 (see below).


Q2 multiples were much stronger. “Impressively, on the M&A side, the median SaaS EV/Revenue multiple dropped only 4.5% year-over-year (YOY).”

So in summary the number of transactions is holding steady, but valuations are definitely down; Q3 seems to have marked the beginning of the valuation downturn. Big thanks to SEG for putting the data together. Reach out to them if you’re selling your business; they’re excellent.

Sammy is the Managing Partner and Co-Founder of Blossom Street Ventures. Visit us at blossomstreetventures.com and email directly at sammy@blossomstreetventures.com. We invest in companies with run rate revenue of $3mm to $30mm, with year over year growth of 20% to 100%+ depending on revenue. We lead or follow in growth rounds and special situations like inside rounds, small rounds, rushed rounds, corralling investors with our term sheet, cap table clean up, and extensions. We can commit in 3 weeks and our check is $1mm to $4mm. Also visit https://blossomstreetventures.com/metrics/ for always up-to-date SaaS metrics.