Software Equity Group Q3 2019 SaaS M&A Update

EV/Revenue Multiples for SaaS Companies

John Mecke
Oct 17 · 2 min read

The Software Equity Group has published their third quarter 2019 SaaS M&A update. You can download the entire report here (free, email registration required). As usual it contains a ton of valuable information.

Highlights

  • For the first time, M&A deal volume for the overall software industry (including SaaS, on-premise license model software, internet, and mobile deals) eclipsed 700 transactions in 3Q19.
  • Specific to the SaaS M&A market, deal volume reached a historical high of 314 SaaS transactions in 3Q19, a 24.6% YoY increase from 3Q18’s 252 transactions. Annual deal volume is expected to reach approximately 1,100–1,200 deals by end of 2019.
  • M&A targets with a vertical focus comprise approximately 42% of SaaS M&A transactions in 3Q19. Verticals with the highest deal count in 3Q19 include Healthcare (28 deals), Financial Services (18 deals), and Real Estate (12 deals).
  • SaaS M&A transactions posted a strong median multiple of 4.8x EV/Revenue in 3Q19. The SaaS M&A revenue multiple has been trending up over the past few quarters, increasing from 4.3x EV/Revenue in 3Q18.

Enterprise Value/Revenue Multiples

Revenue multiples remain high with a median multiple of 4.8x.

SEG Q3 2019 V/Revenue Multiples
SEG Q3 2019 V/Revenue Multiples
https://softwareequity.com/seg-snapshot-2q19-saas-ma-update/

Revenue Multiples by Company Size

SEG Q3 2019 EV/Revenue by Company Size
SEG Q3 2019 EV/Revenue by Company Size

Life Span Before Acquisition

SEG q3 2019 EE & Lifespand
SEG q3 2019 EE & Lifespand

EV/Revenue varies by size of company:

Other Contents

The report contains a lot of other valuable content including transaction count by industry, three year valuation trends, deal count by product category/vertical, deal count by business model, del count by buyer and target backing, M&A activity by region, and a listing of the 250+ transactions that closed in Q2.

Once again, here is the link to the full report.


Originally published at Development Corporate.

John Mecke

Written by

John has over 20 years of experience in leading product management and corporate development organizations for enterprise firms.

Development Corporate

Musings of a reformed private equity operator on product management and corporate development

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