What Saas Categories Did Investors Like in Q1 2018?
CRM, Marketing and Human Resource platforms are the most sought after according to Software Equity Group’s (SEG) Quarterly SaaS M&A Update. Below are some of the first quarter 2018 highlights we feel are most significant.
Overall deal volume in 1Q18 was strong, both for the overall software industry (4.3% increase over 4Q17) and for SaaS companies (4.3% increase over 1Q17).
Product Category Winners – Volume Breakdown
For several quarters we continue to see CRM & Marketing leading M&A deals based on volume. Coming in second, was HR & Talent Management. This may well be the result of low unemployment rates in America.
The median 1Q18 trailing twelve months revenue multiple of 4.4x is in line with the previous few quarters The Storage & Systems Management has lead other categories for the past 3 years with a median multiple of 5.9x.
Revenue Multiple By Seller Revenue (Last 3 Years)
What SaaS Categories Did Investors Like in 2018?
Larger companies yielded higher median multiples.
REVENUE MULTIPLE BY SELLER REVENUE (LAST 3 YEARS)
The Bottom Line
Understand the data behind multiples you use to guide your investors and team. As the SEG reports typically demonstrate, product category, size, age and headcount impact results. Setting the right expectation will allow a more a more meaningful analysis of deals when they are presented.