SEG SNAPSHOT
SaaS M&A
3Q17 Update
Select SEG 2017 TransactionsSEG’s Broad Network of
SaaS Buyers
2017 is a record-breaking year for SEG. In the first three
quarters, we have closed eight deals and are on track to
end the year with completed transaction volume in the
double digits.
established software companies.
focused private equity investors that look to provide
shareholder liquidity and growth capital to established software
companies.
large private software companies.
owners preparing for a future liquidity event, whether that be
months or years down the road.
Services:
Please contact Kris Beible at
kbeible@softwareequity or visit our websitefor
more informationSelect SEG 2017 Transactions
Unannounced
2017 Transaction
Copyright2017 by SEG Capital Advisors, LLC. All Rights ReservedSUMMARY
Q3 2017 SaaS M&A Industry Trends
593reported softwareM&A transactions
in 3Q17, which includes all SaaS, on premise, mobile and
internet deals. We expect this to be revised north of 600
deals by next quarter’s publication. Software M&A
transactions surpassed 600 deals each of the last three
quarters, an industry precedent.
204SaaS deals in 3Q17, representing a 4.6%
increase from last quarter’s 195 deals. SEG expects total
SaaS M&A transactions in 2017 to reach approximately 820
transactions, a 10% increase over 2016’s 740 deals.
4.5x TTM median EV/Revenue multiple in 3Q17. Median
EV/Revenue multiples have been hovering around an all-time
high for much of the past two years.
CRM & Marketingonce again represents the
highest deal count out of all SaaS product categories,
comprising 20.5% of all SaaS transactions. This category
continues to be the most active product category across the
software industry landscape.
25%of all SaaS sellers were vertically focused, a notable
decrease from the 32% of vertically focused SaaS deals
during 2Q17. Education was the most active vertical
category, comprising 17% of all companies with a vertical
focus.
40.9% of the quarter’s SaaS sellers were bought by
equity backed strategic buyers. Again, equity backed
strategic buyers acquired more SaaS companies than their
publicly traded strategic buyer counterparts.
Copyright2017 by SEG Capital Advisors, LLC. All Rights ReservedSoftware industry deal activity reached 593 deals in 3Q17, which we expect will be revised
above 600 deals by next quarter’s publication. According to our historical data, eclipsing
600 transactions per quarter marks an industry first.
On a TTM basis, average quarterly deal volume reached 619 transactions in 3Q17,
representing a 48.4% increase in transaction activity since the recent low in 2Q13 of 417
transactions. Average TTM quarterly deal volume surpassed 600 transactions for the first
time in 1Q17 with 607 deals.
Software Industry M&A Deal Volume & SpendRolling Average Deal Volume –Last 4 Quarters
488505
513
587578
565570584586
612
647
622
593
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0100
200
300
400
500
600
700
3Q144Q141Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q17
Va
lue
(B
illi
on
s)
Nu
m
be
r o
f D
ea
ls
DealsValue
619100
200
300
400
500
600
700
Nu
m
be
r o
f D
ea
ls
(T
TM
A
ve
ra
ge
)
High-Level Software Industry Deal Volume
*Aggregate software industry M&A volume consists of all reported SaaS, on
premise, internet and mobile deals.
Copyright2017 by SEG Capital Advisors, LLC. All Rights ReservedQ3 2017 SaaS M&A Highlights
42
21
2014
over-year (YOY) increase from 3Q16’s 193 transactions. In
comparison, YOY deal volume increased 38.9% and 22.9%
in 3Q16 and 3Q15, respectively.
approximately 820 transactions by the end of 2017,
comprising nearly 45% of total software transactions.
highest number of SaaS transactions 3Q17. With 49
transactions, this category was double the second highest
category, Analytics & Business Intelligence, which posted
21 transactions.
Top SaaS Product Categories by Number of Deals
(3Q17)
CRM & Marketing
Supply Chain &
Logistics
Communication
& Collaboration
HR & Talent
Management
Analytics & Business
Intelligence (BI)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%100
200
300
400
500
600
700
800
900
1000
20102011201220132014201520162Q17
Pe
rc
en
t o
f T
ot
al
S
of
tw
ar
e
M
&A
D
ea
ls
Nu
m
be
r o
f S
aa
S
M
&A
D
ea
ls
SaaS Deal Volume
Q1Q2Q3Q4Percent of Total Software M&A Deals
SEG 2017
Estimate
Copyright2017 by SEG Capital Advisors, LLC. All Rights ReservedQ3 2017 SaaS M&A Highlights
5.0x
4.7x
4.7x
3.9x
3.7x
3.3x
3.2x
2.8x
2.4x
2.4x
par with last quarter’s 4.6x multiple. EV/Revenue multiples
have remained near an all-time high for much of the past
two years.
highest TTM median EV/Revenue multiple of 5.0x in 3Q17.
This category includes notable transactions from the last
three years such as Futaba Corporation’s 3Q17 acquisition
of Kabuku(13.9x EV/Rev) and Salesforce’s 2Q16
acquisition of Demandware (10.5x EV/Rev).
Select SaaS Categories by TTM Median EV/Revenue
(Last 3 Years)
eCommerce Enablement Software
Enterprise Resource Planning
Analytics & Business Intelligence
Content & Document Management
Security
Supply Chain & Logistics
CRM & Marketing
Storage & Systems Management
Communication/Collaboration
HR & Talent Management
* Each quarter includes 12 months of data in order to obtain a larger dataset
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
4.0x
4.5x
5.0x
3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3QM
ed
ian
T
TM
EV
/R
Ev
en
ue
M
ult
ipl
e
M&A Valuation
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