1Q11 SaaS M&A Transactions

This excerpt is from our complimentary Q1 2011 Software Industry Equity Report which can be downloaded here:  https://softwareequity.com/research_reports.aspx

In 1Q11, 39 SaaS companies were acquired, compared to 26 SaaS acquisitions in 4Q10 and 10 in 1Q10.  The spike in SaaS acquisitions demonstrates buyers are beginning to resonate with recent IT spending surveys which show CIOs are gaining confidence in SaaS deployed applications and are allocating a larger percentage of their IT budgets accordingly.  Indeed, SaaS acquisitions accounted for 9.9% of all software acquisitions in 1Q11, up from only 2.8% in 1Q09 (Figure 31).

Five of the SaaS companies exiting in Q1 belonged to one of the earliest and most popular SaaS categories, CRM and Marketing. The surge in CRM/Marketing SaaS deals signals another wave of consolidation in that category  as private companies offering socially enabled CRM services prove to be irresistible to larger, public players seeking to update their offering and catch a bit of the digital wave.  That may give many of the remaining SaaS based, privately held CRM and Marketing players good reason to reevaluate their exit timing assumptions.

Of the 39 SaaS acquisitions in 1Q11, three of the four reported EV/Revenue multiples were above 4.3x TTM revenue, with Davis + Henderson’s acquisition of Mortgagebot LLC posting the highest reported multiple at 6.2x.  Another notable transaction was in the aforementioned CRM space with RightNow Technologies acquiring Q-go.com for a 4.3x EV/Revenue multiple equating to a $34 million enterprise value.

Additional details on 1Q11’s SaaS M&A transactions can be found in Appendix E.

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