Transactions
Let's Talk
3Q23

SaaS M&A and Public Market Report

In the current landscape, the timing couldn’t be more opportune for SaaS companies with the right metrics to step into the market.

Certain public companies are achieving significant revenue multiples well above the SEG SaaS Index median. The M&A landscape is poised to follow suit, as we anticipate a record year for SaaS M&A in terms of deal volume.

Even in a challenging market, there are still investors willing to buy companies, potentially resulting in higher valuations. As a result, ignoring these opportunities in favor of waiting for market conditions to improve could be a missed opportunity.

Our SEG Research Reports are not just data, they are your strategic advantage. We meticulously study the stock and financial data of 120+ publicly-traded SaaS companies,  as well as hundreds of software & SaaS M&A transactions to examine quarter-over-quarter trends and uncover the pivotal moments that will shape the industry going into 2024.

The Top 3 Highlights

20%
SEG SaaS Index YTD Stock Gain

Overall, the Index has seen a 19.5% increase YTD. However, when measured against major indices starting from May, the SEG SaaS Index has surpassed the market by an impressive 39%.

539
SaaS M&A Deals Completed

The surge in SaaS M&A activity continued into 3Q23, with a total of 539 SaaS M&A deals, proving that this momentum is not merely a trend driven by the pandemic.

60%
Private Equity-Driven Deals

In 3Q23, private equity continued to dominate, accounting for 60% of SaaS M&A deals.

DOWNLOAD REPORT

Public SaaS Companies

The public market section conducts an in-depth analysis of stock prices, financial data, and valuation performance for the 121 publicly traded B2B software companies that form our SEG SaaS Index. This index undergoes quarterly updates, driven by mergers and acquisitions, IPOs, available financial data, and shifts in business models. Notably, in 3Q23, one company was welcomed into the Index, while two were removed.

Notable Public SaaS Companies

DOWNLOAD REPORT

SEG SaaS Index EV/Revenue by Product Category

In 3Q23, the SEG SaaS Index achieved a median EV/TTM Revenue multiple of 5.9x. Overall, the SEG SaaS Index demonstrated impressive consistency, reflecting the performance observed in Q1 and Q2 of 2023. Notably, certain product categories within the Index excelled in terms of EV/Revenue multiples. DevOps & IT Management and ERP & Supply Chain, for instance, exhibited higher median revenue multiples in 3Q23 compared to 3Q22, setting them apart as the sole two categories to attain improved valuations. This highlights the market’s acknowledgment of their mission-critical and growth-focused attributes.

EV/Revenue by Product Category
Quarterly Medians
3Q22
4Q22
1Q23
2Q23
3Q23
SEG SaaS Index
6.4x
5.4x
5.8x
6.0x
5.9x
Analytics & Data Management
7.3x
5.5x
5.3x
5.0x
5.3x
ERP & Supply Chain
6.6x
6.4x
7.2x
7.4x
8.2x
Financial Applications
6.3x
5.4x
5.8x
5.9x
6.0x
Sales & Marketing
6.6x
6.0x
5.4x
6.1x
6.2x
Vertically Focused
4.9x
4.6x
5.7x
5.3x
4.5x
3Q22
SEG SaaS Index
6.4x
Analytics & Data Management
7.3x
ERP & Supply Chain
6.6x
Financial Applications
6.3x
Sales & Marketing
6.6x
Vertically Focused
4.9x
4Q22
SEG SaaS Index
5.4x
Analytics & Data Management
5.5x
ERP & Supply Chain
6.4x
Financial Applications
5.4x
Sales & Marketing
6.0x
Vertically Focused
4.6x
1Q23
SEG SaaS Index
5.8x
Analytics & Data Management
5.3x
ERP & Supply Chain
7.2x
Financial Applications
5.8x
Sales & Marketing
5.4x
Vertically Focused
5.7x
2Q23
SEG SaaS Index
6.0x
Analytics & Data Management
5.0x
ERP & Supply Chain
7.4x
Financial Applications
5.9x
Sales & Marketing
6.1x
Vertically Focused
5.3x
3Q23
SEG SaaS Index
5.9x
Analytics & Data Management
5.3x
ERP & Supply Chain
8.2x
Financial Applications
6.0x
Sales & Marketing
6.2x
Vertically Focused
4.5x
DOWNLOAD REPORT

SaaS M&A Activity

We anticipate a record-breaking year as SaaS M&A activity maintains its strength, recording 539 transactions in 3Q23, on par with the previous quarter. Comparing this to the average of 389 transactions per quarter in the four quarters before 3Q21, the last four quarters have witnessed a substantial 36% surge, with an average of 528 transactions each. This positions 2023 as a potential record-setting year, poised to surpass the robust performance of 2022. Notably, select SaaS businesses are commanding premium valuations compared to previous years. Furthermore, SaaS is predicted to represent 58% of total software transactions in 2023, reaffirming the global shift towards modern, cloud-based technology solutions for the second consecutive year.

M&A Deal Volume

Quarterly

M&A Deal Volume

Monthly
DOWNLOAD REPORT

Vertical M&A Activity

Vertically focused businesses took up 48% of all SaaS deals, marking a significant increase from 3Q22 (42%) and a slight shift from the previous quarter (46% in 2Q23). Investors are increasingly recognizing the value of businesses that provide mission-critical solutions tailored to recession-resistant markets. Notably, Healthcare, Financial Services, and Government emerged as the most active verticals, with Healthcare leading at 18% of vertical M&A deals. Furthermore, several other verticals witnessed year-over-year growth, including Energy, Manufacturing, and Legal. The report also covers horizontal SaaS deals, providing insights into their most active product categories.

Financial Services
Healthcare
Real Estate
Education
Hospitality
Retail

Healthcare M&A

Quarterly
DOWNLOAD REPORT

Buyers of SaaS

In 3Q23, private equity investors continued to play a pivotal role in driving SaaS M&A, representing 60% of deals, a slight increase from 58% in 3Q22 and consistent with the previous quarter’s 61%. This segment comprises both PE-backed strategics at 50% and platform investments at 10%. The private equity sector, backed by a record $3.7 trillion in dry powder at the end of 2022, exhibits distinct characteristics as PE-backed strategics concentrate on product synergies, without facing the real-time valuation pressures experienced by publicly traded strategics. This showcases their resilience, even during bear markets.

SaaS M&A Activity by Buyer Type

3Q23
DOWNLOAD REPORT

Insights to Drive Stronger Software M&A Performance

tool-img
browser_updated guide

Interactive Market Maps
visit-img
browser_updated guide

SEG SaaS Index Page
Expert-PE-Perspectives-on-the-Evolving-Software-M&A-Market
auto_graph report

State of SaaS M&A: Buyers' Perspectives

Archived Reports

If you are looking for a past version of SEG’s Annual or Quarterly Reports, you can now download all previously published reports from our archived section.

Annual
2023 ANNUAL REPORT
2022 ANNUAL REPORT
2021 ANNUAL REPORT
2020 ANNUAL REPORT
Quarterly
3Q23 QUARTERLY REPORT
2Q23 QUARTERLY REPORT
1Q23 SaaS M&A REPORT
1Q23 SaaS PUBLIC MARKET REPORT
DOWNLOAD YOUR REPORT

3Q23 SaaS M&A and Public Market Report

3Q23 SaaS Report

Gain strategic insights into the SaaS industry with our latest report. Click the button to download your copy.