Newsletters
Customer Relationship Management News NewsFactor Sites:       NewsFactor.com     Enterprise Security Today     CRM Daily     Business Report     Sci-Tech Today  
   
Home CRM Systems Customer Service Business Intelligence Contact Centers More Topics...
Press Releases
Tame your scariest paperwork. Find Out How
Average Rating:
Rate this article:  
Analysis: SaaS Companies Are Hot Acquisitions
Analysis: SaaS Companies Are Hot Acquisitions

 
April 10, 2012 7:54AM
Latest SaaS Acquisitions Sold for More Than 7 Times Trailing 12-Month Revenue, Analysis Shows -- IBM, Oracle, SAP buying SaaS companies to gain market position; according to martinwolf M&A Advisors some of these deals will end up as bargains
 



San Ramon, California, April 10, 2012 -- A new analysis from martinwolf M&A Advisors comparing mergers and acquisitions in the SaaS sector to those in other IT sectors revealed that on average SaaS companies are selling for 3.19 times more than their counterparts in the other sectors. Other sectors analyzed included IT Services and Business Processing Outsourcing (BPO), IT Supply Chain and traditional Software.

The analysis shows that in the past six months companies in these other sectors sold on average for 2.39 times trailing 12-month revenue while SaaS companies acquired by software industry giants IBM, Oracle and SAP were sold on average for 7.63 times trailing 12-month revenue -- or more than 3.19 times more.

In fact, on the high end, SAP paid more than 12 times trailing 12-month revenue for SuccessFactors, a standout leader in SaaS-based human capital management solutions. SuccessFactors had revenue of $291 million in the 12 months prior to its purchase; SAP paid $3.5 billion.

Analysis of prices paid for key SaaS companies acquired in the past six months ranged from 3.42 to 12.05 times trailing 12-month revenue, while those in other IT sectors ranged from .4 to 3.68 times trailing 12-month revenue.

According to Marty Wolf, president and founder of martinwolf M&A Advisors, "On the outside, some people might think the prices being paid for SaaS companies are too high. Our belief is that IBM, Oracle and SAP can make these deals into bargains. These companies are smart buyers and they know how to integrate companies and leverage their existing infrastructures, including sales, to capitalize on their strengths.

"In the end, these software leaders are paying for the future revenue stream, not the past," said Wolf. "So, if they can buy an asset for 7 times trailing 12-month revenue, and increase the sales 10 times in a few years time, they effectively make the purchase less than 1 times future revenue. Clearly they go into these deals knowing exactly how they will grow value."

Wolf cited a case in point for the 1990s. In 1996, IBM purchased Tivoli Systems for $743 million, which was about 10 times trailing 12-month revenue. At the time, many analysts opined that IBM had grossly overpaid for the asset. But within a year, IBM was able to leverage Tivoli into almost a billion dollars in revenue.

"So in the end, did IBM pay 10 times 12-month trailing revenue, or less than 1 time 12-month future revenue for Tivoli?, said Wolf. (continued...)

1  |  2  |  Next Page >

 

Tell Us What You Think
Comment:

Name:



Salesforce.com is the market and technology leader in Software-as-a-Service. Its award-winning CRM solution helps 82,400 customers worldwide manage and share business information over the Internet. Experience CRM success. Click here for a FREE 30-day trial.


 Press Releases
1.   Dragon NaturallySpeaking 13 Debuts
2.   Web Platform Ezoic Launches
3.   Philips: We're Onto the Next Big Thing
4.   The Major BYOD Security Concerns
5.   Vectra Honored as 'Emerging Vendor'


advertisement
Product Information and Resources for Technology You Can Use To Boost Your Business

Network Security Spotlight
Researchers Working To Fix Tor Security Exploit
Developers for the Tor privacy browser are scrambling to fix a bug revealed Monday that researchers say could allow hackers, or government surveillance agencies, to track users online.
 
Wall Street Journal Hacked Again
Hacked again. That’s the story at the Wall Street Journal this week as the newspaper reports that the computer systems housing some of its news graphics were breached. Customers not affected -- yet.
 
Dropbox for Business Beefs Up Security
Dropbox is upping its game for business users. The cloud-based storage and sharing company has rolled out new security, search and other features to boost its appeal for businesses.
 

Enterprise Hardware Spotlight
Microsoft Makes Design Central to Its Future
Over the last four years, Microsoft has doubled the number of designers it employs, putting a priority on fashioning devices that work around people's lives -- and that are attractive and cool.
 
Contrary to Report, Lenovo's Staying in Small Windows Tablets
Device maker Lenovo has clarified a report that indicated it is getting out of the small Windows tablet business -- as in the ThinkPad 8 and the 8-inch Miix 2. But the firm said it is not exiting that market.
 
Seagate Unveils Networked Drives for Small Businesses
Seagate is out with five new networked attached storage products aimed at small businesses. The drives are for companies with up to 50 workers, and range in capacity from two to 20 terabytes.
 

Navigation
CRM Daily
Home/Top News | CRM Systems | Customer Service | Business Intelligence | Contact Centers | Sales & Marketing | Customer Data | CRM Press Releases
NewsFactor Network Enterprise I.T. Sites
NewsFactor Technology News | Enterprise Security Today | CRM Daily

NewsFactor Business and Innovation Sites
Sci-Tech Today | NewsFactor Business Report

NewsFactor Services
FreeNewsFeed | Free Newsletters

About NewsFactor Network | How To Contact Us | Article Reprints | Careers @ NewsFactor | Services for PR Pros | Top Tech Wire | How To Advertise

Privacy Policy | Terms of Service
© Copyright 2000-2014 NewsFactor Network. All rights reserved. Article rating technology by Blogowogo. Member of Accuserve Ad Network.