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 Sales & Marketing More Topics...
Eliminate costly downtime!
Find out how with Free White Paper
& enter to win a Samsung Galaxy Note

www.apc.com
Press Releases
Fiercely productive scanners
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:



APC has an established a reputation for solid products that virtually pay for themselves upon installation. Who has time to spend worrying about system downtime? APC makes it easy for you to focus on business growth instead of business downtime with reliable data center systems and IT solutions. Learn more here.


 Press Releases
1.   Ponemon: Organizations Under Siege
2.   CorvisaCloud Unveils SMS Platform
3.   DB Networks Named 'Hot Company'
4.   DataSource Honored as 'Cool Vendor'
5.   DB Networks Board Welcomes Link


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

Network Security Spotlight
Google's Street View Software Unravels CAPTCHAs
The latest software Google uses for its Street View cars to read street numbers in images for Google Maps works so well that it also solves CAPTCHAs, those puzzles designed to defeat bots.
 
Canadian Teen Arrested for Heartbleed Hack
One week after the OpenSSL Heartbleed vulnerability was unveiled, Canadian authorities have made the first arrest -- a London, Ontario teenager -- connected to exploiting the security hole.
 
IBM Offers Security, Disaster Recovery as SoftLayer Service
New disaster recovery and security services for SoftLayer clients are being added by IBM. Big Blue said the new capabilities will speed cloud adoption by alleviating concern over business continuity.
 

Enterprise Hardware Spotlight
Vaio Fit 11A Battery Danger Forces Recall by Sony
Using a Sony Vaio Fit 11A laptop? It's time to send it back to Sony. In fact, Sony is encouraging people to stop using the laptop after several reports of its Panasonic battery overheating.
 
Continued Drop in Global PC Shipments Slows
Worldwide shipments of PCs fell during the first three months of the year, but the global slump in PC demand may be easing, with a considerable slowdown from last year's drops.
 
Google Glass Finds a Home in Medical Education, Practice
Google Glass may find its first markets in verticals in which hands-free access to data is a boon. Medicine is among the most prominent of those, as seen in a number of Glass experiments under way.
 

Mobile Technology Spotlight
Google Releases Chrome Remote Desktop App for Android
You're out on a sales call, and use your Android mobile device to grab a file you have back at the office on your desktop. That's a bit easier now with Google's Chrome Remote Desktop app for Android.
 
Amazon 3D Smartphone Pics Leaked
E-commerce giant Amazon is reportedly set to launch a smartphone after years of development. Photos of the phone, which may feature a unique 3D interface, were leaked by tech pub BGR.
 
Zebra Tech Buys Motorola Enterprise for $3.45B
Weeks after Lenovo bought Motorola Mobility’s assets from Google for $2.91 billion, Zebra Technologies is throwing down $3.45 billion for Motorola’s Enterprise business in an all-cash deal.
 

Navigation
CRM Daily
Home/Top News | CRM Systems | Customer Service | Business Intelligence | Sales & Marketing | Contact Centers | 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 | XML/RSS Feed

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.