Newsletters
Customer Relationship Management News NewsFactor Sites:       NewsFactor.com     Enterprise Security Today     CRM Daily     Business Report     Sci-Tech Today  
   
This ad will display for the next 20 seconds. Click for more information, or
Home CRM Systems Customer Service Contact Centers Business Intelligence More Topics...
Press Releases
DDoS Protection Powered By Verisign
Average Rating:
Rate this article:  
Analysis: SaaS Companies Are Hot Acquisitions

Analysis: SaaS Companies Are Hot Acquisitions

News as reported by the company
Share
Share on Facebook Share on Twitter Share on Linkedin Share on Google Plus

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.   Wells Fargo Eyes Zumigo for Security
2.   Pipeliner CRM Appoints New COO
3.   Pipeliner Updates Product Features
4.   Porticor Boosts MS SQL Encryption
5.   Vectra Networks Gets Funding Boost


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

Network Security Spotlight
UPS Stores in 24 States Hit by Data Breach
Big Brown has been breached. UPS said that about 105,000 customer transactions at 51 of its UPS Store locations in 24 states could have been compromised between January and August.
 
Cost of Target Data Breach: $148 Million Plus Loss of Trust
The now infamous Target data breach is still costing the company -- and its shareholders -- plenty. In fact, the retailing giant forecast the December 2013 incident cost shareholders $148 million.
 
Aruba Networks Handles Black Hat with Aplomb
It's not an easy job. Aruba Networks' task throughout the Black Hat USA conference in Las Vegas this month was to ensure thousands of attendees could connect without malicious attacks.
 

Enterprise Hardware Spotlight
Acer's New Desktop Box Rides the Chrome OS Wave
Filling out its Chrome OS line, Acer is following the introduction of a larger Chromebook line earlier this month with a new tiny $180 desktop Chromebox and also a smaller Chromebook.
 
Three New Lenovo PCs Aimed at Business Users
Businesses everywhere want computing solutions that do more for less money, and Lenovo has unveiled three new desktop PCs that offer solid computing at a budget-minded price.
 
Aruba Networks Handles Black Hat with Aplomb
It's not an easy job. Aruba Networks' task throughout the Black Hat USA conference in Las Vegas this month was to ensure thousands of attendees could connect without malicious attacks.
 

Mobile Technology Spotlight
Google Glass Adds Voice Access to Phone Contacts
The latest update to Google Glass will let users access their top 20 phone contacts with voice commands alone. A user can then choose a phone call, Google hangouts, e-mail or text messaging.
 
Samsung, B&N Target Amazon with Nook Tablet
They've seen the enemy and it is Amazon. So Samsung and Barnes & Noble are teaming up to combat their common foe with a 7-inch tablet that blends Samsung’s tech, Nook’s content and e-reader platform.
 
Acer's New Desktop Box Rides the Chrome OS Wave
Filling out its Chrome OS line, Acer is following the introduction of a larger Chromebook line earlier this month with a new tiny $180 desktop Chromebox and also a smaller Chromebook.
 

Navigation
CRM Daily
Home/Top News | CRM Systems | Customer Service | Contact Centers | Business Intelligence | 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.