SaaS M&A shows 9x to 10x multiples

Sammy Abdullah
2 min readDec 4, 2023

Alongside multiples of publicly traded SaaS companies, public SaaS acquisitions are some of the most relevant you can look at for deriving SaaS revenue multiples. These transactions are all cash, the financials are public and audited, and these are all control transactions so the data is about as pure as it gets. Below is the data for all public SaaS company acquisitions since 2021.

31 acquisitions. 31 public companies have been acquired since December 2020. Of note, we would consider 5 of those acquisitions to be distressed (a combination of slow growth, poor margin, and weak multiple), so when looking at consolidated multiples, we separate the distressed transactions which are highlighted in red, from the good acquisitions. The rest of this blog will talk about the data excluding the 5 distressed transactions.

Capped price. The median acquisition price of these companies was $6.5bln. There are only so many acquirers that can spend billions in cash and/or company stock to make acquisitions. Once you get to $5bln+ in valuation, the universe of corporate acquirers (Salesforce, Microsoft, Adobe) and private equity firms (Thoma Bravo, KKR, Vista, Clearlake, Fracnsico, Symphony) that can afford you shrinks, such that IPO becomes the primary viable option. And of course, SaaS IPO’s have become rare: there were 40 in 2021 but only one (Klaviyo) since January 2022.

8.7x median and 9.4x average. The businesses on median sold for 8.7x trailing twelve month revenue of $789mm with YOY growth of 20%. While that growth may sound low, it’s impressive for companies with nearly $1bln of revenue, so any multiple discount from slower growth should be offset by the premium these companies receive for size and the fact that these are control investments.

No burn. These companies don’t burn, but they also weren’t wildly profitable. On median, EBITDA margin was -4%. Profitability isn’t a requirement to get acquired, and these acquisitions fly in the face of “Rule of 40”, which in our view is just a lazy saying.

Private equity is leading the way. Of the 31 acquisitions shown, only 7 were made by a strategic. All the rest were made by private equity, with Thoma Bravo making 7 of the acquisitions. Again, there are very few firms that can afford a multi-billion dollar acquisition. Not surprisingly, the highest multiple of the group is Salesforce’s, paying 33x revenue for Slack.

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