SEG Q320 SaaS Valuation

There’s a reason why I haven’t published anything in a year- check out why at the end of this post.

The Software Equity Group has published their Q320 SaaS Public Market Update.  You can download the entire report here.  SaaS Valuations have reached record highs, in spite of the Covid-19 crisis.

SaaS Q3 2020 Valuation Context

Covid-19 has undoubtedly been a worldwide crisis:

Covid-19 YTD deaths

In spite of this grim chart, FANG stocks (Facebook, Amazon, Netflix, & Google) have had significant YTD growth after cratering in March at the start of the crisis:

FANG YTD Performance

SEG SaaS Index Median Metrics

The Software Equity Group maintains data on 90+ public SaaS companies known as the SEG SaaS Index.  Here are a number of key metrics from the past four quarters:

SEG Q3 2020 Saas Valuation Segment Metrics

SEG shows that some segments of the SaaS market are faring significantly better than others:

SEG Q3 2020 Saas Valuation Top 25% EV/Rev
SEG Q3 2020 Saas Valuation Bottom 25% EV/Rev

Check out the full report here.

Now For The Rest of the Story

I have not published anything in over a year for a reason.  In the summer of 2019 I was retained as an expert witness in a SaaS M&A legal malpractice case.  The case recently settled.  I have never been an expert witness before and I learned a few things.  One important thing I learned was that I had to submit everything I had published to the other side so they could use it to impeach my testimony.  Since I write about a lot of M&A topics I decided to save my client and myself a ton of grief by not publishing anything while the case was ongoing.  Now that the matter has been settled (Covid-19 stretched things out a bit) I can return to writing and publishing.

Also published on Medium.

By John Mecke

John is a 25 year veteran of the enterprise technology market. He has led six global product management organizations for three public companies and three private equity-backed firms. He played a key role in delivering a $115 million dividend for his private equity backers – a 2.8x return in less than three years. He has led five acquisitions for a total consideration of over $175 million. He has led eight divestitures for a total consideration of $24.5 million in cash. John regularly blogs about product management and mergers/acquisitions.