The Software Equity Group (SEG) regularly publishes quantitative research on the software and SaaS market M&A activity. It is always great information and clearly shows the trends in the industry. While information providers like PitchBook and dealroom offer comprehensive data and analysis, they are paid services that cost thousands of dollars a year. SEG offers its research for free.

SEG Q2 2021 Update

SEG publishes two major updates every quarter — one on the overall software market (on-premise & SaaS). The other is the SEG SaaS Public Market Update. The SEG SaaS Index contains dozens of publicly traded SaaS companies. The SaaS-only market has dramatically different performance than the overall market that also includes on-premise software.

Here are some highlights from the Q2 2021 M&A Update. You can download the entire report here.

Overall SaaS Index Median Performance

SEG’s overall SaaS Index showed some modest declines in Q2  in comparison to Q1

SEG Q2 2021 Median Metrics
Software Equity Group

Enterprise Value Revenue Multiplles Increased

EV/Revenue Multiples increased sequentially from 12.9x to 14.3x but were still below January’s record of 16.3x

SEG Q2 2021 Median Metrics
Software Equity Group

Quarterly Operating Ratios

Quarterly median operating ratios slightly declined, continuing a trend for the past year:

SEG Q2 2021 Median Metrics
Software Equity Group

The category a company is classified in continues to have a significant impact on its valuation.  DevOps & I.T Management and Communication & Collaboration continue to be the most valuable.  In Q2 the Security was the lowest valued category.

SEG Q2 2021 Median Metrics
Software Equity Group

Summary

The Software Equity Group continues to publish excellent research on software-related M&A activity. While some metrics showed slight declines, the sequential growth in median EV/Revenue ratios is encouraging.


Also published on Medium.