Spring 2018

2018
SEG SaaS M&A Update
ANNUAL
SNAPSHOT
REPORT
 SELECT SEG TRANSACTIONS SEG’S BROAD NETWORK OF
SOFTWARE INDUSTRY BUYERS

Software Equity Group (SEG) provides

unparalleled M&A advisory services for emerging
and established software companies.

Services:
• Strategic M&A: Sell-side representation of emerging and
established software companies.

• Majority Recapitalizations: Majority investments from software-

focused private equity investors that look to provide
shareholder liquidity and growth capital to established software
companies.

• Divestitures: Sell-side representation of divisions of public and

large private software companies.

• Board Advisory: Strategic guidance and advice to business

owners preparing for a future liquidity event, whether that be
months or years down the road.

Please contact Kris Beible at

kbeible@softwareequity.com or visit our website
for more information.
2
Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
SELECT SEG SaaS TRANSACTIONS

VISIT OUR WEBSITE FOR TRANSACTION HIGHLIGHTS

3
Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
SEG RESEARCH
SEG 2018 Annual Report:
We constantly track transactions and The Software Industry’s Bull M&A
SEG Snapshot: Supply Chain
Software M&A Activity
buyer appetite globally to aggressively Market Continues
create competitive markets for our
clients’ businesses. As always, our
research is complimentary.

CLICK TO ACCESS RESEARCH

SEG Snapshot: 2018 Real Estate SEG Snapshot: 3Q17 SaaS M&A
Software M&A Update Update

4
Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
The following presentation summarizes the
highlights from SEG’s Spring 2018 SaaS
M&A Update.

Download the full report at

softwareequity.com/research
SaaS M&A MARKET UPDATE – 1Q18
SEG SNAPSHOT: SPRING 2018 SaaS M&A UPDATE

6
Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
HISTORICAL SOFTWARE INDUSTRY M&A VOLUME

SOFTWARE INDUSTRY M&A DEAL VOLUME ROLLING AVERAGE DEAL VOLUME – LAST 4 QUARTERS
Overall software industry deal activity, which includes SaaS, on-premise license On a TTM basis, average quarterly deal volume reached 613 transactions in 1Q18.
model, internet and mobile deals, reached 626 transactions in 1Q18, a 4.3% increase Average TTM quarterly deal volume surpassed 600 transactions for each of the past
over 4Q17’s 600 transactions. This marks the sixth consecutive quarter surpassing five quarters.
600 transactions.

700
700
649 613
625 626
612 601 600
600
587 578 584 586
600 565 570

Number of Deals (TTM Average)

513 500
500
Number of Deals

400
400

300
300

200 200

100 100

0 0
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

7
Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
 1Q18 SaaS M&A HIGHLIGHTS TOP SaaS PRODUCT CATEGORIES BY NUMBER OF DEALS
(1Q18)
• 1Q18 posted 216 SaaS M&A transactions, a 4.8% increase
from 1Q17’s 206 transactions. We expect aggregate SaaS
M&A volume to approach 900 transactions during 2018.
CRM & Marketing 35
• Consistent with past quarters, CRM & Marketing
accounted for the highest number of SaaS M&A
transactions in 1Q18.

• HR & Talent Management emerged as the second most

active product category during Q1. Acquisition demand HR & Talent Management 32

within the segment reflects the 17-year low unemployment

rate of 4.1% in the U.S. and the need for tools to manage a
growing labor population.
Analytics & Business 24
SaaS DEAL VOLUME Intelligence (BI)
Q1 Q2 Q3 Q4 Percent of Total Software M&A Deals

1000 2018 35.0%

Estimate
900
30.0%
Percent of Total Software M&A Deals
Content/Document
Number of SaaS M&A Deals

800 19
700 25.0% Management & BI
600 20.0%
500
400 15.0%

300 10.0% Billing & Service 19

200
5.0%
Provisioning
100
0 0.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 8
Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
 1Q18 SaaS M&A HIGHLIGHTS SELECT SaaS CATEGORIES BY TTM MEDIAN EV/REVENUE
(LAST 3 YEARS(2))
• The median TTM revenue multiple(1) was 4.4x in 1Q18, on
par with recent quarters, and remains 38% above the 7-
Storage & Systems Management 5.9x
year low of 3.2x in 3Q14.

• Over the past three years, the 5.9x median multiple posted BI & Analytics 5.3x
by Storage & Systems Management providers outpaced all
other product categories. Notable transactions include
Cisco’s acquisition of AppDynamics, Deloitte’s acquisition Billing & Service Provisioning 4.5x

of ATADATA, and Nutanix’s acquisition of Minjar Cloud

Solutions. Security 3.8x

M&A VALUATION Content/Document Management & BPM 3.8x

5.0x
4.4x
4.5x
Supply Chain Management 3.4x
4.0x
Median TTM EV/REvenue Multiple

3.5x

3.0x eCommerce Enablement 3.0x

2.5x

2.0x Communication/Collaboration 2.7x

1.5x

1.0x
CRM 2.6x
0.5x

0.0x
HR & Talent Management
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18

2.4x

9
(1) Values are on a median TTM basis, indicating that each quarter includes 12 months of data in order to obtain a larger dataset
(2) Last 3 years as of March, 2018 Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
SaaS M&A MARKET UPDATE – MONTHLY YTD
SEG SNAPSHOT: SPRING 2018 SaaS M&A UPDATE

10
Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
 2018 YTD M&A HIGHLIGHTS MONTHLY SaaS M&A DEAL COUNT BY PRODUCT CATEGORY
(2018)
• Through the first four months of 2018, monthly SaaS M&A 60
January February March April
deal volume has followed a similar trend in comparison to
2017, with deal volume softening each month during 1Q18
prior to picking up in April. However, SaaS M&A volume in 50

March 2018 was nearly 30% higher than the year prior.

• When comparing monthly SaaS M&A by product category, 40

CRM & Marketing, HR & Talent Management, and Analytics
& Business Intelligence posted the highest deal volume
through the first four months of 2018. CRM & Marketing 30
M&A activity has been on a tear thus far in 2018, posting
double digit deal volume each month during 2018.
20

MONTHLY SaaS M&A DEAL VOLUME

10
2017 2018

79 79
76 0
71 73
70
65

51

January February March April 11

Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
SaaS M&A ACTIVITY: BY EMPLOYEE COUNT & COMPANY AGE (2018 YTD)

TARGET EMPLOYEE COUNT (YTD) LIFESPAN OF TARGET COMPANY (YTD)

Of all transactions with estimated target employee count, the majority of SaaS targets had Of all SaaS companies acquired thus far in 2018, 35% were founded within the past 8
1-50 employees. This cohort posted a median EV/Employee of $645K, while companies years, while 32% of targets were founded between 2000 and 2009, when SaaS was in its
with 50+ employees received a median EV/Employee of $1.1M. Typically, smaller SaaS infancy. Companies over 18 years old, founded prior to 2000, likely made the successful
companies generate less revenue per employee and consequently EV/Employee, versus transition from a license to SaaS model.
larger companies that have experienced the benefits of scale.
Target Employee Count
28%
8%
4% 1-50 51-100
3%
3%
101-150 151-200
6%
18%
52%
8% 201-250 251-300 16%
14%

351-400 >401
10%
16%
7%
6%
EV/Employee per Employee Count Ranges

1-50 Employees 50+ Employees

Median $ 645,833.3 $ 1,125,000.0

1-3 4-8 9-13 14-18 19-23 24-28 25+
Average $ 992,285.4 $ 1,332,763.8
# of Years Since Company Founding

12
Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
 SaaS M&A ACTIVITY: BY REGION (2018 YTD)

Target Region / Acquirer Region

• Approximately three quarters of SaaS M&A targets were based in North America, along with an even larger percentage of buyers (83%).
• Europe accounted for the second most active region, with M&A targets and buyers accounting for 18% and 11% of all deals, respectively.

Region(1) Target Acquirer

North America 73.9% 82.6%

18% / 11% Europe 18.1% 11.1%

74% / 83% 3.1% / 2.1% Asia-Pacific 3.1% 2.1%

1.0% / 2.1%
Australia & New Zealand 2.1% 2.1%

1.7% South America, Central

1.7% 0.0%
America & the Caribbean

2.1% / 2.1% Middle East & Africa 1.0% 2.1%

13
(1) Values indicate the percent of acquisitions in both the target region and the acquirer region. Regions
are based on the headquarters for each company. Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
SELECT NOTABLE SaaS DEALS BY MONTH (2018 YTD)
Buyer Seller
JANUARY FEBRUARY MARCH APRIL

14
Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
2016 High HIGH
NOTABLE ProfilePROFILE
Deals SaaS DEALS (2018 YTD)
BUYER SELLER

Enterprise tech giant SAP acquired Callidus Software, a provider of cloud-based sales, marketing,
learning, and customer experience solutions for $2.4B (10.0x EV/Rev). Callidus’ sales performance and
talent management software will contribute to the SAP Hybris cloud portfolio, strengthening SAP’s front
office suite of solutions. The deal compliments SAP’s acquisitions of SuccessFactors and their core HRIS
offering.

Private equity firm Thoma Bravo acquired Nintex, a provider of business process management and
workflow automation software. Nintex has more than 7,500 enterprise clients and 1,700 partners in 90
countries. The acquisition will provide Nintex with the capital needed for the next stage of growth.

Trimble acquired Viewpoint, a provider of integrated software solutions for the construction industry, for
$1.2B (6.0x EV/Revenue). The acquisition marks Trimble’s second transaction for the year following the
1Q18 acquisition of e-Builder, purchased for $500M (9.4x EV/Revenue). Viewpoint’s solution
compliments e-Builder, as both companies join a list of over half a dozen construction-centric software
companies having been purchased by Trimble in past years. Read more on SEG’s Blog.

RealPage announced the acquisition of ClickPay for $218.5M (9.9x EV/Revenue), its third largest
acquisition to date. ClickPay is a provider of an electronic payment platform, servicing 2.3M units across
multifamily, HOA, condominium and co-op segments of real estate. Furthermore, the acquisition
significantly expands RealPage’s presence in the HOA market and puts the company in more direct
competition with payment platforms like PayLease (backed by Vista Equity Partners). Read more on
SEG’s Blog.
MINDBODY, a leading technology provider of software for the wellness services industry, acquired Booker
for $150M (6.0x EV/Rev). Booker is a cloud-based business management platform for salons and spas,
and the provider of Frederick, an automated marketing software for wellness business. The acquisition
will add approximately 10,000 salons and spas to the MINDBODY platform, extending MINDBODY’s
expertise of boutique fitness studios to high-value salons and spas. This is MINDBODY’s second
transaction in 1Q18. Read more on SEG’s Blog.
15
Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved

“I have been exceptionally impressed with SEG's
expertise, guidance, thoughtful negotiation,
responsiveness, and overall professionalism. Without
question, SEG stands clear of any ibankers that I have
worked with over the years, and I assure you I have
worked with many. SEG delivered everything they
promised from day one.”
Harris Jones
Chairman of ShowClix
SEG served as exclusive advisor to ShowClix in their
investment from Providence Equity
VISIT OUR WEBSITE FOR MORE TESTIMONIALS AND TRANSACTION HIGHLIGHTS
WHAT OUR CLIENTS SAY…
“M&A is complex. Most sellers are at a genuine a
disadvantage in each phase due to asymmetric
knowledge. Having SEG at our side was critical in tilting
the playing field to maximize enterprise value. By
leveraging years of negotiating experience and
managing the process with our best interests in mind,
SEG helped structure a terrific deal for me and our
shareholders. I look forward to working with them again!”
Dan Forootan
Founder & CEO of StreamSend
SEG served as exclusive advisor to StreamSend in their
acquisition by j2 Global
Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved
“The SEG team is a team of smart, straight shooters…
just good people. Selling a company is a life changing
event for the shareholders, but for the SEG team it’s all in
a day’s work. This was evident from the day we met to
the day the deal closed. Their buyer relationships,
process, industry knowledge, negotiating acumen, and
100% commitment to our shareholders’ best interests
were remarkable. However, what stood out most was
their assurance and patience when things got tough.
They always had our back."
Paul Lachance
Co-Founder of Bigfoot
SEG served as exclusive advisor to Bigfoot in their
acquisition by Dude Solutions
16
 Unmatched Expertise | Extraordinary Results

About Our Firm:

SEG provides unparalleled M&A advisory services for emerging and established software companies. By focusing
exclusively on this underserved market segment for over 25 years, we have the knowledge and experience to
quickly determine clients’ business value drivers, position them well among our deep network of industry buyers
and investors, and aggressively negotiate top-tier valuations. These skills together with our commitment to
Contact Information excellence results in exceptional outcomes for our clients’ shareholders, employees and customers.

Kris Beible
(858) 509-2800 Services:
kbeible@softwareequity.com
Strategic M&A: Sell-side representation of emerging and established software companies.
www.softwareequity.com
Majority Recapitalizations: Majority investments from software-focused private equity investors that look to
provide shareholder liquidity and growth capital to established software companies.

Divestitures: Sell-side representation of divisions of public and large private software companies.

Board Advisory: Strategic guidance and advice to business owners preparing for a future liquidity event, whether
that be months or years down the road

Disclaimer
The information contained in this Report is obtained from sources that SEG Capital Advisors LLC (“SEG”) believes to be reliable. However, SEG makes no representations or warranties, express or implied, about the
accuracy, completeness or fairness of such information, or the opinions expressed herein. Nothing in this Report is intended to be a recommendation of a specific security or company or intended to constitute an offer
to buy or sell, or the solicitation of an offer to buy or sell, any security. Any person or entity reviewing this report (a) should conduct its own diligence and reach its own conclusions regarding its business transactions,
(b) should not rely upon any conclusions reached by SEG, and (c) should consult its own advisors regarding its tax, accounting, financial and/or business decisions. SEG or its affiliates may have an interest in one or
more of the securities or companies discussed herein. Financial data was provided by Capital IQ & 451 Research.

This Report may not be reproduced in whole or in part without the expressed prior written authorization of SEG or one of its affiliates.

Copyright © 2018 by SEG Capital Advisors, LLC. All Rights Reserved

 The presentation summarizes the
highlights from SEG’s Spring 2018 SaaS
M&A Update.

Download the full report at

softwareequity.com/research