Software and SaaS valuations: When quality matters more than ever

PARIS | LONDON | February 15th, 2023

Bryan, Garnier & Co’s software research team is pleased to release Software and SaaS valuations: When quality matters more than ever – an in-depth analysis of the recent correction in SaaS valuations and its impact on software and SaaS M&A transactions, IPOs and private fundings.

SaaS valuations have corrected beyond the necessary. In the US, listed SaaS players now incur a discount on sales multiples versus the broader software sector. This comes despite continued healthy revenue growth rates and the general resilience of the subscription model in economic downturns. On the other hand, 2022 was a record year in terms of Software M&A. While bear stock markets have made strategic acquirers more cautious in their M&A ambitions, the number of deals initiated by private equity funds has surged, and M&A multiples paid have not seen the same correction as those of listed players. Finally, the rare recent SaaS IPOs have not obtained the valuation they deserved, making it more difficult for private equity and venture capital funds to IPO their SaaS holdings, and funds raised by unlisted SaaS vendors have plummeted in value. However, if fundings above USD200m have disappeared, the market for fundings below USD200m on SaaS companies is recovering.

Bryan Garnier’s latest white paper reviews the valuation opportunities in the software sector, as well as challenges for software vendors migrating to SaaS and subscriptions. Read this report to learn about the key trends that will shape the software market, and understand why we consider the currently low valuation multiples in the software industry provide further opportunities for M&A and fundings. Contact your Bryan Garnier representative if you would like to speak to the author, Gregory Ramirez.

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About Bryan, Garnier & Co

Bryan, Garnier & Co is a European growth investment bank that helps healthcare and technology companies become global champions. By combining extensive sector expertise with an entrepreneurial mindset, Bryan Garnier provides companies and their investors with independent growth strategic advice, and privileged access to buyers and capital in Europe, the US and Asia.

As a full-service investment bank, the firm offering includes private and public growth financing solutions, mergers and acquisitions (M&A) advisory, research insights, and institutional sales & execution. Founded in 1996, Bryan Garnier & Co is an independent partnership with around 200 employees located in major financial centres in Europe and the US.