M&A ACTIVITY EXPECTED TO REMAIN STRONG WITH DEALS RETURNING TO MARKET AND VALUATIONS RETURNING TO PRE-COVID LEVELS
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M&A ACTIVITY EXPECTED TO REMAIN STRONG WITH DEALS RETURNING TO MARKET
AND VALUATIONS RETURNING TO PRE-COVID LEVELS
ENTERPRISE SAAS & CLOUD INDUSTRY UPDATE | Q4 2020
Q4 2020
Enterprise SaaS & Cloud
M&A Activity Expected to Remain Strong
CONTRIBUTORS HIGHLIGHTS
David Michaels Strong last twelve month (LTM) merger & acquisition (M&A) activity with a record 3,151 deals
Head of Technology, Media & Telecom totaling over $240 billion.
Managing Director
Initial public offering (IPO) activity remains strong in Q4, though down from the unprecedented
(858) 926-5950
levels in Q3.
dmichaels@capstoneheadwaters.com
M&A revenue multiples of 3.0x for private targets and 3.1x for public targets are down from 2018
and 2019 levels with private targets at a five-year low.
Teak Murphy
Director
Enterprise SaaS & Cloud 205 stock prices rose by 19.6%, outperforming the NASDAQ’s 15.4% gain,
(310) 746-5006 as stocks have rallied post-election with positive vaccine news driving improved outlook.
tmurphy@capstoneheadwaters.com M&A activity soared in Q4’20, surpassing 1,000 deals for the first time, with H2’20 deal volume of
over 2,000 deals matching typical annual deal volume, though deals tended to be smaller
transactions at weaker multiples.
Public valuations quickly rebounded from Q1 lows with most SaaS companies well above pre-COVID
valuations despite continued risk to the economy as vaccines roll out.
Capstone Headwaters expects M&A activity to remain strong throughout 2021, with healthy
valuations and expectations of tax increases motivating sellers.
www.capstoneheadwaters.com
KEY TAKEAWAYS M&A ACTIVITY & MULTIPLES PUBLIC COMPANY VALUATION & OPERATING METRICS CAPSTONE HEADWATERS SOFTWARE TEAM
ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
KEY TAKEAWAYS
TRANSACTION ACTIVITY MEDIAN VALUATION MULTIPLES MEDIAN PUBLIC COMPANY METRICS
Strong LTM M&A activity with a record 3,151 M&A revenue multiples of 3.0x for private Stock prices rose 19.6%, outperforming the
deals totaling $245 billion as H2’20 deal targets and 3.1x for public targets are down NASDAQ’s 15.4% gain, as stocks have rallied
volume exploded to record levels. from 2018 and 2019 levels with private targets post-election with positive vaccine news
at a five-year low. driving improved outlook.
IPO activity remained strong in Q4, with
investors continuing to chase new technology Public company median multiples jumped to Median revenue growth of 20.9% is the lowest
offerings despite heady valuations. record levels, hitting 11.1x revenue and 39.4x level since 2015 with just 17.2% growth
EBITDA as investors paid up for the relative projected for 2021.
safe haven and growth potential of
Median EBITDA margin of 13.6% is the highest
technology stocks.
level since 2015 as companies restricted
spending during the pandemic.
M&A OUTLOOK NOTABLE Q4’20 M&A TRANSACTIONS MOST ACTIVE BUYERS
H2’20 M&A activity was much stronger than Buyer Target Segment EV
Capstone expected, though deals tended Communication & $27.8B
Collaboration
toward smaller, lower multiple deals as buyers
went value hunting. Vertical Market $9.9B
Private equity (PE) firms focused on tuck-in Human Resources $3.9B
acquisitions and bargain hunting in 2020, but
Capstone expects a return to focus more on Content Creation & $3.6B
Management
platform investments going forward.
CRM & Customer $3.2B
Strong public valuations and stabilized Service
outlook will have strategic buyers more active ERP, Supply Chain & $3.1B
Commerce
as confidence returns.
Vertical Market $2.8B
Expected tax hikes will likely drive a lot of
founders to consider exits in 2021. Vertical Market $2.2B
Cloud & IT $2.1B
Infrastructure
Vertical Market $1.6B
3
KEY TAKEAWAYS M&A ACTIVITY & MULTIPLES PUBLIC COMPANY VALUATION & OPERATING METRICS CAPSTONE HEADWATERS SOFTWARE TEAM
ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
LTM M&A DOLLAR VOLUME
The LTM M&A dollar volume of $245B is up 40% from 2019, absolutely crushing prior record levels despite unprecedented economic disruption throughout the year. Private deal dollars
amounted to $174B, outpacing historical levels while public deal dollars were up from 2019 but a bit below prior highs.
» Megadeals drive dollar volume and the year saw 52 billion-dollar deals, led by Salesforce’s acquisition of Slack (Dec’20, $29B), Intercontinental Exchange’s acquisition of Ellie Mae (Sep’20,
$11.0B), Thoma Bravo’s acquisition of RealPage (Dec’20, $10.5B), Takeaway’s acquisition of GrubHub (Jun’20, $7.5B), Foley Trasimene’s acquisition of Paysafe (Dec’20, $7.2B), Intuit’s acquisition
of Credit Karma (Feb’20, $7.1B), and Clarivate’s acquisition of CPA Global (Jul’20, $7.1B).
The Q4’20 M&A dollar volume of $113B is a new record, 50% above the previous high, and a quick rebound from Q2’s $15B which marked a three-year low.
We expect deal activity in 2021 to remain robust, driven by strong valuations in public markets and private equity investors flush with cash.
$300,000
$250,000
Total Transaction Value (in $US millions)
$70,769
$200,000
$150,000 $89,306
$68,646
$86,014
$100,000
$30,758 $174,130
$23,195
$50,000 $112,179 $105,345
$84,212
$67,250 $66,970
$0
2015 2016 2017 2018 2019 2020
LTM = Last Twelve Months
Total Private $ Total Public $ Sources: Capital IQ, 451 Group, Capstone Headwaters
5ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
M&A DOLLAR VOLUME BY QUARTER
The impact of COVID-19 was significant in Q2, but private M&A dollar volume rebounded significantly in Q3 with Q4 bringing record setting levels.
» Q4 dollar volume set records for both private and public deals despite uncertainty around the election and COVID-19 as investors focused on the longer term.
» Q3 dollar volume rebounded to near record levels despite lingering uncertainty on COVID-19 impact.
» Q2 dollar volume was quite low despite a return to larger deals in June totaling $11.8B for the month.
» Q1 dollar volume was strong despite March dropping to just $2.1B as January and February hit $20.5B and $18.7B, respectively.
$120,000
$100,000
Total Transaction Value (in $US millions)
$50,189
$80,000
$60,000 $12,786 $8,875
$49,426 $3,387
$7,538
$40,000 $21,795
$23,850 $63,245
$54,697 $54,828
$16,365 $48,897
$15,645
$20,000 $41,431
$28,188 $25,822
$18,594 $8,319
$17,041 $15,012
$7,160
$0
Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20
Total Private $ Total Public $
Sources: Capital IQ, 451 Group, Capstone Headwaters
6ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
LTM M&A TRANSACTION VOLUME BY SEGMENT
Transaction volume reached 3,151 deals for 2020, once again setting record M&A activity with more than 50% increase in activity over 2019.
» The 1,082 deals completed in Q4’20 also sets a record, with more than double the average quarterly deal volume over the past five years.
The Vertical Market is by far the largest segment by deal count, representing nearly 40% of transaction volume
Communication & Collaboration and Cloud & IT Infrastructure both experienced strong growth in deal volume. This was likely helped by the increased focus on virtual communications
and cloud as workforces largely remain remote, while Analytics/AI/BI continues to see increasing activity with AI continuing to go mainstream.
Human Resources deal activity remains strong and growing despite COVID-19 causing disruption in the segment.
3,500
3,000
2,500 1,218
Transactions
2,000
160
768 168
781
1,500 757
754 708 188
281
126 151
158 141 109 124 110
1,000 71 152
110 124
61 84 84 129
56 69 124
131 134 166 180 42
68 134
107 63 72 76 86
93 84 37 109
500 86 83 83 68
80 42
51
489
85 60 71
268 267 260 221
243
139 185 247
0 111 115 104
2015 2016 2017 2018 2019 2020
Analytics / AI / BI Cloud & IT Infrastructure Cloud Computing, Storage & Delivery Communication & Collaboration
Content Creation & Management CRM & Customer Service ERP, Supply Chain & Commerce Finance & Administration LTM = Last Twelve Months
Sources: Capital IQ, 451 Group, Capstone Headwaters
Human Resources Marketing & Advertising Vertical Market 7ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
M&A TRANSACTION VOLUME BY QUARTER
SaaS & Cloud M&A transaction volume fell considerably in Q2 2020 due to COVID-19, but quickly rebounded to record levels in Q3 and Q4.
» Q4 saw over 1,000 deals for the first time in history as deal activity exploded.
» Q3 saw about 300 deals in each month of the quarter as activity was strong and consistent, though many deals were still at lower multiples.
» Q2 deal activity experienced depressed levels with 140-170 deals each month, though much of the activity was bargain hunting at lower multiples.
» Q1 started out strong at 250 deals in January, and remained healthy at 212 deals for February, before slipping slightly to 193 deals in March as COVID-19 impact increased with M&A
activity starting to skew more towards smaller, lower multiple deals.
1,200
1,000
800
Transactions
600
1,082
946
400
651
538 540 552
478 475 489 472
447
200
0
Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20
Sources: Capital IQ, 451 Group, Capstone Headwaters
8ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
LTM M&A TRANSACTION VOLUME BY DEAL SIZE – PRIVATE TARGETS
Private company M&A activity once again hit a new record high for LTM, surpassing 3,000 deals for the year, and up more than 50% from 2019.
» Megadeal volume is strong at 42 deals over $1 billion in 2020, with half of those deals coming in Q4’20.
The median LTM transaction size of $22 million, for deals with announced values, represents a low for recent periods with Q2’20 and Q3’20 median deal value in the $10-15M range as it seems many
deals during COVID-19 have been smaller, often distressed, transactions with Q1 and Q4 median deal value just above $30M, which is also below historical norms.
Deals under $25 million represented over 50% of deal volume for transactions that reported values, notably above the usual 40%.
100% 8 13
16 28 18 42
25 23
26 22 26
90% 35 25
27 34 26 29
34
80% 65
50 55 73
56
70% 59
49 55
45 54 45
60%
50 71
64
50% 55 57
60 43 79
40%
101 60 59
74 69
30%
20% 233
129 117 108
10% 88 100
0%
2015 2016 2017 2018 2019 2020
Total Deals 1,873 1,807 1,783 1,985 1,995 3,110
Deals w/ Value 476 402 396 408 390 608
Median ($M) $29 $33 $36 $43 $36 $22
$0-10M $10-25M $25-50M $50-100M $100-250M $250-500M $500M-1B $1B+ LTM = Last Twelve Months
Sources: Capital IQ, 451 Group, Capstone Headwaters
9ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
LTM M&A TRANSACTION VOLUME BY DEAL SIZE – PUBLIC TARGETS
Public target transaction volume of 41 deals sets a new five-year high, displaying strength with 10 deals over $1 billion.
» Median deal size of $232 million is at the low end of historic levels, as H1 median deal size was below $50M and deal activity in ranges under $50M all set record activity levels.
» Q4’20 saw 13 deals closed, only behind Q3’20’s peak of 16 deals.
100%
90% 7 7 10
80% 12
14
4 13
70% 6
7
60% 5 2
2 4
50%
5 4
40% 8 2 7 2
1 11
30%
4 4 2 7
20% 4 3
2
5 2 5
10% 4 3
3 1
1 1 1 2 3
0% 1
2015 2016 2017 2018 2019 2020
Total Deals 30 30 34 23 33 41
Median ($M) $464 $949 $235 $1,739 $244 $232
$0-10M $10-25M $25-50M $50-100M $100-250M $250-500M $500M-1B $1B+ LTM = Last Twelve Months
Sources: Capital IQ, 451 Group, Capstone Headwaters
10ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MEDIAN LTM REVENUE MULTIPLES – PRIVATE TARGETS
Median LTM multiple of 3.0x represents a significant step down from 2018 and 2019 levels, and the lowest level in the past five years.
» The 25th-75th percentile spread remains quite broad as quality assets continued to command premium multiples, while there was a higher mix of low multiple deals with many buyers value
hunting for businesses struggling through the pandemic or completing small tuck-in acquisitions. Median revenue multiples will continue to improve as distressed deals become a smaller portion
of the deal mix in 2021.
» Private equity remains hungry, but most PE deals in recent quarters were tuck-ins to portfolio companies as platform acquisitions by PE are below typical levels, though we expect that to change
in 2021.
6.0x
5.0x
5.0x
4.5x
4.0x
Median Revenue Multiple
4.0x 3.8x 3.8x
3.0x
3.0x
2.0x
1.0x
0.0x
2015 2016 2017 2018 2019 2020
25th % 2.0x 2.3x 2.2x 2.9x 2.1x 1.5x
75th % 6.1x 6.2x 6.6x 9.9x 7.9x 7.0x LTM = Last Twelve Months
Sources: Capital IQ, 451 Group, Capstone Headwaters
11ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MEDIAN LTM REVENUE MULTIPLES – PUBLIC TARGETS
Median LTM multiple of 3.1x is a step down from 2018 and 2019, with multiples on deals above $100M also taking a hit down to 4.1x.
Q4’20 median revenue slipped to 2.4x, the second lowest quarterly level in the past three years, only above Q2’20’s 1.7x multiple.
Private equity aggressively acquired public SaaS & cloud companies in 2020, accounting for four of the 10 deals over $1B, at a median revenue multiple of 7x.
9.0x
8.1x
8.0x
7.0x
Median Revenue Multiple
6.0x 5.5x
5.0x 4.4x
4.2x 4.1x
4.0x 3.7x 3.7x 3.8x
3.2x 3.1x
3.0x 2.5x
2.3x
2.0x
1.0x
0.0x
2015 2016 2017 2018 2019 2020
25th % 1.7x 2.5x 1.1x 3.4x 2.9x 1.4x
75th % 4.7x 6.3x 3.9x 8.4x 6.5x 5.5x
All Deals $100M+ Deals LTM = Last Twelve Months
Sources: Capital IQ, 451 Group, Capstone Headwaters
12ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MEDIAN REVENUE MULTIPLES BY SEGMENT – LAST 5 YEARS
Median revenue multiples across SaaS & Cloud segments for deals in the past five years range from 1.7x to 5.9x, with a median of 3.8x.
» Cloud & IT Infrastructure achieved the highest median multiple of 5.9x.
» Finance & Administration median multiple of 5.4x is buoyed by its more recent transition to the cloud.
» Analytics/AI/BI is exploding as new technologies seek to leverage the wealth of enterprise data to drive business optimization, driving strong valuations.
» Segments, such as Marketing & Advertising and CRM & Customer Service, that made the transition to the cloud earlier have seen multiples compress as those segments have experienced
consolidation and commoditization.
7.0x
5.9x
6.0x
5.4x
Median Revenue Multiple
4.8x
5.0x
3.9x 3.9x 3.8x
4.0x 3.7x
3.1x
3.0x 2.7x
2.5x 2.4x
2.0x 1.7x
1.0x
0.0x
Sources: Capital IQ, 451 Group, Capstone Headwaters
13ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
HIGHEST REVENUE MULTIPLE TRANSACTIONS FOR LTM
LTM
Enterprise Premium to
Ann. Date Buyer Target Segment Target Description Revenue
Value 1 Mo Prior
Multiple
Communication &
12/01/20 Provides a business technology platform that brings together people, applications, and data. $27,770M 33.3x 79.3%
Collaboration
Provides open-source Kubernetes management SaaS for DevOps teams and businesses. Software provides
07/08/20 Cloud & IT Infrastructure $600M 24.0x NA
features for managing on-premise or hybrid data clusters, container installation, and block storage.
Provides unmanaged and IoT devices cybersecurity monitoring software enabling users to discover
01/06/20 Cloud & IT Infrastructure $1,100M 18.3x NA
managed, unmanaged, and IoT devices on or off a network, analyze endpoint behavior, and detect threats.
Operates a cloud-based payment processing platform that support multiple transaction types with online
07/28/20 Finance & Administration $288M 18.0x NA
and offline capabilities for businesses and consumers.
Provides SSL certificate and encryption key management SaaS software that enables cybersecurity
12/10/20 Cloud & IT Infrastructure $1,150M 16.4x NA
protection on mobile devices, web applications, virtual machines, and network devices.
Provides cloud security posture management (CSPM) and compliance SaaS that provides features for
04/28/20 Cloud & IT Infrastructure $145M 14.5x NA
unified cloud visibility and monitoring, risk assessment and auditing, and identity and access management.
Develops on-premise and cloud-based enterprise quality management software (EQMS) solutions,
12/22/20 Cloud & IT Infrastructure $1,300M 14.4x NA
consisting of embedded reporting and analysis tools to provide real-time analytics.
10/30/20 Vertical Market Develops internet-based automotive portals for used and new car buyers. $150M 14.4x 56.3%
03/31/20 Cloud & IT Infrastructure Develops enterprise wide-area networks for hybrid clouds to allow for mobile workforces. $420M 14.0x NA
Provides data discovery and protection security software for business to automate information security and
11/10/20 Cloud & IT Infrastructure $135M 13.5x NA
data privacy management processes.
Excludes deals with Target company revenue less than $5M
Sources: Capital IQ, 451 Group, Capstone Headwaters
14ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
NOTABLE M&A TRANSACTIONS FOR Q4’20
LTM
Enterprise Premium to
Ann. Date Buyer Target Segment Target Description Strategic Rationale Revenue
Value 1 Mo Prior
Multiple
Communication & Provides a business technology platform that brings together Salesforce gains access to a communication platform that
12/01/20 $27,770M 33.3x 79.3%
Collaboration people, applications, and data. it can integrate into its existing platform.
Provides software and data analytics software for the real
Thoma Bravo’s acquisition allows for RealPage to access $9,858M
12/21/20 Vertical Market estate industry that assists in the automation of numerous 8.8x 36.0%
Thoma’s operational expertise to further expand its sales.
tasks.
Operates a cloud-based technology skills platform that allows
Pluralsight will be more agile and be able to further $3,944M
12/13/20 Human Resources for individuals and teams to acquire technology skills through 10.5x 27.7%
accelerate its strategic vision as a result of the deal.
skill development exercises.
Certain Assets of
Content Creation & Baidu continues to expands its mobile ecosystem by $3,600M
11/16/20 Provides a live streaming social media platform. NA NA
Management acquiring Joyy’s live streaming business.
With the acquisition, Twilio can collect and centrally store
CRM & Customer Provides customer data collection & analytics, as well as related $3,200M
10/12/20 all customer data to further streamline its internal NA NA
Service data management SaaS.
processes.
ERP, Supply Chain Provides cloud-based platform solutions for businesses across By partnering with Clearlake, Endurance looks to further $3,078M
11/02/20 2.8x 66.1%
& Commerce three segments: Web Presence, Domain, and Email Marketing. drive revenue growth and drive customer value.
Provides financial anti-fraud, anti-money laundering, crime
Nasdaq’s acquisition of Verafin allows for Nasdaq to
11/19/20 Vertical Market detection, reporting and regulatory compliance automation $2,750M NA NA
expand into the financial regulatory software space, .
SaaS.
NEC’s acquisition will allow it to have digital finance
Provides financial management SaaS and BPO services to $2,227M
10/04/20 Vertical Market software and domain knowledge as it enters into the NA NA
banks, wealth managers, and investment firms.
space.
Certain Assets of
Cloud & IT Through the deal, I Squared Capital furthers its global $2,150M
11/23/20 Provides cloud networking solutions to businesses. NA NA
Infrastructure digital infrastructure strategy.
TA Associates’ acquisition of the company allows to
ERP, Supply Chain Provides project and portfolio management SaaS, software, and $1,600M
11/10/20 company to continue to expand its presence in the ERP NA NA
& Commerce related integration services to enterprises.
space now in a time when it is most needed.
Includes largest transactions based on Enterprise Value
Parenthesis indicate a negative number
Sources: Capital IQ, 451 Group, Capstone Headwaters 15ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MOST ACTIVE SAAS & CLOUD BUYERS – LAST 2 YEARS
SaaS/Cloud Transactions
Company Date Company Value Date Company Value Date Company Value
12/23/20 Latéral Innovations Inc. NA 02/27/20 MUSAC Ltd. NA 05/08/19 Uniphy Health Systems LLC NA
12/11/20 Selectapension Limited NA 02/21/20 Informatique Côté Coulombe Inc. NA 04/25/19 Triple E Technologies, LLC NA
12/10/20 SSP Limited NA 02/10/20 Bibliocommons Inc. NA 04/23/19 TORCHx NA
12/07/20 Alcuin SAS NA 02/10/20 Club Caddie, Inc. NA 04/16/19 BEC Legal Systems NA
11/24/20 ICT Concept B.V. NA 02/10/20 Doc-tor.com LLC NA 04/01/19 Mortgage Builder Inc. NA
11/19/20 Assets of Go Solutions Group, Inc. NA 02/10/20 Industrios Software, Inc. NA 03/11/19 Green 4 Solutions Ltd. NA
11/18/20 Xavannah Gmbh & Co. Kg NA 02/06/20 Advanced Systems Consultants Inc. NA 01/31/19 Haystack Informatics, Inc. NA
11/16/20 MedAptus, Inc. NA 01/09/20 Ping Pong AB NA 01/25/19 Distillery Solutions, Inc. NA
11/12/20 Commerce Decisions Ltd $13M 01/07/20 DealerNet NA 01/08/19 Flairbase, Inc. NA
09/02/20 SourceGroup CBO, LLC NA 01/06/20 Lifecycle Software Ltd. NA 12/19/18 Financial Risk Solutions Ltd. NA
09/01/20 Everwin SAS NA 12/10/19 NCG Inc. NA 10/12/18 Greycon Ltd. NA
08/19/20 Symbrio AB NA 11/27/19 Informatique Nouvelle Technologie Inc. NA 10/01/18 Coreworx Inc. NA
08/04/20 Quality Positioning Services B.V. NA 10/15/19 wiko Bausoftware GmbH NA 09/20/18 Helm Operations NA
08/03/20 Quality Positioning Services B.V. NA 10/14/19 Worldwide Chain Stores Inc. NA 09/13/18 Nokia Corporation (IP video business) NA
07/22/20 Unique Business Systems, Inc. NA 10/10/19 Microcash Retail B.V. NA 08/02/18 Aleyant Systems, LLC NA
86 deals 07/14/20 Reflecta Automation BV NA 10/09/19 IndiCater NA 08/01/18 Ez-Runner Systems Ltd NA
07/09/20 DOBRICK + WAGNER SOFTWAREHOUSE NA 10/01/19 mquadr.at software engineering NA 07/10/18 Dispatching Solutions, Inc NA
07/03/20 Pulsen Retail AB NA 08/28/19 Pulse Systems Inc. NA 07/10/18 E-ISG Asset Intelligence Inc. NA
06/10/20 Flash Networks Ltd. NA 08/19/19 Assets of SmartZip Analytics Inc. NA 06/28/18 Pace Software Inc. NA
05/28/20 Leverance Inc. (LandDev assets) NA 08/15/19 Point of Sale Enterprise, LLC. NA 06/05/18 Customer Insight Inc. NA
05/20/20 Topicus B.V. NA 08/01/19 Akuiteo SAS NA 05/31/18 Orion Wine Software, Inc. NA
05/19/20 TUNE, Inc. NA 08/01/19 Salvia Développement SAS NA 03/30/18 XLerant, Inc. NA
05/18/20 CTI Soft, S.L. NA 07/17/19 MDS Global NA 02/01/18 Real Estate Digital LLC NA
05/06/20 Stratec Biomedical Ltd. NA 07/16/19 Windward Software NA 01/15/18 Sicap Schweiz AG NA
04/07/20 KURIER TECNOLOGIA EM INFORMAÇÃO NA 06/24/19 CORVID PayGate Ltd. NA 01/12/18 Blayhall Marine Limited NA
04/02/20 S.A. NA 05/31/19 Aurum NA 01/09/18 Pike13 Inc. NA
03/19/20 Virtual Properties, Inc. $6M 05/22/19 Assets of Emerson Software Solutions, Inc. NA 01/08/18 Infian LLC NA
03/03/20 Collab - SoluCOes InformAticas NA 05/21/19 Abak Software Inc. NA 01/03/18 Forsikringens Datacenter NA
03/02/20 ProShip Inc. $15M 05/20/19 Cake Marketing UK Ltd. $20M
12/02/20 Smashgg, Inc. NA 08/19/19 jClarity Ltd NA 10/08/18 Glint Inc. $400M
07/07/20 Orions Digital Systems, Inc. NA 08/05/19 PromoteIQ $60M 09/13/18 Lobe Artificial Intelligence, Inc. NA
06/22/20 Cyber X, Inc. NA 08/05/19 SpotFront, Inc. NA 06/20/18 Bonsai AI, Inc. NA
06/18/20 ADRM Software, Inc. NA 07/29/19 BlueTalon, Inc. NA 06/04/18 GitHub, Inc. $7,500M
05/19/20 Softomotive Ltd. NA 06/17/19 Good Software LLC NA 05/20/18 Semantic Machines Inc. NA
05/14/20 Metaswitch Networks Ltd. NA 05/28/19 Drawbridge Inc. NA 04/02/18 Forerunner Software LLC NA
27 deals 03/26/20 Affirmed Networks NA 02/04/19 DataSense of BrightBytes Inc. NA 02/13/18 Chalkup Corp. NA
10/21/19 Mover Inc. NA 01/24/19 Citus Data Inc. NA 01/29/18 PlayFab Inc. NA
09/04/19 Movere, Inc NA 11/19/18 FSLogix Inc. NA 01/03/18 Avere Systems, Inc. NA
Sources: Capital IQ, 451 Group, Capstone Headwaters
16ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MOST ACTIVE SAAS & CLOUD BUYERS – LAST 2 YEARS
SaaS/Cloud Transactions
Company Date Company Value Date Company Value Date Company Value
12/21/20 RealPage, Inc. $10,470M 10/14/19 Sophos Plc $3,820M 09/04/18 Apttus Corporation NA
12/10/20 Venafi Inc. $1,150M 10/08/19 International Decision Systems NA 08/13/18 Quorum Business Solutions, Inc. NA
12/03/20 Flexera Software LLC NA 05/28/19 Cority NA 07/10/18 Centrify Corporation NA
10/19/20 AxiomSL Inc. NA 02/25/19 ConnectWise, Inc. NA 06/13/18 CRIF Corporation NA
08/08/20 Majesco $652M 02/12/19 Ellie Mae, Inc. $3,683M 06/12/18 MeridianLink, Inc. NA
08/04/20 Foundation Software Inc. NA 02/07/19 Aucerna NA 05/31/18 LogRhythm Inc. $525M
06/02/20 Exostar LLC NA 11/30/18 PEC Safety Operations LLC $225M 02/09/18 Nintex Group Pty Ltd. NA
03/31/20 Command Alkon Inc. NA 11/05/18 CA Veracode Inc. $950M 01/17/18 Motus LLC NA
25 deals 12/04/19 Instructure, Inc. $2,011M
10/29/20 CoreLogic Inc. (Jenark assets) NA 01/08/20 Lindsey and Company, Inc. NA 01/09/19 Rental History Reports NA
10/13/20 CheckpointID Inc. NA 08/01/19 Rockend Pty Ltd NA 12/05/18 John Stephen Consultancy Limited NA
08/06/20 MacMunnis, Inc. NA 07/31/19 LEVERTON Corporation $10M 12/05/18 Thesaurus Technology NA
08/05/20 Housing Partners Ltd NA 07/31/19 Link Systems, Inc. NA 10/10/18 IPM Software Inc. NA
04/15/20 Castleton Technology plc $103M 07/31/19 ProLease $75M 07/12/18 CML Software Limited NA
21 deals 03/31/20 Orchard Information Systems Ltd. NA 06/20/19 Dynamic Lead Solutions LLC NA 07/04/18 PropSys Solutions NA
01/13/20 InterNETalia Ltd NA 02/07/19 CTM Software Corp. NA 03/08/18 HAPPY Software Inc. NA
12/22/20 Dashbase, Inc. NA 10/01/20 Portshift Software Technologies Ltd NA 01/30/19 Singularity Networks, Inc. NA
12/07/20 IMImobile PLC $782M 08/25/20 BabbleLabs, Inc. NA 11/21/18 Ensoft Ltd. NA
12/07/20 sli.do s. r. o. NA 05/28/20 ThousandEyes, Inc. NA 08/02/18 Duo Security, Inc. $2,350M
12/07/20 Slido s.r.o. NA 08/26/19 Customer Analytics Technologies Inc. NA 06/19/18 July Systems Inc. NA
11/16/20 Banzai Cloud Zrt. (assets) NA 08/12/19 42hertz Software India Private Limited NA 05/01/18 Accompani Inc. $270M
20 deals 11/16/20 All Assets of Banzai Cloud Ltd. NA 08/06/19 Voicea NA 01/24/18 Skyport Systems Inc. NA
10/01/20 Portshift Ltd. $80M 06/06/19 Sentryo SAS NA
12/22/20 Compello AS NA 05/12/20 Zetech S.A. NA 11/19/19 OneStop Reporting AS NA
12/01/20 PDE Practicom B.V. NA 04/08/20 Specter AB NA 02/11/19 Roxit B.V. NA
10/26/20 SIA Jumis Pro NA 02/20/20 OnGuard International Holding BV NA 10/16/18 Triangel Solutions AS NA
09/09/20 Cash Software bv NA 01/16/20 Circle Software Group B.V. NA 10/08/18 KBOSS.hu Kft NA
08/24/20 Codegarden AS NA 12/16/19 Intelligent IT SRL NA 09/11/18 Merit Tarkvara AS NA
20 deals 08/04/20 Yuki Works B.V. NA 12/16/19 S.C. Intelligent IT S.R.L. NA 05/29/18 Raet B.V. NA
05/12/20 Nmbrs B.V. NA 12/03/19 Inyett AB NA
11/30/20 Gainsight Inc. NA 05/29/19 Black Mountain Systems, LLC NA 11/11/18 Apptio Inc. $1,940M
11/17/20 Tribute Technology NA 03/22/19 PlanSource Benefits Administration, Inc. NA 10/02/18 Starhome BV NA
03/04/20 Tripleseat Software LLC NA 02/07/19 in4mo Oy NA 08/15/18 iCIMS Inc. NA
11/18/19 Accelya Holding World S.L. NA 01/14/19 QuickBase Inc. $1,000M 08/07/18 Alegeus Technologies LLC $750M
11/18/19 Sonatype Inc. NA 12/24/18 MINDBODY Inc. $1,750M 06/04/18 Integral Ad Science Inc. $800M
20 deals 09/24/19 Acquia Inc. $1,000M 12/11/18 7Park Data, Inc. NA 04/23/18 Allocate Software plc $450M
09/11/19 Vertice Technologies, LLC $500M 11/29/18 Wrike Inc. $800M
Sources: Capital IQ, 451 Group, Capstone Headwaters
17KEY TAKEAWAYS M&A ACTIVITY & MULTIPLES PUBLIC COMPANY VALUATION & OPERATING METRICS CAPSTONE HEADWATERS SOFTWARE TEAM
ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
ENTERPRISE SAAS & CLOUD 210 PUBLIC COMPANY UNIVERSE – PART 1
Analytics / AI / BI
Cloud &
IT Infrastructure
Cloud Computing,
Storage & Delivery
Communication &
Collaboration
Content Creation &
Management
CRM &
Customer Service
19ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
ENTERPRISE SAAS & CLOUD 210 PUBLIC COMPANY UNIVERSE – PART 2
ERP, Supply Chain &
Commerce
Finance &
Administration
Human Resources
Marketing &
Advertising
Vertical Markets
Software
Conglomerates 20ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
Q4 2020 ENTERPRISE SAAS & CLOUD IPOS – MEDIAN LTM REVENUES MULTIPLES
79.0x
34.7x
10.1x
Median 9.5x
9.5x
5.5x
4.8x
2.6x
0.0x 10.0x 20.0x 30.0x 40.0x 50.0x 60.0x 70.0x 80.0x 90.0x 100.0x
Source: Capital IQ
Note: Data is current as of December 31th, 2020
21ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
Q4 2020 ENTERPRISE SAAS & CLOUD IPOS
IPO Date Company Segment Description IPO Details
C3.ai provides AI-based SaaS applications for enterprises. Its software Offering Amount 651.0 Mkt Cap at 12/31 13,298.9 LTM Revenue 164.7
Cloud / IT solutions include a PaaS application development and runtime platform Offer to Open + 138.1% EV/Rev Mult 79.0x LTM EBITDA (55.5)
12/08/20
Infrastructure that enables customers to design, develop, and deploy enterprise AI Open to Close - 7.5% EV/EBITDA Mult NA Gross Margin 75.1%
NYSE:AI applications, and industry-specific and turnkey AI solutions. Open to 12/31 + 38.8% EBITDA Margin (33.7)%
Offering Amount 594.0 Mkt Cap at 12/31 4,336.1 LTM Revenue 505.9
Datto provides cloud-based software and technology solutions for
Cloud Computing / Offer to Open + 18.5% EV/Rev Mult 9.5x LTM EBITDA 116.1
10/20/20 delivery through the managed service provider (MSP) channel to small
Storage Open to Close - 15.3% EV/EBITDA Mult 36.8x Gross Margin 74.0%
and medium businesses in the United States and internationally.
NYSE:MSP Open to 12/31 - 15.6% EBITDA Margin 22.9%
Offering Amount 740.0 Mkt Cap at 12/31 2,625.8 LTM Revenue 2,811.0
McAfee provides various integrated security, privacy, and trust solutions to
Cloud & IT Offer to Open - 7.0% EV/Rev Mult 2.6x LTM EBITDA 891.0
10/21/20 consumers, small and medium-sized businesses, large enterprises, and
Infrastructure Open to Close + 0.5% EV/EBITDA Mult 7.3x Gross Margin 70.5%
governments in the United States and internationally.
NasdaqGS:MCFE Open to 12/31 - 10.3% EBITDA Margin 31.7%
Offering Amount 175.8 Mkt Cap at 12/31 2,293.6 LTM Revenue 520.8
MediaAlpha develops a insurance customer acquisition technology
Offer to Open + 21.1% EV/Rev Mult 4.8x LTM EBITDA 46.7
10/27/20 Vertical Market platform for various verticals of property and casualty insurance, health
Open to Close + 38.5% EV/EBITDA Mult 53.2x Gross Margin 15.2%
insurance, and life insurance.
NYSE:MAX Open to 12/31 + 69.9% EBITDA Margin 9.0%
Offering Amount 344.9 Mkt Cap at 12/31 1,702.4 LTM Revenue 345.8
Meltwater provides media intelligence and social analytics SaaS solutions.
Marketing & Offer to Open + 4.3% EV/Rev Mult 5.5x LTM EBITDA (6.2)
12/02/20 It offers solutions for brand management, media relations, crisis
Advertising Open to Close - 3.3% EV/EBITDA Mult NA Gross Margin 70.7%
communications, and PR reporting.
SHSE:688365 Open to 12/31 + 14.0% EBITDA Margin (1.8)%
Source: Capital IQ
22ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
Q4 2020 ENTERPRISE SAAS & CLOUD IPOS
IPO Date Company Segment Description IPO Details
Offering Amount 222.5 Mkt Cap at 12/31 1,329.4 LTM Revenue 38.0
PLAID develops and operates KARTE, a cloud-based customer experience
ERP, Supply Chain & Offer to Open + 98.9% EV/Rev Mult 34.7x LTM EBITDA (10.0)
12/17/20 (CX) platform. Its CX platform analyzes the behavior of customers who use
Commerce Open to Close + 15.0% EV/EBITDA Mult NA Gross Margin 71.2%
websites and apps and realizes tailored communication to customers.
TSE:4165 Open to 12/31 + 16.6% EBITDA Margin (26.3)%
PubMatic provides a cloud infrastructure platform that enables real-time Offering Amount 118.0 Mkt Cap at 12/31 1,337.2 LTM Revenue 126.9
Marketing & programmatic advertising transactions. The company’s solutions include Offer to Open + 25.6% EV/Rev Mult 10.1x LTM EBITDA 33.9
12/08/20
Advertising PubMatic Cloud, a customizable PaaS to deliver proprietary solutions, and Open to Close + 17.2% EV/EBITDA Mult 37.8x Gross Margin 69.2%
NasdaqGM:PUBM openwrap, the Prebid-powered header bidding solution. Open to 12/31 + 11.3% EBITDA Margin 26.7%
Source: Capital IQ
23ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MEDIAN STOCK PERFORMANCE – SAAS & CLOUD 205
SaaS & Cloud 205 posted a strong median gain of 19.6% in Q4 as strong vaccine results drove investor confidence, outperforming the broader NASDAQ for the quarter though slightly behind for the
year.
» Finance & Administration and Marketing & Advertising led growth, both up over 25%.
» Cloud & IT Infrastructure and Analytics/AI/BI were up over 20% as transition to cloud and data analytics accelerate across enterprises.
Despite COVID-19 cases rising from the combination of colder weather and COVID-fatigue resulting in relaxed preventative measures, we see a pullback in valuations as unlikely. Unless a new strain
resistant to vaccines breaks out, investors are expecting an economic recovery during 2021.
Stock Performance Stock Performance - 9/30 - 12/31
180%
163.5% Finance & Administration 29.5%
160% 157.4%
Marketing & Advertising 27.0%
Cloud & IT Infrastructure 24.8%
140%
Analytics / AI / Business Intelligence 24.4%
120%
Human Resources 22.0%
100% 91.9% SaaS & Cloud 205 19.6%
86.7%
Communication & Collaboration 18.6%
80%
Vertical Market 17.6%
60% ERP, Supply Chain & Commerce 14.8%
43.0% 43.6%
40% CRM & Customer Service 10.1%
19.6% Content Creation & Management 7.6%
20% 15.4%
Software Conglomerates 4.6%
0% Cloud Computing / Storage 3.4%
Last 5 Years Last 3 Years 2020 9/30 - 12/31
0% 5% 10% 15% 20% 25% 30% 35%
SaaS & Cloud 205 NASDAQ
LTM = Last Twelve Months
Source: Capital IQ 24ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MEDIAN LTM REVENUE MULTIPLES – SAAS & CLOUD 205
The median LTM revenue multiple of 11.1x marks a huge leap, and new record level, as multiples increasingly seem detached from fundamentals, particularly in new IPOs coming to market.
» While some businesses are benefiting from the shift to cloud/virtual, many companies have had little boost or slowdowns, yet are experiencing rising multiples as investors are flocking to the
perceived safety and growth potential of SaaS businesses relative to other investments despite inflated valuations. Though we have seen some pullbacks across tech companies as institutional
investors rebalanced portfolios nearing year end.
LTM Enterprise Value / Revenue LTM Enterprise Value / Revenue
12.0x
11.1x Finance & Administration 22.4 x
ERP, Supply Chain & Commerce 21.9 x
10.0x Analytics / AI / Business Intelligence 15.5 x
Cloud & IT Infrastructure 12.4 x
8.0x Communication & Collaboration 12.1 x
7.0x
Content Creation & Management 12.1 x
6.0x 6.0x
6.0x Marketing & Advertising 11.3 x
5.1x 5.0x
SaaS & Cloud 205 11.1 x
4.0x CRM & Customer Service 10.9 x
Vertical Market 8.4 x
2.0x Human Resources 7.5 x
Cloud Computing / Storage 6.0 x
Software Conglomerates 5.4 x
0.0x
2015 2016 2017 2018 2019 2020 0x 2x 4x 6x 8x 10x 12x 14x 16x 18x 20x 22x 24x
Based on data available as of 12/31/20 Based on data available as of 12/31/20
LTM = Last Twelve Months
Source: Capital IQ 25ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MEDIAN LTM EBITDA MULTIPLES – SAAS & CLOUD 205
The median LTM EBITDA multiple of 39.4x is a huge jump to a record level, rebounding significantly from Q1’s drop to 21.3x and over double 2015’s multiple.
» The big movement is driven by the combination of increasing valuations with a drop in EBITDA across the SaaS & Cloud 205 and buoyed by a surge of recent IPOs with lots of younger
companies with lower profit margins and trading at high multiples as they focus on growth.
» Investors are clearly looking past weaker near-term earnings and rewarding growth, preferring to bet on positioning of future market leaders with the presumption that strong earnings will
follow in the future.
LTM Enterprise Value / EBITDA LTM Enterprise Value / EBITDA
45x Finance & Administration 148.6 x
39.4x Communication & Collaboration
40x 102.0 x
ERP, Supply Chain & Commerce 78.9 x
35x
Content Creation & Management 52.4 x
30x 28.4x CRM & Customer Service 51.7 x
Human Resources 43.0 x
25x
22.0x 22.0x
Cloud & IT Infrastructure 40.2 x
20x 17.2x 17.9x Analytics / AI / Business Intelligence 39.7 x
15x SaaS & Cloud 205 39.4 x
Marketing & Advertising 36.9 x
10x
Vertical Market 31.5 x
5x Cloud Computing / Storage 17.9 x
Software Conglomerates 12.7 x
0x
2015 2016 2017 2018 2019 2020 0x 50x 100x 150x 200x
Based on data available as of 12/31/20 Based on data available as of 12/31/20
Companies with EBITDA MarginENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MEDIAN REVENUE GROWTH – SAAS & CLOUD 205
Median LTM revenue growth slipped to 20.9%, the lowest level since 2015 as COVID-19 has impacted performance for many companies.
Analysts expect weakened growth over the next year, projecting a median growth of just 17.2%. However, this is up from last quarters projection of 13.4% growth signaling increased optimism by
analysts.
» Growth metrics are murky as COVID-19 continues to hamper the economy and timing for broad vaccine rollout remains unclear.
Content Creation & Management, Communication & Collaboration and ERP, Supply Chain & Commerce, and CRM & Customer Services are the only segments projecting growth above 15%.
Revenue Growth vs Prior 12 Mos NTM / LTM Revenue Growth Projection
30%
27.7% Content Creation & Management 22.9%
Communication & Collaboration 21.9%
25%
23.1% 22.8% 22.4% ERP, Supply Chain & Commerce 18.3%
20.9%
CRM & Customer Service 15.5%
20% 19.2%
17.2% Marketing & Advertising 14.3%
Analytics / AI / Business Intelligence 14.0%
15%
Human Resources 13.6%
SaaS & Cloud 200 13.4%
10%
Finance & Administration 12.6%
Cloud Computing / Storage 11.2%
5%
Vertical Market 11.0%
Cloud & IT Infrastructure 10.9%
0%
Software Conglomerates 5.8%
2015 2016 2017 2018 2019 2020 NTM
12/31/20 0% 5% 10% 15% 20% 25%
Based on data available as of 12/31/20 Based on data available as of 9/30/20
LTM = Last Twelve Months
Source: Capital IQ 27ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MEDIAN EBITDA GROWTH – SAAS & CLOUD 205
Median EBITDA growth increased to 23.6% during 2020 on solid revenue growth coupled with more conservative operating expenditures (opex) in the face of COVID-19.
» Growth is projected to decelerate to 15.1% as spending returns along with the economic recovery.
Six segments project EBITDA growth of more than 20%.
Cloud & IT Infrastructure projects just 5.6% growth, while Software Conglomerates project relatively flat EBITDA.
EBITDA Growth vs Prior 12 Mos NTM / LTM EBITDA Growth Projection
35%
Finance & Administration 26.3%
30% 28.8% CRM & Customer Service 23.1%
Human Resources 21.5%
25% 23.6% Analytics / AI / Business Intelligence 20.6%
20.9% 20.4% ERP, Supply Chain & Commerce 20.5%
19.2%
20% Content Creation & Management 20.4%
15.1% Marketing & Advertising 19.5%
15%
Vertical Market 17.6%
9.6% SaaS & Cloud 205 15.1%
10%
Cloud Computing / Storage 12.2%
5% Communication & Collaboration 10.4%
Cloud & IT Infrastructure 5.6%
0% Software Conglomerates (0.2)%
2015 2016 2017 2018 2019 2020 NTM
12/31/20 (5)% 0% 5% 10% 15% 20% 25% 30%
Based on data available as of 12/31/20 Based on data available as of 12/31/20
Companies with EBITDA Margin between -5.0% and 5.0% deemed NA Companies with EBITDA Margin between -5.0% and 5.0% deemed NA
LTM = Last Twelve Months
Source: Capital IQ 28ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MEDIAN GROSS MARGIN TRENDS – SAAS & CLOUD 205
Gross margins improved to 70.5%, marking a new high.
Gross margins vary widely by segment, ranging by nearly 20%, with seven segments achieving more than 70% gross margins and just two below 65%.
» Cloud Computing/Storage represents the weakest gross margins as competitive pricing pressure in the mature segment has led to thinner margins.
» Vertical Markets tend to have lower gross margins, likely from a combination of typically lower scale and increased customer support costs for more specialized solutions.
Gross Margins Gross Margins by Segment
80%
Cloud & IT Infrastructure 77.2%
68.8% 70.1% 70.2% 70.5%
70% 67.7% 68.0% Content Creation & Management 75.1%
Analytics / AI / Business Intelligence 73.5%
60%
Marketing & Advertising 73.4%
50% Human Resources 71.0%
CRM & Customer Service 70.8%
40%
Finance & Administration 70.8%
30% SaaS & Cloud 205 70.5%
ERP, Supply Chain & Commerce 69.6%
20%
Software Conglomerates 69.4%
10% Communication & Collaboration 68.5%
Vertical Market 59.3%
0%
Cloud Computing / Storage 58.8%
2015 2016 2017 2018 2019 2020
0% 25% 50% 75% 100%
Based on data available as of 12/31/20 Based on data available as of 12/31/20
LTM = Last Twelve Months
Source: Capital IQ 29ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
MEDIAN EBITDA MARGIN TRENDS – SAAS & CLOUD 205
Median EBITDA margins of 13.6% continue the rising trend, nearing 2015’s recent high, as companies have managed operating expenditures (opex) during COVID-19.
» Software Conglomerates and Cloud Computing/Storage companies generate strong EBITDA margins from their mature business models and large scale.
» Marketing & Advertising EBITDA margins are strong for larger players while smaller players are typically losing money as they attempt to add scale.
» The Vertical Market segment achieves high EBITDA margins despite the relatively low gross margins, often focusing on developing mature business models earlier than horizontal players
who are more willing to trade near term profitability for increased growth as they chase larger total addressable markets.
EBITDA Margins EBITDA Margins by Segment
16%
Software Conglomerates 41.7%
14.1%
14% 13.6% Marketing & Advertising 28.0%
12.3%
Cloud Computing / Storage 26.1%
12% 11.3% 11.1%
10.6% Vertical Market 23.6%
10% Content Creation & Management 20.0%
Human Resources 14.6%
8%
Cloud & IT Infrastructure 14.4%
6% SaaS & Cloud 205 13.6%
Finance & Administration 11.7%
4%
CRM & Customer Service 11.1%
2% Communication & Collaboration 10.7%
ERP, Supply Chain & Commerce 8.1%
0%
2015 2016 2017 2018 2019 2020 Analytics / AI / Business Intelligence 0.8%
0% 10% 20% 30% 40% 50%
Based on data available as of 12/31/20 Based on data available as of 12/31/20
LTM = Last Twelve Months
Source: Capital IQ 30KEY TAKEAWAYS M&A ACTIVITY & MULTIPLES PUBLIC COMPANY VALUATION & OPERATING METRICS CAPSTONE HEADWATERS SOFTWARE TEAM
ENTERPRISE SAAS AND CLOUD: M&A AND VALUATION UPDATE | Q4 2020
3 SENIOR SOFTWARE COVERAGE TEAM
2
Capstone Headwaters has organized a highly skilled transaction team with deep industry
expertise, close relationships with market leaders, and extensive execution experience
David Michaels John Snead David Francione David DeSimone Teak Murphy
Head of TMT Head of International TMT Head of Fintech Managing Director Director
David brings 30 years of John Snead is responsible for David has over 23 years of David has over 22 years of Teak has over 20 years of
investment banking experience managing Capstone’s Central experience as an investment experience in equity, debt and experience assisting technology
in technology M&A and European investment banking banker and leads the firm’s M&A transactions companies on mergers,
financing activities Fintech practice Previously, David served as a acquisitions, IPOs, and capital
Previously, he founded Previously, he founded Previously, David served as Principal at Bowen Advisors, raises
SagePoint Advisors and was a Grenport Limited, was Senior Vice President at was a Vice President at Prior experience includes
Co-Founder, Partner, and Managing Director in Kroll’s Silverwood Partners, was head Boenning & Scattergood and SagePoint Advisors,
Managing Director at corporate finance group, was a of corporate development for held positions at Needham & Montgomery & Co., Cowen, and
Montgomery & Co. Director in Arthur Andersen’s Elcom International and held Company, RobertsonStephens Enterprise Partners Venture
BS, Engineering, from University Corporate Finance Practice and positions at SS&C Technologies and J.P. Morgan Capital
of Michigan held positions at KPMG and and Advest, Inc. BA, Government, from BS, Finance, from University of
Morgan Grenfell BS, Finance, from Central Harvard University Southern California
MBA, Finance, from UCLA
BS, Accounting, from University Connecticut State University
of Wolverhampton MBA, Finance, from University
MBA, from University of of Connecticut
Birmingham
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