May 2018
SaaS M&A Activity

Welcome to The Cirrostratus Group May newsletter.

If you think that you hear about a lot of SaaS acquisitions that's because there continues to be a lot of activity this year, up about 5% from last year. Read below for some information on what metrics to focus on when doing due diligence on SaaS companies and the SaaS M&A activity so far this year.

I'm always interested in hearing about your experiences with delivering cloud applications.

Paul Ressler
The Cirrostratus Group  

M A  MERGERS AND ACQUISITIONS  Mergers   Acquisitions Businessman working at office M A  
The Software Equity Group publishes regular reports on the state of SaaS M&A activity. Their Spring 2018 Report highlights several key points about the current market which is on track for another busy year.
  • CRM & Marketing software continues to be the category with the most activity. Interestingly this is also the category with one of the lowest price to revenue multiples.
  • The highest multiples are in the systems and storage management area.
  • The split between horizontal and vertical SaaS businesses is becoming more evenly split
  • The healthcare vertical market has been the most active.
I think this blog post has a lot of good insight into the appropriate due diligence for purchasing a SaaS business.

SaaS Professional Services  
I've had the privilege of working with several SaaS vendor professional services organizations and this article by McKinsey really resonated with me. The successful SaaS businesses either have or are investing in their professional services staff skills, refining their services portfolio and focusing more on how to sell those services. This is helping them become increasingly important partners with customers. This becomes increasingly important as major enterprise applications are migrated to the cloud. If your focused on how to strategically scale your professional services as a SaaS vendor I'd recommend reading this article.

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