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Exit Multiple - Average
Exit Multiple - Median
Exit Multiple - Average (Weighted)
0 1 2 3 4
$1-$50 Million $50 - $150 Million $150 -$500 Million
$500 Million & Up
Transaction Multiples By Deal Size
Exit Multiples Paid (Gr
oss Revenues)
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$10.00
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$30.00
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Software Sector Multiples for Transactions $50 Million & Under 2009-2012
Multiples Paid On Gr
oss Revenues
Transaction Details
Seller Description
Deal
Size
Revenue
Multiple
US based company engaged in the development of on demand safety management solutions $50.10 3.85
US based provider of enterprise video management in unified communications space $50.00 5.56
US based business engaged in data and web security $50.00 2.94
US based solution provider of data backup, restore, disaster recovery, replication and storage
reporting software solutions $44.87 0.73
US based provider of software solutions for management of media and community applications $44.70 3.73
US based company that develops, manufactures and markets life saving external cardiac
defibrillator devices and proprietary softwares $43.89 0.28
US provider of Global Positioning System (GPS) enabled location technology for high-volume
mobile consumer devices and commercial applications. $42.87 0.18
US based marketer and distributer of video games $42.65 0.15
US based company that develops software solutions for service experience management $41.98 0.64
US based network testing tool software provider $40.60 0.92
US based company engaged in manufacturing of wireless network equipment and technologies $40.50 8.10
US based company which provides software and services to communication providers globally $39.27 2.71
US based company engaged in development and licensing of automated translation solutions $38.50 3.16
US based provider of cloud-based, point-of-sale (POS) analytics $38.47 3.64
US based developer of matter lifecycle management (MLM), electronic discovery, and litigation
US based provider of extensible Business Reporting Language (XBRL) filing services, data sets and analysis tools
$36.88 1.33
US based integrated online marketing company $35.70 1.19
US based company develops software products that enable network equipment manufacturers
and service providers to deliver broadband to the digital home $33.67 0.32
US based software provider for automating and optimizing Financial processes. It also offers
Consulting Services $32.90 1.17
US based provider of biometric fingerprint security technology company $32.04 1.78
US based company providing embedded Wi-Fi hardware and software solutions $30.00 1.74
US based provider of Privileged Access Lifecycle Management (PALM) solutions for
heterogeneous IT environment. $30.00 1.50
US based provider of agile airborne Intelligence Surveillance and Reconnaissance solutions and
Micro Terrain Intelligence $30.00 1.35
US based provider of trading technology and FIX connectivity services to the financial industry $28.70 2.88
UK based software & consulting services provider to scientific, technology and engineering
establishments $27.94 1.00
US based provider of infrastructure, applications, content provisioning, and integration services
for deploying and maintaining innovative location-based services $25.00 1.37
US based provider of contract management software and services for the enterprise $24.21 0.70
US based company that develops K-12 business software solutions $23.50 1.96
US based company provides government-to-citizen email and wireless communication solutions $22.13 2.46
US based company engaged in information technology consulting services $22.00 1.29
Canada and US based businesses engaged in development of software for industrial automation,
process control and power distribution $22.00 0.63
US based company engaged in providing Web-based revenue cycle tools for the healthcare
industry $19.50 2.29
US based developer and manufacturer of gaming software $18.90 0.61
US based provider of universal, multi-platform software solutions for fast, secure, and inexpensive
file transfers both inside and outside the enterprise $18.22 1.96
US based supplier of advanced video surveillance solutions $18.08 0.50
US based provider of practice management software, electronic health records and revenue cycle
management services $18.00 0.64
US based provider of information technology products, e-business solutions and professional
services to medium and large commercial customers and government and educational accounts $17.56 0.06
US based provider of repair services and products for the telecom, imaging, defense/aerospace,
medical, semiconductor, industrial automation and IT markets $17.41 0.59
US based provider of software development lifecycle services in support of the Intelligence
Community $16.70 1.39
US based company engaged in the development of sleep diagnostic software systems $16.10 0.54
UK based digital media and corporate communication business which delivers visual asset
management solutions $16.02 5.05
US based holographic security business $15.50 0.79
US based telecom software engineering service provider $15.00 1.25
US based application software developer, and IT services provider $14.70 1.48
US based software and technology company, a provider of online ecommerce software $14.51 0.40
US based technology consulting company engaged in providing collaboration, productivity and
business insight solutions $14.40 1.20
USA based provider of software for clinical analysis $14.00 3.50
US based provider of debt collection software and services for collection agencies, first party
US based embedded security solutions business $13.80 0.89 Israel based company which provides information leakage prevention solutions for enterprise
endpoints $13.27 2.14
US based company that provides program/project management, information assurance, network
engineering, systems engineering, and software engineering services $13.00 1.01
US based company providing federal, state, municipal software solutions $12.71 1.43
US based company develops application infrastructure software for Web and application
deployment, managed file transfer, and SharePoint synchronization $11.80 1.48
US based company provides Linux email, group calendaring, and messaging solutions $11.73 5.31
US based IT company that provides computer harware and software solutions $11.60 0.29
US based provider of IT software and services for the medical, pharmaceuticals, and biotech
sectors $11.50 0.71
US based provider of electronic clinical documentation and charge capture solutions to the health
care industry $10.92 2.73
US based network content control business $10.80 4.91
US based company engaged in development of software applications, and provides hardware and
software based technology solutions $10.45 0.19
US based company providing e-commerce software-as-a-service solutions for small, medium,
and large businesses $9.90 2.39
US based company engaged in the design, development, marketing, and support of
object-oriented database management system products $9.72 0.60
US based software and technology escrow services provider, including intellectual property and
trade secret protection $9.50 4.32
US based company engaged in developing staffing and recruiting software solutions $8.27 1.22
US based provider of records compliance management solutions $8.00 0.60
US based provider of IT software and services for the medical, pharmaceuticals, and biotech
US based company provider of communication security (ComSec) software and services and
ComSec management software solution $7.30 1.46
US based website software management tools company $7.00 2.00
US based company engaged in providing data-management programs, system consulting
services, and development services $6.95 0.87
US based software and services firm engaged in providing custom application development
services for bio-pharmaceutical industry $6.61 1.69
US based provider of embedded test and diagnostic solutions for semiconductors $6.53 0.54
US based provider of advanced solutions for monitoring transport assets and cargo in the
transportation and distribution industries $5.95 1.36
US based company engaged in developing and marketing of imaging software development
toolkits $5.50 1.53
US based company providing Application Management, Cloud Computing, Colocation, Email
Hosting & Collaboration, Managed Hosting, Software as a Service (SaaS) $5.40 1.38
US based company that owns and operates a mobile advertising platform for advertisers and
publishers $5.01 2.51
• Legacy Software Systems • Low Profit Margins • Flat to Low CAGR • One and Done Revenue • Low Intrinsic Value
• No Proprietary Technology Or IP • No Contracts
• Small Market Size • Low Entry Barriers
• SaaS/Cloud Software • Higher Profit Margins • High CAGR
• Per User Per Month Recurring Revenues • High Intrinsic Value
• All Proprietary Technology or IP • Long Term Contracts
• Large Market Size • Publicly Traded • High Entry Barriers
.5x 1.0x 2.5x 3.0x 5x
Transactions $50 Million and Under
External Influence Factors
As you have seen above there are many external variables that go into the valuation of a software business. In addition to these, there are several other factors that can influence multiples such as current economic, tax, interest rate, political and regulatory conditions. An improving environment may raise overall investment confidence levels spurring increases in multiples paid across the entire bell curve range. Likewise decreases in conditions cause multiples along the entire bell curve to decline.
Cool or Hot Industry Sector
Just as there are business cycles, growth cycles and more, there exists industry sector cycles. These waves of sector intensity come and go, remember the ring tone craze? Today its all about mobile and SaaS or cloud technologies. If a seller’s business type falls within these rising tides its often advantageous to consider an exit as multiples rarely remain at high levels indefinitely.
Deal Term Factors
“Sellers may certainly name their price which buyers may certainly pay under their terms” Anonymous
Depending on where a business falls on the bell curve based on its internal circumstances narrows down the range of the potential transaction multiples paid. Perhaps best thought of as a mini bell curve within. This mini bell curve range essentially boils down to the amount of “skin in the game”, or risk the seller maintains. All cash transactions will always show up on the left side of the bell curve. On the right will be much higher multiples but less cash at close with longer term payouts.
Inside the Transaction Details
It is important to recognize that the purchase price noted in a press release does not tell the entire story. Learning the terms of the deal itself allows sellers to get clear insight to the true valuation. Just because the press release says $100 Million doesn’t mean that was all cash. It could very well have been $20 million in cash with the assumption of $30 million in debt and $50 million in stock of the acquiring entity.
Learn the Specifics for Your Business
iMerge Advisors is well versed on the details of many transactions and is happy to confidentially provide specific insight as to the potential market valuation for your technology business.
About iMerge Advisors
Since 2001, M&A investment banking firm, iMerge Advisors has focused exclusively on small to mid-market technology companies within the internet, application software, software as a service (SaaS), and cloud computing verticals that are both growing and profitable with revenues exceeding $2 million on up to $50 million.
For more than a decade iMerge Advisors has provided exemplary mergers & acquisitions and investment banking services to those technology business owners wishing to position and capture the highest values for their businesses. Perhaps you have received an unsolicited approach from a buyer or you have reached any of the critical stages of business growth and question if it’s the right time to sell your business. iMerge Advisors can provide valuable insight allowing you to choose the best strategy going forward. Going beyond the simple review of profit and loss statements, iMerge Advisors looks at a wide range of internal and external variables surrounding your internet, software or technology business. Some of these factors include a macro review of current market conditions, personal goals and objectives as well as the micro review of
valuation expectations, deal structure, tax implications, and your management and employee concerns. Our philosophy is to develop long-term partnerships in which we provide expert guidance in positioning your technology business for an exit that meets your goals.
