The enterprise software market review: FY 2021
Welcome to the FY 2021 edition of our Enterprise Stack Report – Results’ annual market update for the enterprise software sector
Contact: Julie Langley Contributors: Richard Latner, William Garbutt, Vinay Saraiwala, Ryan Wheeler McKinley
Both private and public markets have been especially active during 2021. A sustained demand for AI and data-driven technologies has driven more M&A activity in the Enterprise Software sector than ever before. The year rounded off on a high too with total disclosed deal values in Q4 reaching close to $100Bn – a record high for our coverage. Results alone completed seven enterprise software transactions in the last twelve months
Deal making surged in Q4, significantly up from both the previous quarter and the same period last year. The year witnessed close to 1,700 deals in the enterprise software space as businesses continue to strengthen their digital and multi-cloud capabilities in an attempt to operate in a hybrid environment through 2022 and beyond. Indeed Results advised Redstor, a UK-based data management and protection SaaS platform, on its significant investment from Bregal Milestone with the breath of Redstor's capability across multiple environments and cloud infrastructure a key USP
Rampant cyberattacks over the last few years have increased security concerns for businesses. The increasing need to drive digital protection and to solve complex cyber risks has led to several multi billion-dollar cyber acquisitions in 2021 including McAfee’s $14.1Bn takeprivate at a premium of 23% and Mimecast’s take-private at a 16% premium for $5.6Bn
Digital cash management solutions saw an all-time high in deal volumes due to a significant increase in cross-border payments and global supply chain challenges, with total global disclosed deal values close to $50Bn. Results advised iController, Belgium-based B2B accounts receivable automation solution on its sale to Billtrust for c.$60mn
2021 marked the strongest year for IPO listings with 81% increase in capital raised and 51% rise in the number of IPOs globally. Governments across the globe have taken both fiscal and monetary measures to tackle the effects of the pandemic, bolstering liquidity and giving investors the power to invest in both innovative startups and dominant incumbents
Results’ public SaaS index also shows a strong median valuation at 15.1x revenue and 27.4x EBITDA, compared to the trailing historical median of 7.1x revenue and 25.8x EBITDA
Despite the uncertainty, businesses are expected to spend more on technology upgrades as we enter 2022. The continued GDP growth and conducive capital markets especially in Europe will enable businesses to continue improving supply chain efficiencies, infrastructure and platform integration across regions
With investors and acquirers now confident operating in a virtual environment we expect a continued surge in M&A and private equity activity that will ensure both the supply and demand for transactions remain strong
Notes: Based on share prices as at 31st December 2021; indices weighted by market capitalisation. Sources: Capital IQ and Results analysis
Note: EV / EBIDTA multiple for Analytics for 2021E exceeds our multiple cap of 50x; for Security, 75th percentile values have been overlaid (shaded lighter) to illustrate next-generation vendors. Note: EV = Enterprise Value; financials calendarised to December year end; median values reported. See Selected Publicly Traded Companies (click here) for details of companies included in each category. Source: Capital IQ
Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis
Note: PE shown as acquirer when acquisitions made through portfolio company; parent shown as acquirer when acquisition made through group subsidiary / group. Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis
1) In certain cases EV/Revenue and EV/EBITDA are publicly reported estimates; TTM financials have been used where possible; EV = transaction value scaled to 100% shareholding plus net debt (incl. minority interest). Note: Earnout considerations excluded in the calculation of Enterprise Value. Sources: Press releases, 451 Research and Results analysis
Sources: Pitchbook, Press releases, Crunchbase and Results analysis (1) In certain cases EV/Revenue and EV/EBITDA are publicly reported estimates; TTM financials have been used where possible; EV = transaction value scaled to 100% shareholding plus net debt (incl. minority interests). (2) Based on 451 estimates. Note: Earnout considerations excluded in the calculation of the enterprise value. Sources: press releases, 451 Research and Results International analysis
Sources: Pitchbook, Press releases, Crunchbase and Results analysis
(1) These companies IPO’d within the last 12 months/last quarter, the share price movement represents the change between the stock’s IPO date and 31st December 2021. (2) McAfee has been acquired by an investor group on 8th November 2021. Note: Based on share prices as at 31st December 2021. Sources: Capital IQ and Results analysis
(1) These companies IPO’d within the last 12 months/last quarter, the share price movement represents the change between the stock’s IPO date and 31st December 2021. Note: Based on share prices as at 31st December 2021. Sources: Capital IQ and Results analysis
(1) All SaaS represents the median of all stocks in Large Cap, Mid Cap and Small Cap, with no weighting applied. Notes: EV = Enterprise Value; financials calendarised to December year end; median values reported. See Selected Publicly Traded Companies (click here) for details of companies included in each category. Sources: Capital IQ and analyst reports
(1) Number of companies with applicable multiples in Q4 2021 index; Notes: EV = Enterprise Value; financials calendarised to December year end, which can impact the multiples at the start of each year as the base is shifted forward; weekly tracking of valuation multiples commenced in July 2015, October 2014 – September 2015 tracked on a quarterly basis, therefore a linear progression has been assumed between quarters up to July 2015. Dotted line represents median since data has been tracked. Source: Capital IQ
Note: Calendarised to December year end; $ millions, except share price data; multiples capped at 20x EV / Revenue and 50x EV / EBITDA; net debt includes minority interest. Sources: Capital IQ and broker reports
Note: Calendarised to December year end; $ millions, except share price data; multiples capped at 20x EV / Revenue and 50x EV / EBITDA; net debt includes minority interest. Source: Capital IQ
Note: Calendarised to December year end; $ millions, except share price data; multiples capped at 25x EV / Revenue and 50x EV / EBITDA; net debt includes minority interest. Source: Capital IQ.
Note: Calendarised to December year end; $ millions, except share price data; multiples capped at 100x EV / Revenue and 50x EV / EBITDA; net debt includes minority interest. Note: Market cap classifications categorised by CY2021E revenue or LTM where CY2021E revenue not available: Large Cap: revenues greater than $900m; Mid Cap: revenues between $300m and $900m; Small Cap: revenues less than $300m. Source: Capital IQ
Note: Calendarised to December year end; $ millions, except share price data; multiples capped at 100x EV / Revenue and 50x EV / EBITDA; net debt includes minority interest. Note: Market cap classifications categorised by CY2021E revenue revenue or LTM where CY2021E revenue not available : Large Cap: revenues greater than $900m; Mid Cap: revenues between $300m and $900m; Small Cap: revenues less than $300m. Source: Capital IQ