Data Storage Today

CIO Today Network Sites:   Top Tech News  |   CIO Today   |   Mobile Tech Today   |   Data Storage Today
News & Information for Data Storage Professionals
APC Free White Paper
Optimize your network investment &
Enter to win a Samsung Galaxy Note

www.apc.com
Thursday, April 17th 
The future of tape is here.
This ad will display for the next 20 seconds. Please click for more information, or scroll down to pass the ad, or Close Ad.
Trending Topics:   Security Heartbleed Big Data Cloud Computing Windows XP Data Centers OS X Mavericks
Home
Data Centers
Storage Solutions
Storage Networks
Data Storage Issues
Data Security
DST Press Releases
 
Free Newsletters
Top CIO News
 
Mobile Tech Today
 

DST Press Releases

Analysis: SaaS Companies Are Hot Acquisitions

Analysis: SaaS Companies Are Hot Acquisitions
April 10, 2012 7:54AM


Latest SaaS Acquisitions Sold for More Than 7 Times Trailing 12-Month Revenue, Analysis Shows -- IBM, Oracle, SAP buying SaaS companies to gain market position; according to martinwolf M&A Advisors some of these deals will end up as bargains

Neustar, Inc. (NYSE: NSR) is a trusted, neutral provider of real-time information and analysis to the Internet, telecommunications, information services, financial services, retail, media and advertising sectors. Neustar applies its advanced, secure technologies in location, identification, and evaluation to help its customers promote and protect their businesses. More information is available at www.neustar.biz.

San Ramon, California, April 10, 2012 -- A new analysis from martinwolf M&A Advisors comparing mergers and acquisitions in the SaaS sector to those in other IT sectors revealed that on average SaaS companies are selling for 3.19 times more than their counterparts in the other sectors. Other sectors analyzed included IT Services and Business Processing Outsourcing (BPO), IT Supply Chain and traditional Software.

The analysis shows that in the past six months companies in these other sectors sold on average for 2.39 times trailing 12-month revenue while SaaS companies acquired by software industry giants IBM, Oracle and SAP were sold on average for 7.63 times trailing 12-month revenue -- or more than 3.19 times more.

In fact, on the high end, SAP paid more than 12 times trailing 12-month revenue for SuccessFactors, a standout leader in SaaS-based human capital management solutions. SuccessFactors had revenue of $291 million in the 12 months prior to its purchase; SAP paid $3.5 billion.

Analysis of prices paid for key SaaS companies acquired in the past six months ranged from 3.42 to 12.05 times trailing 12-month revenue, while those in other IT sectors ranged from .4 to 3.68 times trailing 12-month revenue.

According to Marty Wolf, president and founder of martinwolf M&A Advisors, "On the outside, some people might think the prices being paid for SaaS companies are too high. Our belief is that IBM, Oracle and SAP can make these deals into bargains. These companies are smart buyers and they know how to integrate companies and leverage their existing infrastructures, including sales, to capitalize on their strengths.

"In the end, these software leaders are paying for the future revenue stream, not the past," said Wolf. "So, if they can buy an asset for 7 times trailing 12-month revenue, and increase the sales 10 times in a few years time, they effectively make the purchase less than 1 times future revenue. Clearly they go into these deals knowing exactly how they will grow value."

Wolf cited a case in point for the 1990s. In 1996, IBM purchased Tivoli Systems for $743 million, which was about 10 times trailing 12-month revenue. At the time, many analysts opined that IBM had grossly overpaid for the asset. But within a year, IBM was able to leverage Tivoli into almost a billion dollars in revenue.

"So in the end, did IBM pay 10 times 12-month trailing revenue, or less than 1 time 12-month future revenue for Tivoli?, said Wolf. (continued...)

1  |  2  |  Next Page >

 

Tell Us What You Think
Comment:

Name:



 DST Press Releases
1. Ponemon: Organizations Under Siege
2. CorvisaCloud Unveils SMS Platform
3. DB Networks Named 'Hot Company'
4. DB Networks Board Welcomes Link
5. X-IO Helps I/O Performance Issues


Have an informed opinion on this story?
Send a Letter to the Editor.
We want to know what you think.
Send us your Feedback.

 Related Topics  Latest News & Special Reports

  Malware Targets Facebook Users
  IBM Adds Disaster Recovery to SoftLayer
  How To Beat the Heartbleed Bug
  Google Proudly Scans Your Gmail
  VMware Rolls Out DR-as-a-Service

 Technology Marketplace

Business Intelligence
Get real-time, cloud-based information services with Neustar.
 
Cloud Computing
BMC's I.T. solutions unleash the power of your business
Next Generation Data Center Is Here! Vblock™ Systems from VCE
 
Contact Centers
HP delivers the future of the contact center with HP Qfiniti 10.
 
Data Storage
Next Generation Data Center Is Here! Vblock™ Systems from VCE
Barium Ferrite (BaFe) is the future of tape.
2.5" Enterprise-class SATA & SAS SSDs for server & storage applications
 
Enterprise Hardware
Barium Ferrite (BaFe) is the future of tape.
2.5" Enterprise-class SATA & SAS SSDs for server & storage applications
 
Enterprise I.T.
BMC's I.T. solutions unleash the power of your business
 
Hardware
Protect your network with APC Smart-UPS battery backup
 
Network Security
Protect your network with APC Smart-UPS battery backup
 

Network Security Spotlight
Google's Street View Software Unravels CAPTCHAs
The latest software Google uses for its Street View cars to read street numbers in images for Google Maps works so well that it also solves CAPTCHAs, those puzzles designed to defeat bots.
 
Canadian Teen Arrested for Heartbleed Hack
One week after the OpenSSL Heartbleed vulnerability was unveiled, Canadian authorities have made the first arrest -- a London, Ontario teenager -- connected to exploiting the security hole.
 
IBM Offers Security, Disaster Recovery as SoftLayer Service
New disaster recovery and security services for SoftLayer clients are being added by IBM. Big Blue said the new capabilities will speed cloud adoption by alleviating concern over business continuity.
 

Enterprise Hardware Spotlight
Vaio Fit 11A Battery Danger Forces Recall by Sony
Using a Sony Vaio Fit 11A laptop? It's time to send it back to Sony. In fact, Sony is encouraging people to stop using the laptop after several reports of its Panasonic battery overheating.
 
Continued Drop in Global PC Shipments Slows
Worldwide shipments of PCs fell during the first three months of the year, but the global slump in PC demand may be easing, with a considerable slowdown from last year's drops.
 
Google Glass Finds a Home in Medical Education, Practice
Google Glass may find its first markets in verticals in which hands-free access to data is a boon. Medicine is among the most prominent of those, as seen in a number of Glass experiments under way.
 

Mobile Technology Spotlight
Google Releases Chrome Remote Desktop App for Android
You're out on a sales call, and use your Android mobile device to grab a file you have back at the office on your desktop. That's a bit easier now with Google's Chrome Remote Desktop app for Android.
 
Amazon 3D Smartphone Pics Leaked
E-commerce giant Amazon is reportedly set to launch a smartphone after years of development. Photos of the phone, which may feature a unique 3D interface, were leaked by tech pub BGR.
 
Zebra Tech Buys Motorola Enterprise for $3.45B
Weeks after Lenovo bought Motorola Mobility’s assets from Google for $2.91 billion, Zebra Technologies is throwing down $3.45 billion for Motorola’s Enterprise business in an all-cash deal.
 

Navigation
Data Storage Today
Home/Top News | Data Centers | Storage Solutions | Storage Networks | Data Storage Issues | Data Security | DST Press Releases
Also visit these Enterprise Technology Sites
Top Tech News | CIO Today | Mobile Tech Today | Data Storage Today

Services:
FreeNewsFeed | Free Newsletters | XML/RSS Feed

About CIO Today Network | How To Contact Us | Article Reprints | Services for PR Pros (In partnership with NewsFactor) | Top Tech Wire | How To Advertise

Privacy Policy | Terms of Service
© Copyright 2000-2014 Data Storage Today. All rights reserved. Article rating technology by Blogowogo. Member of Accuserve Ad Network.