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As of 2022, the global SaaS market was valued at $186.6 billion. By 2028, it’s expected that this number will reach $720.44 billion, with a CAGR of 25.25% during the forecast period of 2022 – 2028.
How to value a SaaS business is perhaps one of the hottest and most ambiguous debates among small business entrepreneurs, investors and advisors at the moment. If you want an accurate valuation, you can receive a free one via our page here. If you want to understand how to value a technology business, the first question is whether to look at a multiple of SDE, EBITDA or Revenue.
Stories of wildly high revenue multiples for unicorn SaaS businesses can seem at odds with the modest earnings multiples for smaller SaaS businesses, which serves to confuse the information in the marketplace. The reality is that different SaaS companies can represent entirely different investment propositions.
The main differences come down to the size and growth of the businesses in question, as we explore in depth below.
From “How to Value a SaaS in 2022” by FE International
Our personal favorite: “Search democratizes access to people from various backgrounds to be able to have a path to ownership of a small to medium sized business.”
200 senior business executives and dealmakers offered their expectations on the market in the next 12 months for Dykema's 18th annual M&A Outlook Survey:
Nearly two-thirds of business decision makers anticipate the U.S. M&A market will strengthen over the coming year. And while seven in 10 M&A dealmakers believe a recession will occur in that time, over half of them expect a recession will positively impact deal volume.
"One explanation for this bullish outlook: Even with the steady march of rate hikes and price increases, dealmakers who have stockpiled dry powder will be able to capitalize on lowered valuations and engage in deals,” said Thomas Vaughn, co-leader of Dykema’s Mergers & Acquisitions practice. "Distressed and turnaround deals also thrive during economic downturns – another factor contributing to this optimism."
“The fact that 80 percent of respondents anticipate an increase in private M&A deal activity speaks to how resilient the dealmaking landscape is,” said Frank Ballantine, Dykema M&A Survey Leader. “For now, economic conditions are unlikely to spur a further dramatic slowdown in deals, but instead shift activity toward more promising sectors.”
From “Dealmakers Cautiously Optimistic About U.S. M&A Activity in 2023” by Dykema
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