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Take Five #051: Results from the 2023 SaaS CEO Survey show higher multiples, and more

1. Upcoming SBA changes you need to know

The final rule was published on 4/10/23 and will become effective on 5/11/23.

2. Results from the 2023 SaaS CEO Survey: higher multiples, larger, faster, stronger

Steve Divitkos of the Mineola Search Partners surveyed 41 search fund SaaS (Software-as-a-Service) CEOs to see if software acquisitions have been shifting over time:

I chose to conduct my own survey for two primary reasons:

(1) To better understand the complexion of the “typical” software acquisition within the search fund ecosystem; and

(2) To see whether or not the the complexion of the “typical” software acquisition has changed over time

Over the past few years, I’ve grown to suspect that the typical SaaS acquisition consummated after 2019 has changed quite materially from the typical SaaS acquisition consummated prior to 2019. More specifically, I’ve observed that many of the post-2019 acquisitions seemed to resemble growth equity transactions more than they did traditional buyout transactions.

Yes, searchers do appear to be paying higher multiples for SaaS businesses of late, however they also appear to be acquiring materially different types of companies, on average (larger, faster growing, a higher preponderance of recurring revenue, etc.).

A summary of our survey results can be found in the table below. Contained within each cell is the most frequently provided answer for each category and each cohort:

See the full survey and results chart on “The 2023 SaaS CEO Survey” from Mineola Search Partners

3. Another survey: The Real-Time Search Fund Lenders Survey

From Enduring Search Partners’ Linkedin post:

Endurance Search Partners recently conducted an anonymous survey among the most active Search Fund lenders to gain insight into their outlook following recent banking industry and market events. Full survey results are attached. Some key takeaways:

- Going forward, some tightening is expected, particularly for smaller Search Fund deals.
- While lenders do not anticipate changes in loan sizes, there is potential for changes in loan spreads, loan terms, amortization schedules, and permitted distributions.
- Search Fund loan portfolios are mostly meeting or exceeding expectations, and lenders are still anticipating loan book growth.

From Enduring Search Partners on LinkedIn

4. Are you in SMB manufacturing? Here’s a list of Twitter accounts of everyone in the space

Reg Zeller compiled “a list of those accounts in the broad category of small/medium biz manufacturing.” Add yourself or browse the full list here:

5. How much could a broken deal cost you?

“It was in the marketing services space. Important to consider the end market the company serves and how regulation is changing.  The green / environmental space in particular is going to get more scrutiny coming up.”

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