All signs point to a high volume of M&A activity in 2023. Capital earmarked for M&A remains near record highs and investors are increasingly active in their pursuit of value-oriented acquisitions.
SaaS businesses with high net dollar retention (or low or net negative churn) and strong free cash flows (FCF) have outperformed and are increasingly being targeted by suitors seeking both strategic value and bottom-line growth.
At FE, we’re seeing investors are likely to keep shifting their attention to the private markets for a SaaS acquisition, even if there is a resurgence in the value of public and VC- backed comps. Private equity firms are sitting on close to record sums of capital, estimated to be $348 billion. They have become even more efficient in deploying vast amounts across 2021, and 2022 and it is expected to follow the trend in 2023.
In our newly published 2023 Market Report: SaaS, FE outlines the current state of the market and where we’re seeing exponential growth.
Key FE Data:
- 51% increase in value of closed deals between 2021 and 2022
- SaaS Buyers in our network represent more than $16 billion in capital to be deployed in lower mid-market SaaS acquisitions
- Overall, traditional SaaS and Software businesses accounted for c.50% of our SaaS deal flow
- Private SaaS ARR Multiples have increased by a c.2.4% CQGR
- One thing is clear: the pandemic has accelerated tech adoption and will likely drive more acquisitions in 2023 and beyond. Companies are consolidating, growing scale and aggressively pursuing business transformation through M&A.
For an in-depth look at the current M&A landscape for SaaS, including the latest market projections and unique FE data, download our 2023 SaaS Market Report.
About FE International
Founded in 2010, FE is known for its extensive network of pre-qualified international investors. Its team includes experts in exit planning, valuation, accounting, legal and more.
FE serves clients worldwide with headquarters in New York and regional offices in Miami, San Francisco and London. It was named one of The Americas’ Fastest Growing Companies in 2022, 2021 and 2020 by The Financial Times and is also a four-time Inc. 5000 company.
