SaaS-valuaatiot: Näin sijoittajat ja ostajat määrittävät arvon | Ville Rissanen | EY Corporate Finance

Kun on aika hakea rahoitusta tai neuvotella yrityksen myynnistä, on valuaatiota liian myöhäistä miettiä. Tunnuslukuihin ei enää ehdi vaikuttaa. Niinpä nyt kannattaa suunnata SaaS-klubille perehtymään miten ja mille tasolle sijoittajat ja ostajat SaaS-yrityksiä nyt arvostavat.

Mitä siis pitäisi tehdä, jotta SaaS-yritys saisi muhkean rahoituksen tai mehukkaan ostotarjouksen? SaaS-valuaatiota ja valuaatiomekanismeja klubille tulee avaamaan Ernst & Youngin Ville Rissanen, ja juontajana tavalliseen tapaan Antti Pietilä. Fokus ja data on miljoonaluokan SaaSeissa, mutta sinnehän kaikki tähtäävät.

Transcript

1. SaaS-valuaatiot: Näin
   sijoittajat ja ostajat
   määrittävät
   arvon
   Ville Rissanen
   Ernst & Young
   SAAS-KLUBI
   To 18.11.2021 klo 15 | Online
   

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2. Ville Rissanen
   Director, EY Corporate Finance
   ville.rissanen@fi.ey.com
   • In investment banking since 2013, previously at
   Maventa (acquired by Visma)
   • MSc in Finance from Aalto University
   • Provided M&A advice to clients such as:
   

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3. Advised Adra Software in
   its sale to Trintech, a
   portfolio company of Vista
   Equity
   2017
   Advised Reeleezee in its
   sale to Exact Holding
   2017
   Advised Experian
   (Marketing Services) in
   its sale to Vector Capital
   2017
   Advised Piriform in its
   sale to Avast Software
   2017 2017
   Advised Health &
   Parenting in its sale to
   Philips
   2017
   Advised Khazanak
   Nasional Berhad in its
   acquisition of Sigfox
   2016
   Advised Solibri in its sale
   to Nemetschek Group
   2016
   Advised Thunderhead in
   its sale to AKKR
   2016
   Advised MIND4iT in its
   sale to Visma
   2016
   Advised Groupama in its
   sale of Cegid Group to
   Silver Lake Partners
   Advised Heeros in its IPO
   on NASDAQ First North
   2016
   Advised Inflexion Private
   Equity Partners in its
   acquisition of UKFast
   2018
   Advised i3D.net in its sale
   to Ubisoft
   2018
   Advised Petrotechnics in
   its sale to Sphera
   2018
   Advised OP5 in its sale to
   ITRS Group, a portfolio
   company of TA
   Associates
   2018
   Advised Voiceworks in its
   merger with Swyz Group,
   a portfolio company of
   Waterland
   2018
   Advised Volvo Group in
   its sale of WirelessCar to
   Volkswagen Group
   2018
   Advised Trustweaver in
   its sale to Sovos, a
   portfolio company of HG
   Capital
   2018
   Advised Quinyx in its
   capital raise from Alfvén &
   Didrikson and Battery
   Ventures
   2019
   2019
   Advised ipnordic in its
   sale to Within Reach
   Group, a portfolio
   company of
   Waterland
   Advised Gemalto in its
   sale of Netsize to Link
   Mobility
   2019
   Advised Consignor in its
   sale to Francisco
   Partners
   2020
   Advised Axcel in its
   acquisition of Superoffice
   2020
   Advised Unikie in its
   fundraising from CapMan
   Growth
   2020
   Advised Viima Solutions in
   its sale to Main Capital
   Partners owned HYPE
   Innovation
   2021
   Advised Accountor
   Group in its sale of
   Eduhouse to Verdane
   2021
   Advised CataCap in its
   sale of LanguageWire to
   Bridgepoint
   2021
   Advised FundConnect in
   its sale to FE fundinfo
   2021
   Advised Cryptomathic in
   its sale to Riverside
   2021
   Advised Monterro in its
   sale of Palette Software
   to Altor Fund V.
   2021
   Advised Inflexion Private
   Equity Partners in its
   acquisition of Infront
   2021
   Advised ICG in its
   acquisition of Iver
   2021
   EY is a prolific adviser in SaaS and software deals
   

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4. Arvostuskertoimet ja
   kehitys
   

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5. +10 years of BULL market
   0%
   100%
   200%
   300%
   400%
   500%
   600%
   N
   ov-11
   M
   ay-12
   N
   ov-12
   M
   ay-13
   N
   ov-13
   M
   ay-14
   N
   ov-14
   M
   ay-15
   N
   ov-15
   M
   ay-16
   N
   ov-16
   M
   ay-17
   N
   ov-17
   M
   ay-18
   N
   ov-18
   M
   ay-19
   N
   ov-19
   M
   ay-20
   N
   ov-20
   M
   ay-21
   N
   ov-21
   NASDAQ Composite Index (^COMP) - Index Value S&P 500 (^SPX) - Index Value
   ^COMP +501%
   ^SPX +279%
   

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6. Annual software M&A volume
   110
   0
   500
   1.000
   1.500
   2.000
   2.500
   3.000
   3.500
   1,305
   2016
   2010
   1,642
   2012
   2011 2015
   2013 2014 2017 2018 2019
   1,250
   2020 2021YTD
   2,488
   1,532
   3,052
   1,238
   1,747
   SaaS
   On-premise
   Includes transactions made in USA and Europe
   

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7. Software M&A median valuation
   3,2x
   5,7x
   8,0x
   5,5x
   0,0x
   2,0x
   4,0x
   6,0x
   8,0x
   2010 2011 2017
   2012 2013 2015
   2014 2020
   2016 2018 2019 YTD/2021
   1.9x
   3.0x
   SaaS
   Software (incl. SaaS)
   EV/Net sales (LTM)
   Includes transactions made in USA and Europe
   

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8. Q&A
   Mitä uskot SaaS-valuaatioille, rahoitustarjonnalle ja
   ostajien kiinnostukselle tapahtuvan 2-3 vuoden
   tähtäimellä?
   

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9. SaaS-firmoja hankitaan
   kovilla valuaatioilla,
   ketkä niitä ostavat?
   

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10. Most active strategic buyers
    

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11. Illustrative funding lifecycle
    Pre-seed
    Seed/An
    gel
    Early
    stage
    Series A,
    B
    Growth
    stage
    Series
    C,…
    Liquidity
    events
    Sale, IPO
    Founders, friends
    & family
    Investor examples:
    

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12. SaaS model continues to attract Private equity
    investors with deep pockets
    36%
    31%
    24%
    10%
    Listed strategic
    PE-backed
    Private equity
    Private strategic
    55%
    0%
    20%
    40%
    60%
    80%
    100%
    Q4/20
    Q3/20
    Q4/19
    Q1/20
    Q3/21
    Q1/21
    Q2/21
    Q2/20
    Private equity/PE-backed
    Q3/21
    

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13. Major PE firms considering Tech as a core focus
    sector
    BACK THEN TODAY
    

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14. Funds increasingly pursuing multi stage strategies
    MID MARKET BUYOUT LARGE CAP BUYOUT
    GROWTH EQUITY
    GROWTH
    

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15. Private Equity has become a driving force in
    European software M&A
    

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16. Valuation multiples: strategic vs. PE buyer
    -5%
    21%
    13%
    7%
    21%
    -4%
    -9%
    14%
    -22%-20%
    -14%
    -22%
    -30%
    -20%
    -10%
    0%
    10%
    20%
    30%
    40%
    50%
    2012
    2010 2011 2016
    2013 2014 2015 2017 2018 2019 2020 2021YTD
    Strategic premium
    Includes transactions made in USA and Europe
    

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17. Q&A
    Onko ostaja/sijoittaja lähestynyt teitä viimeisen 12
    kuukauden aikana?
    

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18. Mitä tunnuslukuja
    ostajat tuijottavat?
    

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19. Achieving full valuation starts with strong KPIs
    OTHER HYGIENE FACTORS
    ► Salesforce efficiency /
    Quota achievement
    ► Reliable cohort data
    ► Sophistication of upsell
    model
    ► Modular technology stack
    ► International success
    ► Sales Channel
    development
    ► SaaS business
    operations
    ► Product roadmaps
    Selected KPIs
    ARR/MRR G+M ACV
    ARR growth Churn LTV/CAC
    % Recurring
    revenue
    NRR Engagement
    Gross
    margin
    CAC TAM
    

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20. What to include in MRR
    • Sum of recurring revenue from a given month’s customers
    • What to include:
    • Subscription fees and recurring extra charges from extra
    seats etc.
    • Upgrades and downgrades
    • Churn
    • Discounts
    

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21. Selected SaaS KPIs…
    KPI ”Leading”
    ARR > €10m
    ARR growth > 50%
    % Recurring revenue > 90%
    Gross margin > 75%
    

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22. Selected SaaS KPIs…
    KPI ”Leading”
    G+M / Rule of 40% > 40%
    EUR Churn (annual) < 3%
    Net Renewal rate ”NRR” > 115%
    Customer Acquisition Cost ”CAC” < 0.7x
    

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23. Selected SaaS KPIs…
    KPI ”Leading”
    Annual contract value ”ACV” > €100k
    LTV / CAC > 5x
    Engagement rate
    Total Addressable Market ”TAM” > €2bn
    

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24. Miten paljon tulee takkiin
    jos kasvu ei ole
    kunnossa?
    

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25. “Rule of 40%”
    Median EV/LTM Revenue vs. Weighted Rule of 40% Selected companies by Weighted Rule of 40%
    <10%
    10%-
    20%
    20%-
    30%
    30%-
    40%
    >40%
    6,6x
    4,8x 5,2x
    9,9x
    20,4x
    <10% >40%
    10%-20% 20%-30% 30%-40%
    Median EV/LTM Revenue
    Note: The Rule of 40% assesses the health of Saas companies by considering revenue growth and profitability. The calculation is a weighted formula that accounts for the higher value
    placed on revenue growth. Weighted Rule of 40% = (0.67*EBITDA margin) + (1.33*Revenue growth). Values as of November 16th 2021.
    

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26. Pitääkö kaiken myynnin
    olla MRR:ää?
    

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27. Only MRR matters?
    Real-life example of 4 ERP providers
    A B C D
    % of MRR 89% 66% 67% 57%
    EV/Sales 3.2x 3.2x 3.6x 4.3x
    

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28. Milloin pääsee
    eläkkeelle?
    

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29. Q&A
    Kuinka pitkäksi aikaa olisit valmis sitoutumaan uuden
    ostajan tai pääomistajan palvelukseen?
    

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30. Strategic vs. Private equity
    • Management role in the future
    • Commitment expectations
    • Form of compensation
    • Employee/shareholder agreement
    

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31. Typical SHA items
    1.Drag-along and tag-along
    2.Sale of shares and negative pledge
    3.Non-competition & non-solicitation
    4.Leaver provisions
    

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32. Drag-along and tag-along
    • Investor has the right to oblige the other shareholders to
    sell to a third party at the same conditions
    as the Investor
    • Other shareholders have the right to sell their shares at
    the same conditions as the Investor
    

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33. Sale of shares and negative pledge
    • Any sale or pledging needs to be approved by Investor
    • Right of first refusal; if a mgmt. shareholder intends to
    sell shares to a third party, the other
    shareholders have the right of first refusal
    

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34. Non-competition & non-solicitation
    • Certain non-compete and non-solicitation periods
    (e.g. 2 or 3 years after leaving the company)
    

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35. Leaver provisions
    • Good leavers; Investor can acquire the shares at fair
    value / moderate discount
    • Bad leavers; Investor can acquire the shares at
    significant discount
    • Vesting mechanisms may be applied
    

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36. Milloin on hyvä aika
    myydä?
    

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37. +10 years of BULL market
    0%
    100%
    200%
    300%
    400%
    500%
    600%
    N
    ov-11
    M
    ay-12
    N
    ov-12
    M
    ay-13
    N
    ov-13
    M
    ay-14
    N
    ov-14
    M
    ay-15
    N
    ov-15
    M
    ay-16
    N
    ov-16
    M
    ay-17
    N
    ov-17
    M
    ay-18
    N
    ov-18
    M
    ay-19
    N
    ov-19
    M
    ay-20
    N
    ov-20
    M
    ay-21
    N
    ov-21
    NASDAQ Composite Index (^COMP) - Index Value S&P 500 (^SPX) - Index Value
    +501%
    +279%
    WHAT’S
    NEXT
    

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38. Q&A
    Miltä kasvuvauhtisi näyttää juuri nyt?
    

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39. Ville Rissanen
    Director, EY Corporate Finance
    ville.rissanen@fi.ey.com
    • In investment banking since 2013, previously at
    Maventa (acquired by Visma)
    • MSc in Finance from Aalto University
    • Provided M&A advice to clients such as:
    

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40. Q&A
    DISCLAIMER
    This presentation material (“Presentation”) has been prepared by EY Corporate Finance (“EY”). The information and opinions
    contained in this document are derived from public and private sources which, without further investigation, cannot be
    warranted as to their accuracy, completeness or correctness. This information is supplied on the condition that any partner or
    employee of EY shall not be liable for any error or inaccuracy contained herein, whether negligently caused or otherwise, or for
    loss or damage suffered by any person due to such error, omission or inaccuracy as a result of such supply. In particular any
    figures and opinions contained in this document are for discussion purposes only.
    The information contained herein does not constitute an offer to sell or a solicitation of an offer or a recommendation to
    purchase securities under the securities laws of any jurisdiction, including the United States Securities Act of 1933, as amended,
    or any US state securities laws, or a solicitation to enter into any other transaction.
    

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41. Q&A
    

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42. Kiitos!
    Vastaathan palautekyselyyn
    

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