2022 SaaS M&A Review

News, insights and updates from the team at Bloom Equity Partners

Happy Friday Folks,

Welcome back to another edition of The Weekly Bloom - a must-read for investors, operators, and founders navigating the world of software private equity. We hope that you enjoyed last week’s newsletter on SVB Loans Uncertainty.

This week, we’ll be looking at:

• 2022 SaaS M&A Breakdown

• Bloom Equity Partners Career Opportunities

• What We’re Reading and Listening To

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2022 SaaS M&A Breakdown

Last week, the team at Software Equity Group released its Annual SaaS Report. The annual report provides insights and trends into both SaaS public market & M&A. Our team took a deep dive into the report and wanted to share some key data points and findings:

1. M&A deal volume in 2022 was up 21% versus 2021

   • While there was a decrease in the number of deals with each quarter, the total annual volume remained robust and set a new record of 2,157 deals, representing a notable increase of 21% from the previous year.

   • The year ended on a strong note with 469 deals in Q4.

Source: SEG

2. The median EV/Revenue multiple sat significantly higher than pre-pandemic levels

   • Q4 exhibited a strong M&A environment with a median multiple of 5.6x. PE buyers played a significant role in maintaining these robust multiples.

Source: SEG

3. Vertical software made up 42% of M&A activity

   • Compared to the common 60/40 split of horizontal <> vertical deals, the M&A focus remained fairly on par in 2022.

Source: SEG

There were many more interesting data points highlighted in the report, so make sure to check it out: Here.

Overall, the software M&A market is not expected to reach the same levels it did during the pandemic deal frenzy. However, there are still opportunities for buyers looking to take advantage of the current market conditions.

At Bloom Equity Partners We are actively seeking investment opportunities that fall within the criteria mentioned below. We welcome the opportunity to discuss potential investments with founders, operating executives and intermediaries.

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Partner with Bloom Equity Partners

We're big fans of mission-critical enterprise software, technology and business services with a competitive moat and a loyal, diversified, and growing customer base. Whether the business is bootstrapped, VC-backed, or a division of a larger organization, Bloom is completely agnostic to the structure.

Our Investment Criteria

• Industry: Enterprise Software, Technology and Tech-Enabled Business Services

• Geography: North America, Europe, Australia and New Zealand

• Revenue: $5M - $40M (>70% recurring)

• Growth: 5%+ annual revenue growth

• Retention: >80% gross annual customer retention

• Profitability: Positive EBITDA or near breakeven within six months

• Investment Type: Operational control required

If you or someone you know is considering selling or taking investment in their business, we would love to learn more!   We just launched our referral partner program, which compensates referrers for introductions that lead to affirmative outcomes.

Reply to this thread and we can get acquainted!

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What We’re Reading and Listening To…

Solving for Private Equity’s Inflation Conundrum

The Focus on People Costs

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Bloom Equity Partners Career Opportunity

Investing from our debut Fund, we’re actively hiring for our investment team, linked below. Reach out to careers@bloomequitypartners.com or on the specific job ad if you'd like to learn more / recommend someone for a role.

• Vice President

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Favorites from the Ecosystem

Investors….

Orlando Bravo @OrlandoBravoTB

@jasonlk If cust srvc is part of your core competency (as it probably should be), a leader should never slash support. Instead, focus on improving the product in a way that eliminates the reason for the support calls in the first place. I agree it is about understanding the customer.

Operators….

The Secret CFO @SecretCFO

The key to having good investor relations? Spend less time worrying about investor relations, and more time driving cashflows in the business. Telling a good story is easier if the story is already good.

CJ Gustafson @cjgustafson222

With the IPO market on vacation, tech headlines have been dominated by M&A news Share deals and asset deals are going down at a rapid pace... But what's the diff between the two most popular structures? I asked myself the same question, and went DEEP down a rabbit hole...

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Deals From Across The Industry

Cvent to go private again in $4.6B Blackstone deal

SurveyMonkey owner Momentive Global to be taken private in $1.5 bln deal

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Finders Program

Bloom Equity referral partners are our boots-on-the-ground referral network helping us scope out mission-critical enterprise software, technology and tech-enabled business services businesses with $5M+ in revenue who are looking for their next phase of growth.

If you know of or run a business that may be a good fit for us, submit your lead and we’ll get back to you shortly:

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End Note

As always, if you're enjoying The Weekly Bloom, we'd love it if you shared it with a colleague or two. We try to make it one of the best emails you get each week, and I hope you're enjoying it.

And should you come across anything interesting this week, send it our way! We love finding new things to read through members of this newsletter.