Q3 Software M&A Update

Breaking down highlights & notable transactions

Hey founders & friends…..

As Q3 wrapped up last month we wanted to share some highlights and notable transactions from the past quarter. The momentum does not seem to be slowing down anytime soon as deal volume and transaction size continues to hit record highs.

Highlights

• SaaS M&A deal volume set an all time record surpassing the previous high by approximately 17%.

• 498 SaaS deals were recorded in Q3 v.s. 425 in Q4 of 2020 (previous record high).

• Aggregate software deal volume also reached record figures with 933 transactions recorded in Q3.

• The quarter also included several mega transactions; Afterpay’s acquisition by Square ($28.6B), MailChimps acquisition by Intuit ($12B), & Medallia’s acquisition by Thoma Bravo ($6.1B),

Most active SaaS PE investors (Q1-Q3)

1. Thoma Bravo

• Thoma Bravo recorded 15 deals over the first three quarters of the year, significantly outpacing all other PE investors in the space.

• Notable transactions for the firm include; Medallia, Proofpoint & Stamps.com.

2. Vista Equity Partners

• Vista Equity recorded 7 deals over the 9 month period.

• Notable transactions include; Gainsight, Ellucian & Drift.

• The company recently announced that they will be raising capital for their next flagship fund and could target upwards of $20 billion for the offering.

3. Alpine Investors

• Alpine investors recorded 6 deals over the first 3 quarters of 2021.

• Notable transactions include; Trucker Tools, Visual Matrix & Aspira.

• The firm also closed their eighth fund with $2.25 billion in LP commitments. The fundraise which launched in May with a target of $1.75 billion was significantly oversubscribed.

In the coming weeks, we will be sharing more insights on software PE valuations, metrics & processes. Bloom Equity Partners is on a mission to pull back the PE curtain for our community. If you are enjoying our bit-sized insights make sure to subscribe.

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Favorites from the Ecosystem

Investors👇…..

Bart Macdonald • BloomEquityPartners.com @BartMacdonald

Truth in this point, and true ‘moats’ are often over-stated, h/e “differentiation” need not just be in the core application … could have 2 very similar products, yet differentiate on market (smb v ent), pricing model, gtm (self serve vs sales gated), integrations, community..

Bucco Capital @buccocapital

SaaS investors will look you in the eye with a straight face and say they only own differentiated products with wide moats and a long runway for greenfield adoption but then they own something on this chart https://t.co/FbAdufEPEJ

Michael Girdley @girdley

Want to raise money from other people more easily? Put a meaningful* amount of your own money in the deal. This can be done from straight cash homie or via sweat equity ["I worked for free on this for a year"].)

Founders👇……

Sahil Bloom @SahilBloom

One cold email can change your life. Here's how to write a great one:

Davis Baer @mynameis_davis

Tip for SaaS founders: When writing helpdesk articles, use an abundance of screenshots with arrows pointing to exactly where users should click

Operators👇…..

Tim Ludwig @tsludwig

🚨Call for Operators🚨 For much of 2021 I've been developing a new idea for entrepreneurship through acquisition (EtA) with a partner. We're not quite ready to pull back the curtains, but we're really close. 1/6

Blake Emal @heyblake

Marketing channels fade. Know what never does? • Writing persuasively • Using behavior loops • Building relationships • Making valuable assets

Anyone looking for a good laugh👇…..

Alex Cohen @anothercohen

In case you’re wondering how being a new parent and the lack of sleep is going, I drank one martini tonight and passed out for a solid 45 minutes

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What We’re Reading and Listening To…

📚 Thinking incrementally about SaaS

📚 The Most Important Metric in Software/SaaS Investing

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News from the Industry: deals, deals, and more deals 💰

Newest Vista Equity credit fund raises $2.3 billion

3i offloads Magnitude in £344m software deal

Thoma Bravo, EQT, Reportedly Weigh Bids for Software Firm Temenos

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End Note 🔚

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