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Monday, August 21, 2006

SaaS Exit

By Chris Hoffmann, TripleTree, LLC

It’s no longer controversial to assert that software-as-a-service (SaaS) is real, relevant, robust and transformational. The market forces driving SaaS adoption, innovation and consolidation will continue for several quarters.

Missing from much of the recent analysis of the sector, however, are two important realities:

  • Unique domains and verticals are deploying SaaS in very deliberate ways
  • Historical valuation metrics for traditional ISVs have changed and don’t apply to SaaS firms

A year ago, SaaS vendors began to experience a quiet, unexpected shift in their strategic importance to global technology and business services firms. Consider the September 2005 acquisition of Siebel by Oracle followed days later by the announcement of Salesforce.com’s AppExchange. Within weeks, both SAP and Microsoft hastily launched marketing campaigns trumpeting newfound legitimacy as SaaS visionaries and just as quickly spurred their engineering teams toward making it a reality.

After many years working with SaaS clients, my investment bank, Triple Tree, has conducted a thorough analysis of the factors to be considered when leading a SaaS vendor to M&A, IPO or another exit event. Our findings are encapsulated in a new industry report which includes information on where specific vertical domains are leveraging the scalability of SaaS.

1 comment:

Chris said...

Interesting niche you've targeted - very focused. I'd be interested to see if Salesforce.com's Keiden acquisition fits your model. What's a guy got to do to get a copy of your analysis? :-)