Another computer software acquisition, another week! This time SAP has agreed to purchase Qualtrics for $8B. Qualtrics is a Utah. Qualtrics sells and writes software to ask questions of clients and employees to help companies improve brand, worker satisfaction products, and customer experience. This week qualtrics had intended to go public. The company had increased 27% yearly and generated $342M in the previous twelve months.
The shift to the cloud has happened at a scale that was greater than most legacy applications companies estimated. And they are spending to catch up. Acquirers Microsoft IBM and SAP have invested the most: $25B+ each. A single company was acquired by IBM. Microsoft purchased Github and LinkedIn. SAP bought 5 companies: Ariba, Callidus, Concur Successfactors.
Let’s put the 2018 acquisition surroundings. It’s the best M&A marketplace in the previous seven years. 2012 witnessed 3 acquisitions. In addition, 2018 acquisition worth for this kind of acquisition exceed $60B, more than twice 2016, which comprised the Microsoft/LinkedIn merger.
Last November, a year back, I estimated the latent buying power of the program ecosystem to be about $30B, excluding debt.
Qualtrics brought 23x trailing twelve months earnings multiple. This is actually the second largest. The only one higher is that the Microsoft/Github acquisition, that can be based on media reports of rsquo & Github . Each of the data points is substantiated through investor disclosures. It’s the largest ever VC backed program purchase.
Costs in 2018 are the highest across this time frame. At EV/TTM earnings multiples over 10 , only two acquisitions were consummated before 2018. Six of the seven acquisitions have gone at 20x + at 10x + and three.