Another week! This time SAP has agreed to purchase Qualtrics for $8B. Qualtrics is a Utah based supplier of experience management software. Qualtrics sells and writes software to ask questions of clients and employees to help businesses improve brand, employee satisfaction products, and customer experience. This week qualtrics had intended to go public. The business had grown 27 and generated $342M in the last twelve months.



Let’s put the 2018 acquisition surroundings into circumstance. It’s the market for $ 1B + earnings with six in the previous seven years. 2012 witnessed 3 acquisitions. Additionally, $ 60B is exceeded by 2018 acquisition worth for this kind of acquisition.

We’re bound to find out more.
The change into the cloud has happened at a scale that was larger than most legacy software companies estimated. And they are spending to grab. Amongst acquirers Microsoft IBM and SAP have spent the most: $25B+ each. One company was acquired by IBM. Microsoft bought LinkedIn and Github. 5 companies: Ariba Concur, Qualtrics, Successfactors were bought by SAP.

Last November, a year ago, I estimated the latent buying power of the software ecosystem to be about $30B, excluding debt. I was off by a factor of two.
Qualtrics brought 23x trailing revenue multiple. This is the second biggest one of those I’ve monitored. The only one higher is the Microsoft/Github acquisition, that is based on media reports of Github&rsquo. Every one of the data points is substantiated through investor disclosures. It’s largest ever VC backed software purchase. Congratulations to the Qualtrics team!

Costs in 2018 are the highest across this time frame. At EV/TTM revenue multiples over 10 two acquisitions were consummated before 2018. In 2018, six of the seven acquisitions have gone off in 20x + at 10x + and three. It’s astounding.