Finding an SaaS Exit

Eight years of experience guiding Software as a Service (SaaS) firms through value creation exercises and M&A events shows a focus on key markets will help drive success.

By Chris Hoffmann, TripleTree, LLC

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

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

Unique domains and verticals are deploying SaaS in very deliberate ways
Historical valuation metrics for traditional ISVs have changed and donít 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.Ý Consider the September 2005 acquisition of Siebel by Oracle followed days later by the announcement of Salesforce.comís AppExchange.Ý 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.Ý

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.

Softwareís Next Big Thing: Enterprise 2.0

How will SaaS, Web Services, offshoring, open source and Web 2.0 combine to create a new environment for software vendors? Listen in as SandHill.comís M.R. Rangaswami and NetSuiteís director of marketing, Sean Rollings team up for a webinar on Enterprise 2.0: where software vendors turn the hype into real money. The live webinar will take place Wed., Aug. 23 at 2:00 p.m. EDT. Click here to register now.

If Youíre Down, How Can SaaS be Up?

Erik Keller was down last week ñ really ìdown.î As he twiddled his thumbs through an Internet service provider outage, he ponders how enterprises can bet their apps on on-demand or SaaS models. Read Erikís two cents on the realities of on-demand software in this weekís post to his SandHill.com Blog, the Software Critic.

This Weekís Double-Take: A Software IPO?

Software IPOs are clearly an endangered species. However rare, a new filing from Double-Take Software made an appearance this month. The news gives Tom Taulli cause for optimism. Read Tomís analysis of the offering in this weekís post to the SandHill.com Blog on Software Finance. Ý

Publish Your Perspectives!

The SandHill.com Blog wants your opinions. Send your thoughts on the enterprise software industry to editor@sandhill.com and weíll publish them in our blog.

News Update: Flood Gates ìOpenî

LinuxWorld brings a torrent of open source announcements including new moves from Sun, IBM and Ingres; a key Linux developer moves to Google, watershed earnings from Salesforce.com, EMC hints at the ìnext big thingî as BluewolfÝ says it might have developed ìit.î Read these stories and more software news of the week in the SandHill.com weekly news summary.

Habits of the Busiest Acquirers

M&A execs at the most successful U.S. companies understand not only how acquisitions create value but also how to enlist support from the organization. Read more in this article from The McKinsey Quarterly.

Poll: Salesforce.com to Hit $1 Billion?

On reporting a strong quarter where customers hit 501,000 and annualized revenue may top $500 million, CEO Marc Benioff says Salesforce.com is aiming for 1 million subscribers and $1 billion in sales. Can he do it ñ and if so, when?
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