For example, Salesforce / Mulesoft was 20x revenue and a 35% premium. Whereas IBM / Red hat was 10x revenue but a 60% premium.
How do we think about these two different figures in terms of the valuations and market forces at work?
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Revenue multiples are stupid (just like all multiples), but very common to communicate about a valuation especially for SaaS deals given their high growth comes at the cost of profitability. Acquirer however internally just makes a APV/DCF standalone + synergies. From there they are willing to pay a price that's below the valuation, but enough to get the deal, to create value for their shareholders. Most bankers however are paid on a success fee basis which isn't great for shareholder value creation imo.
Did not follow the specific situations you mention.
All multiples aren't stupid, but I agree that revenue multiples are. You are comparing apples to pears when dividing price (equity) with revenue (equity + debt).
I'm not quite sure what the question is; are you trying to figure out how to value a company based on those multiples or how to calculate premiums?
Multiples are stupid: all companies have different gearing, effective tax rates, capex requirements, etc.
I think you are missing the point. The rationale for using multiples is to get a quick overview of the sector and to have a ballpark estimate for where the target company might trade.
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