Software Banking
What are folks seeing post the Saas sell off? Are deals getting done?
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Recent FT article:
Software buyout deals collapse to lowest level since pandemic after AI rout
I'll give my perspective from a MM Software-focused group. There is a widening gap between premium software assets that still trade for incredible multiples in red hot processes, and the rest of the field. There are a number of businesses my group has pitched for or ran sellside processes for that raised growth capital back in 2020 or 2021 at 10x+ ARR multiples that are now likely looking at a market that will value them closer to ~4x and the top-line growth and EBITDA margin expansion they were projecting has not materialized.
There is more structure being done, private credit is more hesitant around providing financing, and sellers seem to think (or at least pretend to think) that it is 5yrs ago and they are sitting on a hot asset that the market just isn't giving proper value for.
There is also a difference between vertical software and large enterprise software in getting interest from sponsors. I'm seeing sponsors are hesitant to dig in on any asset unless there is a clear moat that provides defense against potential AI startups, usually in the form of regulatory / data privacy laws.
Also agree on the moat point. If you can’t clearly answer why doesn’t AI kill this in 3–5 years, people just move on. no one wants to be the guy who invested in a business that was already evidently dying
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