Thoma Bravo taking ABC Fitness to Market (25x EBITDA expectations)
Anyone else see Thoma seeking 25x EBITDA for ABC Fitness? Is this right? Just seeing where software multiples have been trading in the 1H of 2024, this seems like an outrageous multiple, especially for gym club membership software, but I could be wrong.
What the fuck? Gym software? It's literally a member list and a scanning thing at the door. There is zero chance there is enough complexity in this to justify an entire SaaS vertical
Ngl that bait had me foaming at the mouth for a half second
That said, this is a pretty wild price for these times. I haven't read anything, but it must have good growth and margins to justify it somehow?
The SaaS game isn’t really about uniqueness or IP, or even growth and margins in isolation (though of course those can be positive indicators). If the company isn’t churning many dollars, is expanding new logos and/or cross-selling or taking price in its base consistently and, maybe most underrated, has the sales force equipped to hit the inside or appropriate funnel channels with more scale and repeatability than its competitors, then even dreams of becoming a regional player can lead to wild multiples today because of the mathematical implication for the cash hockey stick in the future.
This isn’t the wildest multiple in the world. Now 25x recurring revenue would be true outlier status.
SMB vertical SaaS is plenty complex. Instead of a single product function like just doing CRM, customers expect a do-it-all solution with integrated General Ledger, CRM, Payments, subscription management, digital marketing, etc. These companies compete by delivering good enough solutions and selling the suite for a measly $500/month. It’s hard for others to deliver all those features at such a low price point, it takes scale. I’m not at TB btw.
You’d be surprised - literally some good consumer business are bought for high 20+ EBITDA…
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