How attractive are software companies doing $5-$10mn revenues for PE?
Coming from the software world, I wanted to get a view on what people in PE think about buying out companies in the software world that didn't become the next Salesforce.com or ServiceNow. Basically companies that got VC funding, did well in some niche but ended up being sub-scale, without any real possibility of an IPO
To put this in financial terms
1) Revenues = $5mn - $10mn recurring revenues, growing in the 10-15% y/y range
2) Net Retention rates = 105% -110%, Gross retention rates near 90%
3) Gross Margins= 80%+
4) Operating Margin (excluding SBC) = 0%
5) Enterprise focus = 80% of revenues coming from enterprise
I know that there are other software companies with a roll-up strategy (Constellation software, Micro Focus) that focus on stuff like this but look for larger deals that they can realize cost synergies with and milk for cash - but how would a pure financial buyer look at deals like this?
Appreciate any insights.