In this Webinar, Tech M&A Expert Ed Bryant, President, and CEO of Sampford Advisors Shares:
-What factors contribute to high valuations for technology companies
-How technology companies can build value to prepare for a successful acquisition
-Insight into today’s tech M&A activity and predictions to how long this robust market will last
6. 6
• Tech-focused mergers and acquisitions advisory
• Founded in Canada, expanding in the U.S.
• Focused on medium-sized technology clients, with emphasis on software
• 40+ years of investment banking experience
‐ In major financial hubs of NewYork, London,Toronto, Hong Kong and Singapore
Sampford Advisors Overview
7. 7
Leading Mid-Market M&A Advisor to Canadian Tech Companies
4
4
4
4
5
5
6
9
10
19
Canadian Boutique 6
American Boutique 2
Big Four Accounting 1
American Boutique 1
Canadian Boutique 5
Canadian Boutique 4
Canadian Boutique 3
Canadian Boutique 2
Canadian Boutique 1
Sampford Advisors
Technology: 2017 – 21 YTD
1
1
1
2
2
2
2
3
3
11
Canadian Boutique 5
American Boutique 4
American Boutique 3
American Boutique 2
Canadian Boutique 4
Canadian Boutique 3
American Boutique 1
Canadian Boutique 2
Canadian Boutique 1
Sampford Advisors
Technology: 2020 – 21 YTD
Source: PitchBook, all transactions below US$75mm or with
undisclosed values from 1/1/2017 – 2/28/2021
• Since 2017 we
have
dominated
Canadian mid-
market tech
M&A
• Gap has
widened since
the pandemic
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Past & Current Clients
Recently Completed (Since July 2020) Pending
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Sales of
technology
companies
16
3 Buyside
technology
mandates
10. 10
Technology M&A Activity is Increasing
Source: PitchBook, all Canada and US Technology M&A
transactions, 01/01/14 – Present
$148.1
$176.7
$344.6
$210.7
$192.1
$296.2
$340.0
$531.4
2,021
2,272
2,202
2,313
2,527
2,368
2,246 2,558
2014 2015 2016 2017 2018 2019 2020 2021 YTD
Dollars invested ($bn) Annualized # of Transactions
• Technology M&A activity has
increased significantly
• Especially Dollars Invested –
driven by larger transactions
• Number of deals also
increasing after 2 year
decline
Technology M&A Transactions
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Software has been a big driver
Software as a % of Technology Transactions
Source: PitchBook, all Canada and US Software / SaaS M&A
transactions, 01/01/11 – Present
59.1% 59.2%
59.6%
63.0%
58.7%
63.9%
67.1%
67.6% 67.7%
66.1%
69.0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD
• Software is increasingly
driving deal activity, up 10
percentage points in 10 years
• Lots of PE money chasing
software deals
• The growth of larger
software strategics is also
helping
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Technology Multiples vary Significantly by Sector
Revenue and EBITDA M&A Multiples by Sub-
Sector
Source: PitchBook, all Canada and US Technology M&A
transactions, 01/01/19 – Present
• IT Services and Hardware still
trades at a significant
discount to Software and
Semis
• Although multiples in those
sectors are rising
• Software EBITDA multiple is
deceptive as not many data
points
1.5x 1.3x
5.4x
4.2x
10.9x
9.4x
27.0x
14.3x
IT Services Technology Hardware & Equipment Semiconductors & Equipment Software & Internet
TEV/Revenue TEV/EBITDA
14. 14
Despite Headlines, Software Multiples have held Steady
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Source: PitchBook, all Canada and US Software / SaaS M&A
transactions, 01/01/14 – Present
2.4x
1.9x
1.3x 1.3x
2.0x 1.9x
1.3x
1.8x
3.6x
3.9x
3.2x
2.6x
3.5x 3.4x 3.4x
4.2x
6.0x
5.7x
6.3x
4.4x
6.2x
6.9x
9.0x
9.4x
2014 2015 2016 2017 2018 2019 2020 2021 YTD
25th Percentile Median 75th Percentile
Revenue and EBITDA M&A Multiples by Sub-
Sector
• Not every software company
trades for >10x
• Median multiple has actually
been pretty steady in the mid
3s
• Spread between 25th and 75th
percentile continues to widen
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• Size has always been
important in driving
value
Size Is Increasingly Important…
2.5x
3.6x
4.9x
$1 - $10 $10 - $50 $50 - $100
Revenue (US$mm)
Proven product market
fit with growth potential
Source: PitchBook; March 2018 through March 2021
48.5%
discount
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But so does Recurring Revenue
SaaS Multiples
Software Multiples (Non-SaaS)
2.0x
2.9x
2.6x
3.3x
2.9x
2017 2018 2019 2020 2021 YTD
4.1x
4.7x
5.0x
4.2x
5.4x
2017 2018 2019 2020 2021 YTD
• Recurring revenue is a key focus of buyers these days
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Examples of Different Deal Values
Deal #1 Deal #2 Deal #3 Deal #4 Deal #5
Revenue $35mm $25mm $5mm $10mm $5mm
YoY Growth 20% 5% 25% 20% (5%)
EBITDA Margin 30% 15% 25% n/a n/a
Recurring Revenue as
a % of Total Revenue 80% 60% 55% 90% 90%
Multiple of Recurring
Revenue 6x 3x 10x 2x 3x
Commentary
Strong EBITDA margins
resulted in elevated
revenue multiple
Strong proprietary
software product but
large mix of services
and resale revenues
Industry tailwinds and
highly strategic
purchaser lifted
multiple
Strong growth but
small addressable
market
Highly strategic fit
resulted in healthy
multiple despite
declining growth