target audience: TECH SUPPLIER  Publication date: Mar 2023 - Document type: Market Perspective - Doc  Document number: # US50464323

SaaS Company Compressed Valuations Make Attractive Takeover Targets


  • Patrick Reymann Loading
  • Heather Hershey Loading
  • Kevin Permenter Loading


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This IDC Market Perspective focuses on functional areas in which SaaS spending is expected to increase. SaaS company valuations have been depressed over the past two years, leading to a number of acquisitions of SaaS companies in our coverage areas, highlighted by the December 2022 announcement of the acquisition of Coupa by PE firm Thoma Bravo. SaaS companies bring several attributes that are particularly attractive during a time of global uncertainty, highlighted by the expected recession, global inflation, and workforce challenges. SaaS solutions provide an attractive means to mitigate much of the global turmoil, as they provide their clients with attractive ROIs and reduced costs. We expect to continue to see a robust slate of M&A activity among the SaaS names that we follow.

"SaaS companies in our coverage universe have seen compressed valuations as a result of higher interest rates and the general global slowdown, with most market observers predicting a global recessionary environment. This, combined with high inflation, makes these entities more attractive to would-be acquirers," says Patrick Reymann, research director, Enterprise and Procurement Applications at IDC.


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