valuation multiples bell curve

Valuation multiples for software companies  continue to remain steady in comparison to the prior period ranging from 2.6 X to 3.8 X gross revenues.  In translating those m&a multiples to the Gaussian bell curve above we can put that range in blue.   Depending on the type of software company and its gross revenues will determine where that company specifically sits on the bell curve.

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Internet Application Software Business Valuation Multiples

internet software business valuation multiplesFor year to date 2011, within the Internet and application software industry, business valuation multiples remained steady. However, there was nearly a 50% decline in the number of announced transactions.  During the first six months of 2010 there were approximately 17 privately held completed deals within the Internet or application software industry versus 9 deals for the same time period in 2011.  In 2010 there were two transactions over $1 billion dollars;  Stone Point Capital and Hellman & Friedman’s acquisition of Sedgwick Claims Management Services at an estimated 2.0x multiple of gross revenues and Madison Dearborn Partners acquisition of 51% controlling interest of TransUnion for $1.02 billion dollars which equates to a 1.8x multiple of gross revenues.   For 2011 the largest announced deal appears to be KKR’s $425 million dollar deal for Ipreo.

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