2015 Software Startup IPOs and M&A - What Does the Data Imply for 2016?
This article analyzes 2015 software exit market activity, revealing a significant decline in both IPO and M&A transactions compared to 2014, driven by a valuation divergence between private markets (10-15x forward revenue) and public markets (5.3x forward revenue). The author predicts 2016 will see increased acquisition activity as private valuations normalize toward public multiples, and successful IPOs will require both strong growth and a demonstrated path to profitability.
Metrics in this report
$105million
average
Software IPOs in 2014
10-15x
Private software/SaaS companies in 2015
5.3x
Public software/SaaS companies as of Nov 2015
8.1x
Public software/SaaS companies at beginning of 2014
0.43correlation coefficient
Growth rate to forward multiple correlation, as of Q3 2015
0.3correlation coefficient
Growth rate to forward multiple correlation, two quarters prior
13companies
Software companies going public in 2014
1companies
Software companies going public in 2015 through November
$410million
median
Software M&A in 2015
$193million
median
Software M&A in 2014
17percent
median
SaaS companies from IPO price appreciation
35percent
median
SaaS companies from last round post-money valuation