Software Equity Group this week released the Q3 SaaS M&A report highlighting SaaS M&A deal volume breaking past quarters’ records. Transaction volume for the quarter reached 251, eclipsing the previous record set in Q2 by 11.1% and putting 2018 on track to surpass deal count in 2017. Notable software deals marked by large strategic buyers like Facebook, Salesforce and Workday contributed to the Analytics and Business Intelligence category surpassing CRM and Marketing in deal count for the first time in numerous quarters. The median EV/revenue multiple for the quarter was 4.3x.
In e-commerce news this week, online holiday sales are reportedly up 18% from the same time last year. Online spending since November 1 has already reached a seasonal record of $110.6 billion, with sales volumes expected to reach $126 billion for the year. Adobe Analytics, which tracks online transactions for 80 of the top 100 US online retailers, reports that mobile transactions thus far have reached $33.3 billion, an increase of 57% over 2017.
Elsewhere in the world of e-commerce, it was discovered that 61% of reviews of electronic devices as well as a majority of other popular categories on Amazon are reportedly false. Reviews coming either from competitors or from paid reviewers are surpassing legitimate customer reviews in consumer electronics as well as cosmetics, clothing and supplements categories. Separate studies by both the Washington Post and Fakespot found that “a majority of reviews in certain Amazon product categories are fraudulent or paid.” Sellers operating with honest reviews should submit complaints of the volume of unreliable reviews in order to avoid dilution of their own social proof.
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In events news, Founder Thomas Smale’s conference schedule for the new year is already set for a busy start. Thomas’ conference tour will kick off with Accelerate Now Summit on January 4 in San Diego, where he will be speaking about How to Increase the Value of Your SaaS Business. He is then quickly off to Affiliate Summit West on January 6-8 where he is looking forward to meeting up with industry experts and valued clients! If you are planning on attending either or will be in the area, reply to this email to set up a meeting!
Continue reading below for more on the the Software Equity Group’s Q3 M&A report, record online holiday sales and Amazon’s suspect customer reviews.
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In The News…
SEG Q3’18 SaaS M&A Results: Report
Software Equity Group released the Q3’18 software industry M&A report, which revealed that deal volume for SaaS, on-premise licensing and mobile reached 667 transactions in Q3’18.
SaaS acquisitions for the third quarter reached a record volume of 251 and put 2018 squarely on track to surpass 2017 for deal volume. Analytics and Business Intelligence (BI) came in at the top of SaaS product categories at 42 deals, with CRM and Marketing second at 33 deals, Content/Document Management third at 25, HR and Talent Management fourth at 22, ERP fifth at 19 and finally communications and collaboration last at 16. Q3’17 saw several high profile acquistions which raised the median multiple for the quarter, which meant this year’s took a comparative dip and came in at 4.3x EV/revenue, well within the 4.2x and 4.6x average which has been observed over the last six quarters. E-commerce software received the highest EV/Revenue multiple overall in the past three years, due to high profile acquisitions by Salesforce, Adobe and Square.
Strategic buyers who are publicly traded made up the largest share of transactions in the quarter, at 38% of all SaaS acquisitions. Private strategic buyers made up 12% of M&A deals for the quarter.
Amazon Reviews Unreliable in Major Categories
A new study has found that in certain Amazon consumer categories, a majority of the customer reviews are not considered legitimate.
The Washington Post released a new survey of reviews in some of the more popular Amazon product categories and found that they are either fraudulent (e.g. by competitors) or paid. A similar analysis by Fakespot supported the findings. The top categories with the highest ratio of false reviews included consumer electronics, beauty/cosmetics, clothing, and supplements and vitamins. In a previous statement to the Washington Post, Amazon said, “We know that millions of customers make informed buying decisions everyday using Customer Reviews. We take this responsibility very seriously and defend the integrity of reviews by taking aggressive action to protect customers from dishonest parties who are abusing the reviews system…” Given how much customer reviews contribute to customers choosing products on the site, Amazon sellers who only solicit honest reviews are left at a disadvantage against those paying or falsifying extra ones, or leaving fake negative reveiws on competitors’ products.
Amazon sellers might be motivated to report the lack of parity generated by this issue, as it affects ranking and purchase behavior.
Online Holiday Spending Already Reaches Record High
Consumers have already spent a record-breaking $110.6 billion online in the 2018 holiday season, up almost 18% over last year.
Retailers large and small were seen to heavily invest in making purchasing from their site easy, convenient, and often with holiday perks like fast delivery or even free shipping. Holiday shopping had not passed the $100 billion mark by this time last year, when the same period starting November 1 generated $93.9 billion in sales volume, according to Adobe Analytics. Director of Adobe Analytics Insights Taylor Schreiner offered: “Weary holiday shoppers continue to look for alternatives to crowded stores, long lines and empty shelves in the final push to Christmas.” He added, “Retailers who can offer the easiest shopping experience, whether through excellent use of data to anticipate shoppers’ needs or by providing an option for picking up products at brick-and-mortar stores, are the ones people are flocking to this week.” Adobe also reported that mobile transactions have risen 57% from last year up to $33.3 billion. As have so-called “click-and-collect” orders, in which items are ordered online and picked up in stores, similarly risen 47% from a year ago, to make this the biggest Christmas ever for this method of purchasing.
Online holiday sales (in the period Nov. 1 to Dec. 31) are expected to reach $126 billion this year.
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