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"A business absolutely devoted to have service will only have one worry about profits. They will be embarrassingly large."

-Henry Ford

SAP to Acquire Qualtrics

martinwolf Transaction Analysis
Financial Information*
  • Enterprise Value                                     $8.0B
  • EV/LTM Revenue                                     21.5x
  • EV/LTM EBITDA                                         N/M
Transaction Facts
  • ERP giant SAP announced yesterday that it was acquiring research and survey SaaS provider Qualtrics for $8 billion.
  • The deal comes just days before Qualtrics’ planned IPO, at an indicated price of $18 – $21 per share (suggesting a market cap of $4.5 billion excluding shares available to the underwriters).
  • Qualtrics expects 2018 revenue to exceed $400 million, and to grow more than 40% next year before synergies.
  • The transaction is expected to be completed in the first half of 2019.
martinwolf Analysis
  • Go Big or Go Home: This is a Big Deal by many measures. It is SAP’s second largest (following its $8.3 billion acquisition of Concur Technologies in 2014), and is the second-largest acquisition of a SaaS company after Oracle’s 2016 acquisition of Netsuite for $9.3 billion.
  • A VC Success Story: Qualtrics’ three venture capital investors are seeing a strong returns on their investments. Accel and Sequoia today own 16% and 9%, each having initially invested $35 million at $350 million valuations–and Insight Venture Partners owns 15% from a subsequent round of financing.
  • Adding to the Arsenal: Qualtrics specializes in what it calls “Experience Management” or “XM”–largely data collection and feedback. As SAP is primarily an ERP company concerned with managing internal systems, this acquisition will make it more competitive with CRM market leaders such as Salesforce.
  • A Year of Big Software Buys: This deal follows IBM’s recent acquisition of Red Hat for $33 billion, as well as major moves from several top players. Microsoft acquired Github for $7.5 billion in June, while Salesforce bought cloud application builder Mulesoft for $6.5 billion in March.
For more information about this transaction, click here to read the press release.
 
*Financial information from Factset.
 

martinwolf  

was not the advisor in this transaction.
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