|Home||Internet of Things||Aerospace||Apparel||Energy||Defense||Health Care||Logistics||Manufacturing||Retail|
IoT software and analytics are unlocking the value of big data, driving consolidation and competition for leading platforms.
A good example of these less traditional buyers was the recent acquisition of EFT Control Systems, a predictive analytics SaaS company, by Koch Industries. Koch plans to support the development and commercialization of innovative technology firms such as EFT, with an emphasis on industrial end markets.
The breadth of interest from these different buyer pools is fueling competition, which is, in turn, driving increased valuations. In particular, non-traditional software buyers are now frequently paying full software valuations in excess of 5x revenue. Acquiring companies are stepping outside of their traditional valuation metrics to buy high-growth, high-margin businesses for much higher software-type valuations based on revenue multiples rather than the more traditional earnings-based valuation of their core businesses.
Another area in which buyers have demonstrated more flexibility is in pursuing companies that may have previously been too small for them to consider acquiring. Very large buyers are actively paying attention to and buying much smaller companies than they have historically. For example, last year, Duke Energy, one of the largest utilities in the United States, bought a relatively small software company in Phoenix Energy Technologies. These buyers are focusing on the best companies at earlier stages because they want first-mover advantage and the opportunity to realize even faster growth with the technology on their platform sooner rather than later.
Finally, Baird is seeing buyers act pre-emptively as a result of the high competition. These buyers identify a field they want to "own" and are going after targets on a pre-emptive basis rather than waiting for the call regarding a sale process.
The Road Ahead
Chase Sanders, a managing director, and Matt Kessler, a director, are members of Baird Global Investment Banking's Technology & Services Group. Joel Cohen is a co-head of Baird Investment Banking's Global Industrial Group.
Login and post your comment!
Not a member?
Signup for an account now to access all of the features of RFIDJournal.com!
SEND IT YOUR WAY
RFID JOURNAL EVENTS
ASK THE EXPERTS
Simply enter a question for our experts.
|RFID Journal LIVE!||RFID in Health Care||LIVE! LatAm||LIVE! Brasil||LIVE! Europe||RFID Connect||Virtual Events||RFID Journal Awards||Webinars||Presentations|