Service: Deal Advisory 

Industry update: SaaS

28 Mar 2022

Following a decade of revolutionary activity and exacerbated growth from the Covid-19 pandemic, the SaaS industry aims to continue to capitalise on businesses and wider society’s desire to utilise SaaS products. The industry is attracting record making M&A and investment activity at some of the economy's highest multiples. 

The latest decade was revolutionary for the SaaS industry as users and companies alike move from on-premises software to cloud-based software, as part of the digital revolution. As a result, the market growth for SaaS is strong, evidenced by a CAGR of 27.9% from 2015 to 2022.

Here Gerald Edelman partners Nick Wallis and Carl Lundberg report on the current SaaS landscape, looking into the structure of the market, recent deal activity and their expectations for the sector in the coming years. 

Key takeaways from this report include: 

  • In 2020, CRM systems made up 25% of the SaaS market, closely followed by enterprise resource planning (ERP) systems at 24%. 
  • The two front runners of successful horizontal products are Shopify and Salesforce, where the market value of these companies has grown over 150% in the 20 months up to September 2021, to £185 billion and £161 billion, respectively. 
  • The SaaS Mergers and Acquisitions (M&A) environment is one of the most deal-active markets. 
  • SaaS Initial Public Offerings (IPOs) have also been extremely popular in the last few years, with SaaS seeing a record number of IPOs in 2021. The largest 27 of these IPOs now represent more than £150 billion in total marketing capitalisation as of January 2022. 
  • The UK marketing is amongst the hottest SaaS marketing globally, with venture capital (VC) investment hitting $15 billion in 2022, after achieving the highest growth rate globally of 17%. 

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