Finance Monthly - March 2022

19 Finance Monthly. Bus i ne s s & Economy Will demand for enterprise software continue its current trajectory? As institutional appetite to invest right across the enterprise software sector has skyrocketed, this has had the knock-on effect of increasing valuationmultiples. We can see similar evidence in the public markets, where global listed SaaS businesses have seen their own valuations increase significantly from historic averages of around 10x revenues to mid-to-high teens. It is impossible to say with any certainty what the future will hold around valuations, but I believe it is a symptom of the structural shift of many advanced economies, such as the UK, towards creative and digital sectors that has driven a lot of this activity and that is unlikely to change. Furthermore, digital transformation going right through established sectors and being used to chase efficiencies across the supply chain is also more anecdotal evidence that the demand, and therefore price, of software businesses will continue to increase. “As institutional appetite to invest right across the enterprise software sector has skyrocketed, this has had the knockon effect of increasing valuation multiples.”

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