According to Tomasz Tungz, Cisco’s US$3.7B acquisition of AppDynamics at 17.3x trailing 12–month revenues represents the biggest software acquisition multiple paid in the last 10 years.
Tungz further writes…” if this acquisition is any bellwether of the 2017 acquisition environment, it’s going to be a monster year. With 30-40 IPOs on the docket for 2017 – a staggeringly large class – many companies may choose AppD’s path of acquisition over going public, especially if they can command such an impressive premium. The median publicly traded SaaS company trades at 6x as of today. The AppDynamics multiple is nearly triple. At the top of the heap, Blackline and Shopify trade at 12-13x.
Source: Tomasz Tunguz Redpoint Ventures
There was some great news this week with Cisco’s announcement that Toronto was one of four cities selected to become one of the company’s global innovation hubs. The project will involve $100 million in investments over ten years, which is on top of the $4 billion that Cisco has already agreed to spend on research and development facilities in Ontario over the same period.
This particular project will be focused on technologies in the “Internet of Everything” sector, which aims to connect all of our devices and appliances to the internet and each other so they can operate more effectively and efficiently. Having a global leader like Cisco with an active presence in our technology sector will hopefully help spur innovation throughout the local tech community as well as investments and acquisitions of emerging companies based here.
Cisco is already a sponsor of OneEleven, an incubator formed by OMERS Ventures and the Ontario Centres of Excellence to support companies developing technologies in data-driven sectors by providing space and assistance with funding, R&D, and commercialization.
Q1 Capital is proud that Toronto is emerging as a hotbed of innovation in the Big Data and Internet of Everything sectors and we remain committed to doing everything we can to assist emerging technology companies – even those at the earliest stages of development – by providing guidance and support for their financing and M&A activities.