Technology Enabled Business Services (TEBS)
Private Equity groups and institutional investors are attracted to technology enabled business services due to the fundamentals of the business model. Several key factors include:
- The need for all small businesses and emerging enterprises to outsource multiple business processes and functions to remain cost competitive and to gain access to capabilities/expertise/resources/tools otherwise unaffordable;
- Macro-business trends driving market dynamics such as the increased need for mobility, risk management and governance requirements;
- Highly fragmented mid-market;
- Economically efficient model driven by recurring revenues (long-term contracts, valuations, high switching costs);
- Operational performance driven by people performance, scalable customer acquisition and cost models
- Increased dissatisfaction with service levels from Fortune 500 vendors presents small business and mid-market opportunities.
- The median software industry exit valuation grew 46% during 2009 but still closed the year below 2008's median TTM revenue exit multiple. (SaaS exit valuations were 1X-5X TTM revenue)
- Seventy-three public software companies issued multiple announcements in 2009 expressing their intent to buy smaller software companies in 2010.
News & Updates
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