Sage(LSE:SGE) Acquires Intacct

Deal Financials

Total consideration: $850m ($807m cash, $43m stock options)
Intacct LTM revenues in 2016 and 2017 of $67m and $88m respectively

Transaction Overview

• On July 25th, 2017, the Sage Group, the world’s third-largest ERP software provider, announced their acquisition of Intacct Corp for a total consideration of $850 million in cash.
• Sage serves 6.1 million customers worldwide through their Accounting, Payroll and HCM, and Payments software.
• Intacct serves small to mid-sized customers with industry-leading, cloud-based accounting software, competing directly with Intuit’s Quickbooks.
• Sage now boasts the “the first and last cloud financial management solution a customer will ever need from start-up to enterprise” through this bolt-on acquisition.

Markets are Willing to Pay a Premium for Top Performing Assets

• Intacct sports a highly impressive business profile that helped to create a premium valuation.
  • Cloud SaaS revenues and offerings
  • Strong 33% revenue growth rate on a trajectory to reaching $100m
• Buyers and investors tend to view the $100m revenue mark, coupled with a strong growth rate, as a sign of market dominance; at this point valuation multiples inflate significantly.

Sage is Expanding its Suite of SMB Offerings

• Sage’s willingness to purchase Intacct at a 9.7x revenue multiple indicates the intense pressure the company faces to compete with cloud-based rivals for US customers.
• Recent acquisitions in the HR and Accounting segments allow Sage to provide a complete set of enterprise solutions, as opposed to single segment solutions currently provided by most mid-market providers.