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SaaS Investors Quantify R&D Impact on Exit Multiples

Updated: Sep 16, 2020

Congruity interviewed institutional investors to find out how they would evaluate specific product development decisions in an M&A scenario

Client's Challenge

A middle market B2B SaaS company was faced with a growing number of clients trying to replicate its solution in-house. A major driver of this trend was the conventional wisdom that integrating, rather than outsourcing, this solution would raise a company’s valuation in an M&A or buyout scenario.

Congruity's Approach

Congruity recruited a group of senior investors drawn from private equity, venture capital, M&A advisory and strategic acquirers to provide in-depth interviews.

We worked with the client to develop an interview template, rather than a script, in order to drive insightful, open-ended conversations about the effects that different investments in product development can have. We also developed a scaled ranking system to quantify investors’ preferences for different types of investments.

Our Results

Our research uncovered a diversity of insights from a range of different investor types. In the end, a clear preference emerged for rented or hybrid leases for SaaS solutions outside a company’s core competency, even if they are essential to operations.

Our client published the results of this study in a white paper, which was circulated to their clients and target audience.

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