I think we may be at the phase of the investment cycle where the market will be much more discerning instead of just throwing high multiples at every flashy SaaS/software growth company.
Capitalism, I would posit that the market has been greatly discerning. Look at Talend, Nutanix, Twou, etc etc. It’s grow or die, and if you don’t keep showing results, your multiple gets cut down.
historically, software company multiples have trended towards no more than 10 or so over time.
Historically, and today, it depends a lot on if they’re growing at 20% or 60%. CRM is not just software but SaaS software, and it’s PS is actually below 10 at present.
Where’s this “bubble,” man?
Bear
PS - Signs of trouble to look for are (1) longer sales cycles, (2) increased marketing spend, and (3) changes in pricing structure. Those are tell-tale signs that the competition is heating up in the space, and a very good warning sign.
I agree with you there! But direly important: these are company-specific.