Silverpeak Q2 2022 benchmark report: Application Software multiples continue decline in Q2

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

  • Software valuations continued their slide in the second quarter amid concerns over recessionary indicators; accentuated by the large proportion of Growth Companies, who tend to suffer more from market volatility.
  • EV/revenue multiples have continued to decline across the board, averaging -21%.
    US (average -27%) and Europe (-19%) categories have been the most affected by the current economic situation. While the UK only decreased -5%, it continues to have the lowest median multiple.
  • In something of a bright spot, EV/EBITDA multiples in the UK remain higher (+20%) than the 12 month period pre-COVID pandemic and in Europe the multiples are only 3% lower then pre-pandemic.
  • Investors placed more importance on profitability than forecast revenue growth in Q2 2022 as EV/revenue multiples across categories and sectors saw a heavier correction than EV/EBITDA multiples.

 

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Silverpeak advises additive manufacturing and advanced materials leader, CRP, on strategic investment by ITT

Silverpeak, the mid-market technology specialist that represents European growth businesses in M&A and financing transactions, has acted as the exclusive financial advisor to CRP Technology and CRP USA (collectively “CRP”) in the investment by ITT Inc. (NYSE:ITT).

CRP has invested in carbon-reinforced 3D printing since 1996, becoming a pioneer in additive manufacturing in Europe. It has advanced additive manufacturing capabilities through its Windform technology range, the leading, lightweight, fiber-reinforced composite materials for industrial 3D printing. Initially focused on manufacturing of high-performing parts with  applications in motor racing, including Formula One vehicles, CRP now works with clients in the space, aerospace, defense and premium automotive industries to create complex designs that help reduce mass, weight, and costs, while shortening lead times and enhancing endurance.

Silverpeak worked closely with CRP on this transaction, supporting the group in the preparation phase, identification of suitable investors and negotiations of the terms and the structure of the transaction up to the closing.

Franco Cevolini, Chief Executive Officer of CRP Technology, said: “Silverpeak are true technology enthusiasts who brought vitality and professionalism to every stage of our transaction. They understand additive manufacturing and were able to identify the best strategic and financial partners. They displayed tenacity and sophistication when it really mattered, to achieve the very best deal.”

Pietro Strada, Managing Partner at Silverpeak said: “We are delighted to have worked with CRP’s management and shareholders led by Franco Cevolini, and to have achieved this transformative deal with ITT. The Cevolini family is an incredible example of entrepreneurialism and CRP has gained a great position in the global additive manufacturing industry. We are proud to have had the chance to work with them”.

For more information please contact Pietro Strada: ps@silverpeakib.com

Silverpeak Q1 2022 benchmark report: Multiples fall 16% across all categories

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

  • On average, EV/Revenue and EV/EBITDA multiples fell 16% across all categories. Europe and UK were impacted more severely, with an average 22% decrease compared to an average 11% decrease between the US categories.
  • This widespread decline can be attributed to the uncertainty brought about by factors including: the ongoing pandemic, particularly the impact of city-wide lockdowns in China; geopolitical tensions, notably the war between Russia and Ukraine; and significant inflation that was already rising due to supply chain and recruitment issues across developed economies.
  • Unsurprisingly, the market is valuing profitability over growth at this time: EV/Revenue multiples have decreased significantly more than EV/EBITDA multiples, both quarter-on-quarter and year-on-year.
  • The DeepTech and Industrial sectors are the most volatile of all the sectors covered in the report. On the one hand, they showed the largest (positive) year-on-year EV/Revenue growth, but on the other hand, they also experienced the biggest declines in quarter-on-quarter EV/EBITDA index.


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Enterprise Awards celebrate UK tech entrepreneurial talent

Silverpeak was delighted to sponsor the tenth Enterprise Awards which culminated in the Awards dinner last night at the prestigious Goldsmiths’ Hall in the City of London.

Uniquely focused on the founder rather than the businesses themselves, the Enterprise Awards boasted previous winners that have achieved prominence in both private and public markets. The judging panel is looking for examples of vision, growth, innovation, funding, use of capital, use of resources, strategy, execution, ambition, and determination to succeed.

Paddy MccGwire, Silverpeak Managing Partner, sits on the judging panel and continues to be excited each year to see the quality and depth of talent in the industry.

Many congratulations to the winners announced across the nine categories:

Net Zero – Dr Rebecca Harding, Coriolis Technologies

Social Enterprise – Alex Stephany, Beam

Public Sector – Sara Murray, Big Technologies trading as Buddi

Deep Tech – Scott White, Pragmatic Semiconductor

Emerging (revenues between £1m and £3m) – Alex Housley, Seldon

Developing (revenues £3m to £20m) – Alexandra Depledge, Resi

Scale Up (growth 50%+) – Adrian Overall, Cloudstratex

Enterprise (revenues £20m+) – Vishal Marria, Quantexa

Judges Special Award (all-round excellence) – Martina King, Featurespace

and also to John O’Connell, to commemorate ten years as chair and founder of the awards.

In addition to celebrating the best of UK tech talent, the Enterprise Awards has traditionally been organised as a fundraising event, donating profits to the Worshipful Company of Information Technologists’ charities to help its mission to improve lives across the UK and beyond by providing IT skills and training. Last night’s Awards, however, raised £30k for the Ukraine Relief Fund.

Silverpeak advises leading RegTech supplier Worksmart on sale to Davies Group

Silverpeak, the mid-market technology specialists that represent European growth businesses in M&A and financing transactions, advised Worksmart on its sale to Davies, the leading specialist professional services and technology business, serving insurance and highly regulated markets.

Worksmart is the leading supplier of regulatory technology (“RegTech”) for people and process management. The Worksmart product range enables organisations to track and manage regulatory processes across customer complaints & feedback, quality assurance, training & competence, the Senior Managers & Certification Regime (“SM&CR”) in the UK, and the Individual Accountability Regime (“IAR”) in Singapore.

Based in Milton Keynes, UK, Worksmart serves financial services organisations across insurance, banking, investment and consumer credit, helping them to manage the growing complexity of operating within the highly regulated space. Worksmart is the number one provider of RegTech for complaints management and feedback in the Lloyd’s market, and the firm’s proprietary platform ‘Foundation’ remains the “go-to” solution for training & competence needs within the Banking and Wealth Management sectors. The firm’s SaaS solution ‘Accord’ is the only purpose-built SM&CR tech available in the UK.

Silverpeak worked with the management team to uncover every source of value and refine the equity story before identifying the most relevant global buyers that would benefit from this RegTech business with a dominant position in the UK market and further market growth in Singapore and Ireland. The whole process was completed in under 6 months.

Andy Nightingale, Worksmart CEO, said, “Silverpeak worked hard and fast to understand every element of our business, discovering sources of hidden value that proved strategically important to our eventual acquirer. I have no doubt this helped deliver a materially higher sale price.”

Paddy MccGwire, Silverpeak Managing Partner leading the transaction said, ”Having had a very competitive process with strategic buyers from Europe and the US, BC Partners’ portfolio company Davies were ideal due to a great cultural fit whilst providing a lot of leverage to the business in its next chapter of growth.”

For more information please contact:

Paddy MccGwire – pm@silverpeakib.com

Dorian Maillard  – dm@silverpeakib.com

Silverpeak advises marine autonomous robotics technology business Vaarst on $20m financing round

Silverpeak has advised Vaarst on the first $20m of a Series B funding round, led by Legal & General and Equinor Ventures, to accelerate the development of 3D SLAM and autonomous marine robotics technologies.

Silverpeak, the mid-market technology specialists that represent European growth businesses in M&A and financing transactions, acted as the exclusive financial advisor to Vaarst and its sister company Rovco, the UK-based innovative ‘blue-economy’ technology and renewables-focussed services businesses, on a significant growth investment to help drive the next phase of expansion. Legal & General and Equinor co-led the round; other participants include strategic investor for the US intelligence and defence communities In-Q-Tel, and existing shareholders Foresight Group and Martlet Capital.

Vaarst is a leading provider of subsea 3D computer vision and SLAM technologies; supporting offshore wind, wave & tidal, scientific, and maritime security sector. It also uses ground-breaking AI-based technology to revolutionise how energy companies manage subsea infrastructure and improve asset integrity.

Rovco delivers Vaarst technology into the energy transition space mainly focused on its use for subsea surveys in the offshore wind where it is a market leader in the UK, and in oil field decommissioning.

This new investment enables Vaarst & Rovco to continue global expansion plans, targeting the USA and Asia, as well as increasing its presence across Europe. Its existing customers include Iberdrola, SSE and Deepocean.

Silverpeak was engaged due to its expertise in deep tech, software, and knowledge of the international investor market. We advised Rovco & Vaarst on its Series B financing by positioning the company as an autonomous robotics leader in the global blue technology sector and approaching a range of international financial investors as well as strategic counterparties with a strong interest in renewable energy and ESG-focused investments.

Brian Allen, CEO of Rovco/Vaarst said, “The Silverpeak team helped us build the equity story and business plan; held in-depth discussions with global investors; put together the multi-party transaction; and provided invaluable support throughout the process all the way to closing – it was a huge undertaking and I’m sure resulted in a better outcome than managing the process in-house”

David Ford, Partner at Silverpeak leading the process added “Through this process, we confirmed that the Vaarst technology is years ahead of any competition, and with this capital injection from some great investors the business is now very well placed to capitalise on the huge opportunities in the subsea marine robotics space.”

For more information please contact David Ford, Partner: df@silverpeakib.com

The State of the Market for Series B&C Rounds in European Tech Companies | 2021

Silverpeak has updated its research into Series B & C round in European Tech Companies.

Key takeaways:

  • Series B&C investment in European tech companies rockets with total capital invested in 2021 increasing 2.5x to €25.3bn
  • European mega-rounds (€100m+) are becoming very common. Of the 2021 total of 58, this was 42 Series C and 16 Series B rounds
  • Median deal sizes have nearly doubled YoY: C rounds grew 89% to €78.4m and B rounds grew 68% to €29.9m
  • UK companies continue to attract the biggest share of investment into European B&C rounds – 32% by value and 35% by count
  • Food & Delivery Tech and Fintech captured the largest investments in 2021, with 3 Series C and 2 Series B rounds, totalling €3.1bn

Paddy MccGwire, Managing Partner, commented that “2021 has been a watershed year with a step change in the value of Series B&C Technology sector investment. The pace and scale of private investment continues into 2022 despite reduction in Technology stock indices on public markets. ”

B&C Rounds Research Silverpeak

Silverpeak advises new space leader D-Orbit on pre-SPAC financing round

Silverpeak is delighted to announce that it has advised Italian new space leader, D-Orbit, on a €51.5m convertible fundraising, ahead of its recently announced $1.2bn SPAC merger, which at completion will make it a unicorn.

D-Orbit addresses the logistics needs of the space industry and is the first-mover to provide in-space satellite transportation services for commercial and institutional clients via its ION satellite carrier. This orbital transfer vehicle transports satellites in-orbit and releases them individually into distinct orbital slots, significantly reducing both the time from launch to operations and also the launch costs of an entire satellite constellation. The company has already launched four ION missions which have successfully and precisely deployed over 70 customer satellites.

Silverpeak worked closely with the company to raise a financing round, including strategic and financial investors, which was structured as a convertible instrument in light of the pending SPAC transaction.

Luca Rossettini, D-Orbit CEO said “Silverpeak’s in-depth knowledge of the space market together with its outstanding execution capabilities and connections with investors across the sector proved invaluable. The team helped us build our investment case, financial models and presentations which led to interest from global investors, ultimately paving the way to the NASDAQ listing that we have just announced.”

David Ford, partner at Silverpeak added “Luca and the team at D-Orbit have done a first-class job of delivering missions and customer value in this sector, in a capital-efficient way. We are proud to have worked with the global leader in satellite last-mile delivery, and believe the space sector will continue to offer fantastic investment opportunities.”

For more information please contact David Ford: df@silverpeakib.com

Q4 underpins 2021 as the year of European software, outperforming all other categories

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

  • Despite a year-end correction, European software multiples outperformed their US peers, growing at an impressive 47% YoY for Europe and 26.2% for UK Small & Mid.
  • After a volatile Q4, the last quarter ended in only a small overall movement in revenue multiples across all categories, with the exception of UK Small & Mid which decreased 7.9% QoQ.
  • There is no distinctive trend on EBITDA margins in Q4 – a small increase for both Europe and US Horizontal, and decreases for UK Small & Mid, US SaaS and US Vertical.
  • The Enterprise Values Index increased modestly across 3 out of the 5 subsectors, led by Cybersecurity, and then HR tech and Industrial. Fintech charted the strongest decline this quarter, ending the year with a small plus of 3%. Every index declined in December.

Silverpeak Benchmark Report Q4_2021

European and UK companies see strongest valuation growth YoY

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

  • Although revenue multiples of US software companies continue to be higher than the rest, Small & Mid Cap UK and European companies have shown much greater Y.o.Y growth.
  • There has been an overall increase in revenue multiples this quarter with the exception of US Vertical which reached a peak of 10.6x at the start of September and fell substantially by the end of Q3.
  • EBITDA multiples for UK and European software companies continue to rapidly increase and outperform the US companies on Y.o.Y growth. European software multiples increased by 11% Q.o.Q reaching US Vertical levels for the first time since 2016.
  • Even though HR tech continues to have a significantly higher median enterprise index value than the other verticals, the median EV has fallen by 5% in Q3.

Silverpeak Benchmark Report Q3_2021