Strategic point - The software sector in private equity

How the B2B software sector has established itself as one of the most robust drivers of performance in the private equity industry.  

With global software spending now exceeding $1,000 billion, according to Gartner, the widespread adoption of the SaaS (Software-as-a-Service) model ensures a high degree of financial predictability thanks to recurring subscriptions and a low churn rate.  

The document explains the historical evolution of this market, analyzes valuation multiples, and discusses the operational optimization strategies employed by specialized funds.  

In particular, the document presents:

• The shift in the business model toward SaaS and the ongoing migration of businesses to the cloud;  
• The financial criteria for mature publishers, combining recurring revenue of up to 95%, strong pricing power, and EBITDA margins of 30 to 40%;  
• The application of the "Rule of 40" and the impact of artificial intelligence, which can generate an additional 4 to 6 percentage points of net EBITDA margin;  
• The resilience of core software ("Systems of Record") in the face of risks of technological disruption;  
• The effectiveness of consolidation strategies ("Buy & Build") and the role of dedicated operational teams.

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