Is $1.2 billion a fair price for Recruit Holdings to pay for Glassdoor?

It seems like a pretty good deal for Recruit Holdings, and market correct.

If Glassdoor was at about ~$100m ARR growing 30% a year (suggested by press, but I have no actual first-hand data), then public market comps suggest the deal sounds “market” at maybe 7x-9x 2019 revenues. The mean is 7x (see below) for top public SaaS market leaders.

Add in that Glassdoor has a significant moat in its content and community, and it sounds like a pretty strong deal for Recruit Holdings.

Glassdoor in turn saves the dilution and risk in IPO’ing — and Recruit Holdings is paying all cash. The likely calculation was with dilution and risk over saying No, could Glassdoor be worth $2b+ after an IPO in another 12 months?

(For AppDynamics, which sold at $3.6b to Cisco, the calculation was would they be worth $5b or more in another 18 months post-IPO or sell today for $3.6b. They decided $3.6b today was better than a possible $5b down the road, even with very strong metrics as well).

It sounds like Glassdoor certainly could have been worth $2b+ in 12–18 months, but with a lot of pressure on growth and to keep the growth up. That pressure can be fairly intense.

This is a strong exit in the Best of Times for SaaS. Times could get better, but it’s hard to imagine too much better.

Strong argument to take it.

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Published on May 9, 2018

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