Contact: Scott Denne
A bet on Renaissance Learning’s transition to SaaS has paid off for Permira Funds. The private equity firm bought the educational software company for $455m in late 2011. Today, Hellman & Friedman announced that it is buying the business for $1.1bn.
When the sale to Permira closed, Renaissance Learning was in the early stages of transitioning its business to a SaaS model, moving away from the hardware and installed software sales that dominated its early years (the company was founded in 1986). In its last quarter before that, its SaaS sales rose 22% from a year earlier to $14.8m, accounting for 41% of its total revenue – and growing.
The Permira buyout was done at 3.3x trailing revenue ($133.5m at the time), well below the 5.1x median multiple that SaaS vendors fetched over the past 12 months, according to The 451 M&A KnowledgeBase. While it is unclear how Renaissance Learning’s SaaS revenue has grown since its sale to Permira, it is clear that its SaaS business helped it get a higher valuation this time around.
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