News article (Nasdaq to buy Verafin for US$2.75-billion in biggest Canadian software takeover since 2007)
The line that caught my attention was:
The purchase price, at 19.5 times expected 2021 revenue, reflects Verafin’s rapid expansion, with a compound annual revenue growth of approximately 30 per cent over the past three years. Nasdaq expects Verafin to deliver more than US$140-million in revenue in 2021.
No wonder they sold out at the price they did!
Software is all the rage currently and some are trading ridiculously expensive, even more so than 19.5 times sales, let alone earnings (want to TSX: SHOP?). Good on the ownership for Verafin for cashing out.
The article laments how Canadian technology companies get taken away, but this is a result of Canada’s regulatory and paternalistic climate – structurally designed to strongly favour incumbency entrenchment and throw talent that can innovate to the USA.