Datasite on the Hunt for Tech Acquisitions Across M&A Lifecycle, CEO Says

By Rachel Stone

Datasite, a private equity-owned software-as-a-service provider for the financial services industry, is “actively looking” for targets in acquisition software and content in the SaaS space, said CEO Rusty Wiley.

The Minneapolis, Minnesota-based company, which sold a majority stake to CapVest Partners in October 2020, has an “active pipeline” and a market map of companies but is not currently engaged in any discussions, Wiley said. It wants to support the entire M&A lifecycle, from the inception of a deal and selecting a banker through marketing the asset and due diligence to closing the deal and post-deal content sharing, he added.

Datasite, which enables deals in 14 languages and 170 countries, will acquire if doing so means getting new capabilities to market more quickly than building internally would do, Wiley said.

Companies are expensive right now, and Datasite will consider timing and pricing as it weighs whether to acquire, Wiley said. EBITDA-valued businesses see multiples in the 12x-15x range, while annual recurring revenue SaaS-based companies notch 8x-12x revenue in a sale, he noted.

The company does not have a limit on the size deal it could pursue, according to the CEO. It could execute several acquisitions with existing cash and incremental debt, he added.

Datasite is growing revenue in the mid-20% range, Wiley said, declining to provide specifics. In the last 12-18 months, amid the COVID-19 pandemic, EBITDA has grown more rapidly than revenue has, he said, again declining to provide specifics.

In July, the company acquired Firmex, a Toronto-based provider of virtual data rooms (VDRs), from Vertu Capital and BDC Capital for an undisclosed sum.

Though the acquisition was supported by Datasite’s new owner, the company had been in conversations with Firmex and its PE owners for a couple of years, Wiley said. The deal was the first executed since Wiley took the helm as chief executive in 2014, he added.

Datasite provides secure software solutions for companies engaging in financial transactions. It targets three customer groups: advisor channel, including investment banks, law firms and accounting firms; corporates, from which about half its business stems; and private equity.

Most of what Datasite has focused on this year has been around increasing coverage in its core diligence business in existing markets, namely North America and Europe, as well as increasing sales and services resources to support new products in those regions, Wiley said. The company is also growing geographically in Asia, Latin America, and the Australia and New Zealand region, he added.

Datasite, which has north of 900 employees, is targeting all spend related to the M&A lifecycle and secure collaboration, what the company has identified as a USD 11bn market, Wiley said. Though it is difficult to calculate market share across that space, it tracks in the low-to-mid-20% of market share in the VDR segment, he said.

The company’s biggest traditional competitor is SS&C’s [NASDAQ:SSNC] Intralinks, according to Wiley.