SaaShimi · 39 min
Sean discussed the financial diligence process of SaaS companies, common mistakes in ARR, Gross Profit, and EBITDA calculations, the effects capitalized software and capitalized commissions have on cash EBITDA, and many other things. BIO Sean St. Germain is a Managing Director at Alvarez & Marsal. He focuses on transactions in the software and technology industry. He has advised clients on domestic and cross-border transactions, including traditional buy-side transactions, portfolio company add-on transactions, public-to-private acquisitions, asset purchases, and sell-side divestiture processes, including carve-outs. Sean is an expert in software revenue recognition, including the new revenue recognition standard (ASC 606, Revenue from Contracts with Customers). TIMESTAMPS 01:00 Sean and Alvarez & Marsal 05:30 Unique aspects of SaaS businesses 09:00 Recurring vs Re-occurring revenue streams 12:20 Mistakes companies make in ARR calculation 15:35 Cost of Sales 17:35 EBITDA Adjustments 22:00 Confirmation of synergies 23:15 Capitalized commissions 25:30 Capitalized software 29:05 What is Cash EBITDA?
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