Sage Group (SGE.LE), mcap=£6.9b, price £6.78 vs £7.18

Pitch: Mission-critical accounting software company that is close to completing the transition to a subscription model. SMB and mid-mkt customers globally. Transition to a subscription model put pressure on EBITDA margins and these are expected to revert from 23% to previous 30%.

Valuation: Trades at 3.7x fwd revenue, and 16x fwd EBITDA on trough 23% EBITDA margins. With 35% margins (how PE would assess the business) Sage is at 11x EV/EBITDA. Peer deals have been done at 5-6x sales.

Exp. gain: Not specified

Full SGE.LE write-up (free guest account required):

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