According to a report on Wednesday from analysts at JMP Securities, the purchase price implies an enterprise value to revenue multiple of 15.8 for 2018 and 11.9 for 2019. That tops a multiple of 9.1 that SAP paid for Concur in 2014 and is more than twice the median multiple for cloud software companies of 5.3 dating back to at least 2012.
MuleSoft sells software that makes it easier for companies to share data on many different systems, including those that operate in on-premises data centers. Analysts at Raymond James described the price tag as "lofty" and said it was "staggering" that Salesforce was paying 16 times MuleSoft's expected 2018 revenue.
"Valuations have significantly increased this year," Alex Zukin, an analyst at Piper Jaffray, wrote in a note following Tuesday's announcement.
They'd been going up even before the MuleSoft deal, with companies like Aconex, Callidus and CommerceHub selling at a 40 percent higher EV-to-sales multiple than what LinkedIn and Marketo sold for in 2016, according to Zukin.
Analysts at KeyBanc and Stifel listed a number of companies that could now be in play, including Zendesk and Talend. Additionally, KeyBanc suggested that Blackline and Five9 are "high-probability targets," while Stifel added Cloudera, HubSpot, MongoDB, Nutanix, Okta, Paycom, Paylocity and Veeva to its list of companies that may have an improved outlook.
That's not to say that MuleSoft will necessarily spark a wave of high-priced deals. Salesforce is paying more than twice the price it's ever paid in an acquisition because it sees MuleSoft playing in a big market and plugging in smoothly to its own systems.
On a call with analysts on Tuesday, Salesforce CFO Mark Hawkins said the acquisition will expand the company's total addressable market by $10 billion in its 2022 fiscal year. And executives said that companies adopting MuleSoft's technology together with Salesforce's services would be able to provide better experiences to customers by more easily incorporating data from many different systems.
"Take the health-care industry as a great example," Keith Block, Salesforce's chief operating officer, said on the call. "Advancements in technology combined with a complex regulatory environment have resulted in disjointed experiences for both patients and providers."
The size of the MuleSoft deal was also possibly inflated because another company was dueling with Salesforce to buy it. JMP's Patrick Walravens and Matthew Spencer wrote that Google, Microsoft, Oracle and SAP may have in the mix, and reminded clients that "Microsoft and Salesforce engaged in a bidding war for LinkedIn in 2016."
Hawkins was asked on the call if there was a competitive bid. He didn't answer the question but told analysts and investors that the color surrounding the tender offer will soon get published.
"That will just describe all the details associated with the entire process and such, so just stay tuned," he said. "You're going to get a lot of good detail on that."