If you, like me, are interested in what goes on in the software sector in terms of investments and M&A activity, an interesting source of information is Ridgecrest Partners, a technology investment bank in San Francisco. They release a newsletter on a regular basis tracking recent investments and acquisitions as well as public company data which provide good comperative data on valuation multiples and exit values. The focus is primarily US but also deals from the rest of the world are included.
Looking at their latest newsletter, one can see that there have been quite a bit of M&A-activity with 100+ transactions between December 2008 and February 2009. However, the exit values are in general low (or not even disclosed which oftens means small exits). Also, company exit values are in the range of 1-2 times revenue (usually referred to as P/S-multiple: price for the company versus either current or forecasted revenue) or even lower.
So, it’s quite clear that in general one cannot expect very high valuations for software companies in the near future.