---
title: "What the New Relic Sale Means for SaaS"
description: "Analysis of New Relic's $6.5B PE acquisition signals rising tech buyouts in 2023, with key insights on SaaS valuations and market liquidity trends."
categories: ["exits","data analysis"]
keywords: ["New Relic","SaaS acquisition","venture capital","technology buyouts","M\u0026A market","Francisco Partners","TPG","data analysis","private equity","market liquidity"]
ai_summary: "Analysis of New Relic's $6.5B acquisition highlights trends in SaaS valuations and technology buyouts in 2023."
date: 2023-07-31
lastmod: 2026-07-23
canonical_url: https://www.tomtunguz.com/newr_acquisition/
author: "Tomasz Tunguz"
---

Earlier today, New Relic announced its sale to Francisco Partners & TPG for $6.5b. 

The acquisition is notable for two reasons.

First, it accelerates the momentum within the technology buyout space. 

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/n60gjvctwxc709zyksm9.png)

At its current pace, technology buyout volumes of venture-backed technology companies will tie or exceed the ten year high, charted in 2022 of about $20b.

PE buyouts provide 2023's slower M&A market liquidity & activity, perhaps will begin to spur strategic/corporate acquirers into action.

Second, New Relic's sale price is close to the recent highs measured on January 1st of each year 

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/fa7tshdhyo8mof9vk8s3.png)

New Relic benefitted from multiple expansion that pushed its valuation higher - admittedly less than the top quartile. Within 18 months, the company attained a sale price within 5% of the high. 

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/qljbvv9h8qtdxginmyke.png)

New Relic's financials relative to its peers are important to bear in mind. The company generated similar free-cash flow yield (free cash flow / price per share). This cash pays the interest costs of the transaction debt. In buyouts, the acquirers invest some cash, but borrow 50-75% of the transaction value. The company's excess cash flows pay those interest payments.

In addition, the company operates with lower profitability & worse sales efficiency than its peers. 

This acquisition is a bet that the company can be run more efficiently. If we are in the nadir of multiple expansion & acquirors expect improved future results, the [M&A market should re-invigorate](https://tomtunguz.com/cloud-earnings-q323/).