Bravo: Profitable software trades at 25x forward P/E versus S&P's 16.5x
Orlando Bravo · Orlando Bravo: Raising Kids as a Billionaire; VC vs PE; Is Warren Buffet Wrong? | 20VC #974 · 20VC with Harry Stebbings · Feb 6, 2023 · at 14:41
Orlando Bravo, founder of software private equity firm Thoma Bravo, assesses public software market valuation metrics relative to the broader market in early 2023.
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“If you look at the public market as a benchmark for the world, and you take an index of the profitable software companies, those companies that have margins in excess of 20%, and you put them all together, on average, They trade for around a 25 forward PE, which the industry uses as a levered free cash flow. That compares to the S&P 500 at 16 and a half forward PE.”
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