SaaS Acquisition Multiple

The average revenue multiple for acquiring a SaaS company typically ranges from 5x to 10x annual recurring revenue (ARR), but this can vary significantly based on key factors:

Key Influencers:

Growth Rate: Companies growing >30% YoY often command higher multiples (8x-15x+).
Profitability: EBITDA-positive firms may see premiums, especially if combined with growth (Rule of 40 alignment).
Size: Smaller firms (<$10M ARR) often trade at 3x-6x, while larger ones (>$50M ARR) can reach 10x-15x.
Recurrence: High net revenue retention (e.g., >110%) and low churn boost multiples.
Market Conditions: As of 2023, higher interest rates and economic uncertainty slightly compressed multiples compared to 2021 peaks.

Example Breakdown:

Early-stage: 3x-6x ARR (sub-$10M revenue, moderate growth).
Mid-market: 6x-10x ARR ($10M-$50M revenue, strong metrics).
Enterprise: 10x+ ARR (>$50M revenue, predictable growth, strategic buyer interest).

Notes:

Strategic buyers (e.g., larger tech firms) may pay premiums for synergies.
Multiples are often tied to ARR, not gross revenue, emphasizing recurring business quality.

Data reflects trends up to October 2023. For precise valuation, company-specific metrics and market context are critical.

The average revenue multiple for acquiring a SaaS company typically ranges from 5x to 10x annual recurring revenue (ARR), but this can vary significantly based on key factors:

Key Influencers:

Growth Rate: Companies growing >30% YoY often command higher multiples (8x-15x+).
Profitability: EBITDA-positive firms may see premiums, especially if combined with growth (Rule of 40 alignment).
Size: Smaller firms (<$10M ARR) often trade at 3x-6x, while larger ones (>$50M ARR) can reach 10x-15x.
Recurrence: High net revenue retention (e.g., >110%) and low churn boost multiples.
Market Conditions: As of 2023, higher interest rates and economic uncertainty slightly compressed multiples compared to 2021 peaks.

Example Breakdown:

Early-stage: 3x-6x ARR (sub-$10M revenue, moderate growth).
Mid-market: 6x-10x ARR ($10M-$50M revenue, strong metrics).
Enterprise: 10x+ ARR (>$50M revenue, predictable growth, strategic buyer interest).

Notes:

Strategic buyers (e.g., larger tech firms) may pay premiums for synergies.
Multiples are often tied to ARR, not gross revenue, emphasizing recurring business quality.

Data reflects trends up to October 2023. For precise valuation, company-specific metrics and market context are critical.