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SaaS Exit: Who has sold, and how did you value your company? Multiplier, EBITA, profits, projected-vs-trailing rev?

A topic related to SAAS or APPs

Bing

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Does anyone here have any experience selling (or buying) a SaaS company? How did you value it?

In my research I've found such crazy ranges of valuation that mix revenue-vs-profit, trailing-vs-projected and multipliers from 3-15x. Depending upon how you do the math a $5m/year company with 10% profit could be valued at just $2m (3x multiplier, trailing 12 months of profit) or it could be as high as $50m (10x multiplier, current annual revenue) depending upon which numbers you use.

I understand every market and condition will vary, but the ranges here seem extreme.
 
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Guest-5ty5s4

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Does anyone here have any experience selling (or buying) a SaaS company? How did you value it?

In my research I've found such crazy ranges of valuation that mix revenue-vs-profit, trailing-vs-projected and multipliers from 3-15x. Depending upon how you do the math a $5m/year company with 10% profit could be valued at just $2m (3x multiplier, trailing 12 months of profit) or it could be as high as $50m (10x multiplier, current annual revenue) depending upon which numbers you use.

I understand every market and condition will vary, but the ranges here seem extreme.
I'm not a Saas guy in particular, just a business and investing guy, but let me just say that anyone paying $50 million for $500,000 in annual profit is an absolute moron.

That's 1% per year.

Don't purchase any deal like that.

Do accept any offer to sell like that (lol).

EDIT: I don't want to bump your thread again, but if you're looking to buy you should aim for 2-3x EBITDA based on all the books on business buying. If you're talking exits, you can expect buyers to read those same books, but if your company is really good or poised for growth maybe you can go higher (?) and that doesn't include assets and a very long list of other factors
 
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Bing

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That's 1% per year.

Don't worry, I wasn't planning on blowing $50m on a $500k/year company :rofl: But between Twitter going private for $45B (despite being LESS profitable than the 10% example I gave) and the wide numbers I've seen, I'm curious what real sales used, especially in the 6-8 figure ranges that seem more common on this forum. I thought about asking @fastlane_dad, but wasn't sure if his was a SaaS exit.
 

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