Looking for help evaluating a SaaS deal

November 20, 2024

by a searcher from Worcester Polytechnic Institute in Fort Myers, FL, USA

I've got a SaaS deal I'm looking at and the multiple is higher than others I've seen in the same revenue range (approx $1M). I like the business but want to make sure I'm making a good offer. Looking to connect with someone who has experience evaluating similar deals that could give some feedback.

Thanks,
Jason

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Reply by an investor
from University of Alberta in Vancouver, BC, Canada

^redacted‌, SaaS business valuations differ due to their unique growth dynamics and cost structure. Unlike traditional businesses, SaaS companies often achieve rapid year-over-year revenue growth driven by scalable subscription models, high customer retention rates, and recurring revenue streams. Also, they can typically expand with relatively minimal incremental costs. These factors, combined with their potential for long-term profitability, typically result in higher valuation multiples and a distinct approach to due diligence, focusing on metrics like churn, CAC and LTV. Having operated and currently invested in a few SaaS companies, I would be happy to share insights or assist further. Feel free to reach out to me at redacted

Reply by a professional
from Bentley College in Miami, FL, USA

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