Martech SaaS valuations

searcher profile

November 14, 2019

by a searcher from Duke University - The Fuqua School of Business in Short Hills, Millburn, NJ, USA

I'm looking at a martech SaaS business with about $1M in ARR and healthy EBITDA margin of ~30%. The company is bootstrapped and has a good brand name in the space they compete in. Revenue growth has been well over 100% and LTV/CAC is above 5x.

Wondering how one would value such a business? It looks like martech firms are typically valued at a discount to vertical SaaS companies or even horizontal SaaS companies with products that are more critical/have greater functionality (eg: CRM).

I'd welcome any thoughts and/or connect with folks who follow martech/adtech (or SaaS in general) and can speak to the transaction comps for such a transaction.

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commentor profile
Reply by an investor
from University of Pennsylvania in New York, NY, USA
How much is being invested in development and how is that impacting the margin? Do not follow martech but do own a SaaS business. I have seen a few martech businesses and the margin profile varied dramatically. Many of them seemed more like consulting businesses than SaaS and the margins were a good indication of that. The valuation for consulting businesses is lower than true SaaS as it doesn't scale as well and the EBITDA can walk out the door.
commentor profile
Reply by an investor
from University of Pennsylvania in Washington, DC, USA
Serial SaaS entrepreneur here. Big factor valuation is how much customer turn there is? MarTech is known to be a high churn area which hurts valuation (but if in this case customer retention high that would stand out). Happy to help - sressler at gmail
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