Software Companies and Valuations

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by an investor from Massachusetts Institute of Technology - MIT Sloan School of Management
in Boston, MA, USA

2yrs ago

Software Companies and Valuations

hI,
Does anyone here have software valuation background or experience they are willing to share or have a conversation?

Am looking at a software opportunity. 7.5m top. 5.5m bottom. <5% churn.

2 Likes

239 Views

reply by a searcher 2yrs ago
in Austin, TX, USA

Here is a formula I used in the past: Formula for Large SaaS Valuation = 10 x Annual Recurring Revenue x Growth Rate x Net Revenue Retention In my opinion Owner operater SaaS adjustment: Valuation = 10 x Annual Recurring Revenue x Growth Rate x Net Revenue Retention X.25

reply by a searcher 1yr ago
from HEC School of Management, Paris in London, UK

Would not go as high as 10x revenue. Likes of constellation and everfield, tend fo buy at 3-4x given they are in the smaller size. You should look at retention, churn and CAC. Feel free to PM me - I spent my spent time looking at higher ticket software but also looking now in smaller size