Software Companies and Valuations

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September 06, 2023

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

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.

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Reply by a searcher
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
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Reply by a searcher
from Allahabad University 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
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