Valuing a slower growth Saas business

searcher profile

February 17, 2021

by a searcher from Harvard University - Harvard Business School in Fort Wayne, IN, USA

I've got a Saas business that is growing only 15% per year. It's got rock solid EBITDA (~$2M on $5M in sales), but most valuation numbers for Saas businesses are for hyper growth businesses. How would you think about valuing it?

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commentor profile
Reply by an intermediary
from New York University in Menlo Park, CA, USA
I'm glad to discuss this with you. Valuation would really depend on the sector and focus of the product. If it is hyper niche, the pool of buyers would be limited and a lower valuation. If it is part of a large, existing sector, many potential buyers can be found and potentially a premium valuation.

Feel free to send some additional details, or suggest a time for a call to discuss.

Regards,
David
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Reply by an investor
from University of Pennsylvania in Washington, DC, USA
Serial SaaS entrepreneur & investor - happy to chat - DM or redacted As Joseph said a lot depends on ARR size, retention rate, ARR % of total revenue, and TAM. And then depends on the technology stack (how much pure cloud vs on-prem). Lots of comp valuations for similar companies in lower middle-market PE - can talk more offline.
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