For those in M&A - what sort of multiples range would you put on a SaaS platform and associated professional service fees? I have heard anything from 5x-10x with adjustments for leadership, key man risk, market share, tech debt, and tech outlook.

My concern is the YOY growth (roughly 10% for the last 7 years) and margins (only 15-20% after extreme thinning of employee base) should be heavily considered.

Would love to get opinions on what to look for in DD.

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This is an incredibly broad question and as you know will vary significantly based on critical factors. Startup? More mature/stood-up platform that can operate standalone? Loss making or not? Not sure if you mean gross margin or EBITDA margins. Easy bolt on? You're typically looking at somewhere around 5-8x revenues for SaaS for privates but can vary significantly. I've seen them go up to 15x for premium assets that offer a strategic advantage for Buyer and have obvious growth potential

Thanks for the response. Mature platform that is cash flow positive. EBITDA margins and IP has been fully amortized on sellers books. Cash flow positive. Not an easy bolt on and really is standalone. Would need cash infusion based on initial findings to bring certain product functionality up to par with market.

^this. Scale, sector and specifics matter tremendously.

The highest quality SaaS assets I’ve looked at in the last year have traded at mid / high 20x ARR range to tech focused mega funds.

From the limited info, this doesn’t meet the rule of 40 criteria (rev growth + ebitda margin should be greater than 40 in a healthy SaaS biz), so wouldn’t expect it to command a premium valuation.

Thanks and agree as well. This software has the potential to scale but is limited with its current owner. Very niche sector for the software as well and am thinking the multiple will probably land around 5-7x ebitda margin given what gets uncovered in DD.

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