Home / Cybersecurity M&A / Selling a Cybersecurity Company
In cybersecurity, two companies at the same revenue can price worlds apart. Product subscription revenue, at 70 to 85% gross margin, is valued like premium software. Managed services revenue, at 40 to 55% margin, is valued far lower. The single biggest lever on your outcome is how clearly you separate the two. Written for founder-led cybersecurity companies generating $3M to $50M in revenue.
Cybersecurity is one of the most acquisitive sectors in technology, but buyers do not value it as one thing. Product-led security companies with high-retention subscription revenue price alongside premium SaaS. MSSPs and analyst-delivered services price on a services framework, closer to earnings than to revenue. The label cybersecurity does not set your multiple. Your revenue model does.
Buyers apply different multiples to each revenue type, and they will not give you the benefit of the doubt. Presenting blended revenue without disaggregation forces a buyer to apply the lower services multiple to the entire business.
Security software and SaaS. Recurring product revenue at 70 to 85% gross margin earns premium software multiples, driven by retention and the stickiness of being embedded in a customer’s security stack.
Managed detection and response. When MDR is separated from consulting, the recurring, product-adjacent component can be valued at software-adjacent multiples rather than blended services rates.
Managed and professional services. Analyst-delivered work at 40 to 55% gross margin is valued on a services basis, well below product revenue.
The work of preparing a cybersecurity company for sale is largely the work of cleanly separating these layers so each is valued on its own terms.
Buyers weigh these together. Clean reporting that makes them visible is often worth more than another quarter of bookings.
Blended revenue. If product and services sit in one line, a buyer applies the lower multiple to everything. This is the most common and most expensive mistake in cybersecurity M&A, and it is fixable before a process.
Services-heavy mix without a product story. A pure services business prices on earnings. If you are building toward product, an extra year of product growth can move the entire valuation framework.
Customer concentration. Heavy reliance on a few enterprise contracts compresses the multiple and lengthens diligence.
By revenue type, not as a single category. Recurring security software at 70 to 85% gross margin is valued like premium SaaS. Managed and professional services at 40 to 55% margin are valued on a services, earnings-based framework. Blended reporting forces the lower multiple onto the whole business.
Because product and services carry materially different multiples. Separating them lets a buyer pay software multiples for the software revenue and services multiples for the rest. Presented as one blended line, the entire business is discounted to the services rate.
It is strong for product-led companies with high-margin recurring revenue and clear retention, because consolidators are paying premiums to fill capability gaps. Services-heavy businesses without a product story should weigh whether another year of product growth changes the framework.
Founder-led cybersecurity companies with roughly $3M to $50M in revenue and $1M to $10M in EBITDA, across the United States and Canada.
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