Private SaaS companies trade near 4 to 5x ARR today, but the spread is everything. A well-positioned business at the same revenue can command 7 to 10x, while flat, churning revenue clears at 2 to 3x. The right time to sell is when your retention, growth, and margins put you on the right side of that spread. Written for founder-led SaaS companies generating $3M to $50M in revenue.
Public SaaS has settled near 6 to 7x EV on run-rate revenue, down from a median of roughly 18x at the 2021 peak after a correction of more than 60%. Private SaaS follows at about 4 to 5x ARR. Top-quartile public names still clear 13 to 14x, while the bottom quartile sits at 1 to 2x. The median tells you almost nothing. Where you fall inside the range is the whole question.
At $5M ARR, the difference between a 3x and an 8x multiple is $25M in enterprise value. That gap is not luck. It tracks a short list of metrics buyers underwrite directly.
High growth, high retention. 7 to 10x ARR. Net revenue retention above 110 to 120%, efficient unit economics, and durable growth.
Steady and profitable. 4 to 6x ARR. Solid retention, moderate growth, clean margins.
Flat or concentrated. 2 to 3x ARR. Slowing growth, elevated churn, or revenue tied to a few accounts.
Two levers move you up the range more than any other: net revenue retention and the Rule of 40. Companies that consistently clear the Rule of 40 command multiples 2 to 3x higher than peers below it.
You do not need all four. You need enough of them visible in clean reporting before a buyer starts asking.
Churn you have not addressed. Weak net revenue retention compresses the multiple regardless of how fast the top line grows. Fix retention before you market the company.
Blended revenue. Subscription mixed with implementation and services pulls your whole multiple toward the services rate. Separate recurring ARR from one-time fees in your reporting.
A 2021 anchor. Pricing to peak comparables ends processes before they start. The market reset is real, and buyers will not underwrite a number from a different cycle.
Private SaaS trades near 4 to 5x ARR today. High-growth companies with strong retention command 7 to 10x, while flat or concentrated businesses clear 2 to 3x. Public SaaS sits at 6 to 7x run-rate revenue. Your position inside that range, set mainly by net revenue retention and the Rule of 40, matters far more than the median.
It is a strong time if your retention is above 110% and you clear the Rule of 40, because buyers are paying premiums for efficient growth. It is a poor time if churn is unaddressed or your price expectation is anchored to 2021.
Private SaaS is valued on ARR, with buyers decomposing it into new, expansion, contraction, and churn. Recurring subscription revenue earns the multiple. Implementation and services revenue is valued lower, which is why a clean split matters.
Founder-led SaaS companies with roughly $3M to $50M in revenue and $1M to $10M in EBITDA, across the United States and Canada.
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