6 ms·

Anyone have an idea on why 3.7x revenue for SaaS was considered a fair valuation? I thought SaaS was always closer to 5-6x

• mritchie712 7y ago
  BareMetrics MRR is public, check it out: https://demo.baremetrics.com/#start_date=2019-01-01&end_date=2019-12-31 https://demo.baremetrics.com/#start_date=2019-01-01&end_date... 20% growth last year or 1.7% per month. That's considered slow for a SaaS. That's likely what's driving the 3.7x multiple.
  • czbond 7y ago
    Fair and thank you for that. Wouldn't their value to Stripe be much more than 3.75x in this case?
    • einarvollset 7y ago
      Basically, there are 3 types of buyers: value PE, growth PE and strategic. Value pays 3-4x, growth 4-7x, strategics ¯\_(ツ)_/¯ Stripe would be a strategic for Baremetrics.
      • ablekh 7y ago
        Hmm ... Where did you get these multiples from? Based on what I've seen in many sources (here's one that I have at hand, by McKinsey: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/multiples-analysis-industry-labels-dont-matter-performance-does https://www.mckinsey.com/business-functions/strategy-and-cor...), high-growth tech/IT startups are valued (and, I assume, could be acquired) at > 15x, sometimes even > 20x.
        • blrgeek 7y ago
          For public companies, growing > 40%, ARR > $100Mn, NDR>125$ revenue multiples are sky-high ATM. For private companies at around $1Mn-$3Mn ARR growing sub-20% YoY there are very few buyers in the first place.
          • ablekh 7y ago
            I was definitely talking about the first category (though not necessarily public only; AFAIK there are some [many?] private companies that fit that profile). I agree that those revenue multiples are high, though I'm not sure I would refer to them as "sky-high". Who knows what kind of numbers we will see in the future ... ;-)
          • einarvollset 7y ago
            Compared to public markets yes, but there are 100s of buyers, particularly if you’re (adjusted) EBITDA profitable, but even if just break even.
        • einarvollset 7y ago
          Public company multiples, VC investment valuations and lower middle market PE exit multiples are very different markets. The multiples come from direct personal experience.
          • ablekh 7y ago
            Understood. Though I would expect some overlap between the first two markets. I'm curious about reasons and rationale, underlying potential differences between valuation and/or multiples within relevant categories. Any pointers or links to corresponding content, by any chance?
      • einarvollset 7y ago
        And for the record, make sure you keep track of price/earnings vs price/revenue multiples :)