When I see SaaS multiples like this, I worry that it incentivizes consultancy behavior. SaaS is attractive as the R&D work gets amortized over many customers a

When I see SaaS multiples like this, I worry that it incentivizes consultancy behavior. SaaS is attractive as the R&D work gets amortized over many customers and many years. Customer acquisition costs are often looked at separately for this reason as the initial sales engineering/solutions consulting/sales work is done once and then the business makes profit on the back-end. At a 100:1 valuation to revenue multiplier, doing ad-hoc work to close deals becomes awfully appealing - likewise performing ad-hoc work to keep the revenue coming becomes very appealing. Pretty soon, you may find that the business has become a consulting organization masquerading as a SaaS as the platform isn't very compelling without the broader consulting business. A Consulting business typically maintains a 1.2x multiple on EBITDA earnings as it tends not to scale very well due to both execution quality challenges, and relatively low/squeezable margins.