3 ms·

I don't think that multiple is right - for a $500k rev software company, I wouldn't pay any more than 3x.

• tobltobs 11y ago
  This 3x yearly earnings is mentioned quite often. But I can't believe anybody is selling for this. Maybe for 5x if you are in need of money. And in times of zero interest rates this 3x thing sounds even more unbelievable.
  • jonknee 11y ago
    Well software isn't like a lot of businesses. A plumbing supply company will probably be just as successful in 3 years as it is now, but a software company might be worthless. Three years is a long time in software.
  • antaviana 11y ago
    3x revenue, not 3x earnings. Revenue and earnings are two different beasts.
    • ownagefool 11y ago
      In a one man software company, there's often not a great of outgoings.
• pmrd 11y ago
  Revenue is largely a function of marketing effectiveness/marketing spend coupled with a minimum product/market fit. If someone has a legit internet software product bringing in $500k a year, they'd have to be pretty silly to sell it for $1.5M - unless they're really desperate for cash or hit a scale/product/market/ops ceiling they cant crack. Capital is free flowing at the moment and a legit revenue-generating, valuable, scalable business shouldn't have to cash out this early or this low.