Today we have a hot off-the-presses Q1 2024 update on SaaS valuation multiples from our friends at Aventis Advisors, showing that over the last ten years median mid-market SaaS M&A transaction revenue multiples have been around 4.2x-4.5x for firms with $1M to $50M in ARR. You can download the full valuations report here.

If you’re not yet a SaasRise member, you can apply to join us here for more killer, fresh, and data-driven content like this. We welcome all SaaS founders and CEOs with $1M-$100M in ARR to join our SaaS growth mastermind community.

Now, let’s jump right in to the report!

SaaS Valuation Multiples - Q1 2024 Update

SaaS companies keep moving forward, with thousands of strong, established SaaS businesses across the world thriving.

Google considering making an offer to acquire Hubspot last week for more than a 14x revenue multiple (around $35B) shows that there is much in store for successful SaaS companies, especially if the buyer has a strong strategic rationale, such as a large install-base to cross-sell to or a desire to enter a new market.

In their latest SaaS Valuations research report, created exclusively for the SaasRise community, Aventis Advisors looked at valuations for both public SaaS companies as well as for private SaaS firms with ARR of $1-100M.

You can download a free PDF copy of the SaaS Valuations Report here or continue reading the summary below.

SaaS Public Market Valuations

Public company SaaS valuations remain high, with a strong premium over non-SaaS software firms. One way to look at the valuations of SaaS companies is to look at the most successful, liquid, US-based firms. In the new Aventis Advisors report, these are the US-listed firms with a $1B+ market cap. Those include the likes of Salesforce, Asana or Atlassian. Following the boom and bust of the post-COVID years, those valuations stabilized, and the median revenue multiple has been staying around 7x Revenue for more than a year. 

The big trend of the past two years is the profitability improvements. Rounds of cost cuts across the companies had their effect, with a median EBITDA margin growing from -7% to 7% from Q2 2022 to Q4 2023. Median revenue growth has continued to slow, with a 17% reading as of Q4 2023.

SaaS M&A Transaction Valuations

Private market valuations show more resilience across all revenue sizes. With much less volatility, we saw smaller growth in valuations in 2021, but also not as rapid decline in 2022-2023.

Over the last nine years, in a sample of SaaS companies with $1-10M in revenue, the median revenue multiple stood at 4.2x revenue (across 118 tracked deals), with more than 50% of transactions taking place in the 2.0-5.0x range. 

The figures are similar in the $10-50M range - a median revenue multiple of 4.5x (across 108 tracked deals).

The thing we believe moves the needle the most is the strong strategic rationale from an established player, such as we saw in the unsuccessful Adobe bid for Figma due to EU Antitrust regulatory issues. 

But it is clear that despite some record-breaking valuations top AI players are fetching, a conservative 2-5x revenue for a buy-out of a mid-size SaaS company is what founders should set as the minimum and work from there to achieve a premium valuation through increasing revenue growth, reducing churn, increasing ACV, and/or increasing EBITDA if you plan to sell based on EBITDA instead of revenue growth.   

If you’d like to see the full free Aventis PDF report on Q1 2024 SaaS Valuations, you can download it here.

Join Our Community of SaaS CEOs & Founders

Thanks for reading. We hope this Q1 2024 SaaS Valuations Multuple Report has been helpful to you. Please take a moment to learn more about SaasRise, our community for SaaS CEOs and Founders. We welcome all CEOs and Founders with $1M-$100M in ARR to join us. We hold three masterminds each week for our members and provide an in-depth library of SaaS growth, sales, fundraising, and exit resources. You can apply here.

See you next week with more killer SaaS scaling content! If you like this type of content, please apply to join SaasRise our community for SaaS CEOs with $1M-$100M in ARR here. It’s a mastermind community of growth-focused SaaS CEOs. Membership is $197 per month – but might just be the difference between your firm making it across the chasm and getting to a successful nine figure outcome from a PE firm or strategic acquirer.

P.S. - Below are six valuable SaaS growth resources we’ve put out. I hope they are useful to you!

Six Helpful Free SaaS Growth Resources from SaasRise

The most in-depth guide for scaling up SaaS companies from $0 to $50M in ARR. Including over 1,200 slides on every aspect of SaaS scaling.

How to determine whether to scale up or down your marketing channels

How to calculate ARPU, LTV, Churn, Lifespan, CPL, CAC, and Max CAC

A fourteen page in-depth PDF on we take each CEO client through a six-phase process designed to increase lead volume, customer acquisition, and revenue growth — and then scale up the sales team, executive team, and investor support as we help you prepare for future fundraising rounds (if needed) or an exit (if desired).

A twenty page in-depth PDF on how to scale a B2B SaaS Company from $1M to $50M ARR. Covering CAC-based customer acquisition, sales team scaling, venture capital markets, and preparing for the exit.

The SaaS Growth Formula was written to help SaaS CEOs who are focused on growing their company's sales - by implementing a simple formula called The Growth Formula. This formula is for companies that have already established product/market fit, already have paying customers, and are now ready to scale up through scientific and CAC-based digital marketing, inbound sales, and outbound sales.

Join Our Saas Growth Mastermind for CEOs and Founders With $1M+ in ARR

If you like the above resources and want more stuff like this, apply to join SaasRise, our mastermind community for SaaS CEOs and Founders with $1M-$100M in ARR who are focused on scaling up MRR. Every Wednesday we jump on an optional mastermind call to support each other and share what is working with scaling our companies – and we support each other throughout the week in our private community.

We’ll see you next time with more great SaaS growth and scaling content!