Today we have a brand new report for you called “2025 SaaS M&A Forecast - A Great Time to Sell”

Below I cover revenue multiples, EBITDA multiples, and discuss why 2025 will be a particularly good time to sell your SaaS firm given record deal volumes, strong macroeconomic fundamentals, and new leadership at the FTC.

If you’re thinking about selling your software company in the next couple years, take 5 minutes and read this report below. It is worth your time.

And if you’re not yet a SaasRise member, 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. At SaasRise, we’re here to help you execute on a successful $100M+ exit.

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

2025 SaaS M&A Forecast - A Great Time to Sell Your Company

Some great news after a couple years of flatlining growth within SaaS M&A…

At SaasRise, we’re projecting that 2025 will set the all-time record for the number of SaaS M&A deals done in a single year, above the prior record of 2,175 deals done during 2022. 

If we simply stay at the most recent Q3 2024 M&A pace, we’ll see a new record of 2,376 SaaS M&A deals will get done in 2025.

However, we expect deal volume will actually accelerate next year.

Public company tech M&A should pick up substantially in 2025 with a new U.S. administration coming in, unburdened by the controversial anti-merger stance of the FTC under outgoing commissioner Lina Khan. 

Once the public tech deal backlog clears next year that was generated by the FTC (including Capital One/Discover, Synopsys/Ansys and the prospective big Qualcomm/Intel acquisition), the effects on private tech M&A markets (the ones that SaasRise members play in) will be positive and we expect a torrent of new activity to resume in 2025. 

So get ready… more deals means more buyers, more competition, and expanding multiples within private SaaS deals. If you’re going to sell in the next few years, now’s a great time to consider coming to market (and to get your financials, audits, growth, EBITDA, and team ready)!

If your firm is at least at $5M in ARR and you plan to sell your SaaS firm in the next 2-3 years, 2025 may be an ideal time to run a process with an M&A advisor and at least test the market to see what you could get in a sale to a private equity or strategic buyer. 

With the DJIA, NASDAQ, and crypto at all time highs ($85k Bitcoin!), U.S. GDP growth strong (2.8%), and unemployment low (4.1%), it’s a great time to explore your options – as who knows how long times as good as these will last. At SaasRise, we’re here to help you execute on a successful $100M+ exit.

SaaS M&A Deal Volume on Track to Set a New Record

Below is a new chart from Software Equity Group’s Q3 2024 SaaS M&A Report showing the number of SaaS M&A deals per year. In 2024, we’re on pace to see around 2,050 SaaS M&A deals, down just slightly from a Covid-era peak of 2,175 in 2022.

The downward M&A trend from the past two years is now reversing as interest rates begin to come down (and deal capital becomes cheaper). M&A deal volume picked up nicely in Q3 2024 with 594 deals from 493 in Q2 2024, an improvement of 20.5% quarter-over-quarter.

In 2025, we expect to see a record year in SaaS M&A deal volume as interest rates continue to come down and the more pro-merger second Trump Administration FTC in power approving more big deals, which then ripple down into private market deal volume and valuations. Here’s what we expect to see for 2025…

Median & Average SaaS M&A Multiples

Of course, the big question remains… what can you sell for?

In Q3 2024 average SaaS M&A revenue multiple was 5.3x TTM revenues, with the median deal at 4.1x TTM Revenues. 

Keep in mind this is the median and the average for those who were actually successful in selling — so generally speaking the good quality attractive firms with strong metrics.

While you can almost always sell your SaaS firm for ~2x revenues, selling for 5x+ revenues really takes the right preparation and process.

The big question of course is “how much is my firm worth?”

Well, that of course depends on your revenue level, revenue growth rate, EBITDA, NRR, vertical, product quality, and the competition within the sale process itself.

But long story short, you can probably expect to sell for between 2x and 10x ARR and/or 10x to 35x EBITDA.

A Short Hand Way To See What Your Software Firm Is Worth

Here’s a handy rule of thumb chart that can allow you to roughly assess what multiples your firm may be able to fetch, by simply adding together your year-over-year revenue growth rate and your current EBITDA percentage. 

A firm with a 20% annual growth rate and 10% EBITDA margin would be a “Rule of 30” company for example… (originally named after the Rule of 40 that states that a strong firm is one that has revenue growth rate + EBITDA of at least 40%).

So if you’re a smaller ($5M) SaaS firm with 0% annual revenue growth and 0% EBITDA, you might get around 1.5x to 2x revenue, resulting in a $7.5M to $10M outcome. 

However if you’re a mid-sized ($30M) SaaS firm with 100% annual revenue growth and 10% EBITDA, you could be looking at more like 7-10x ARR, resulting in a nice ~$200M-$300M exit outcome, especially if you find the right investment bank to run a process for you.

The closer you get to being public-ready ($100M+ in ARR and within range of profitability), the higher your multiple will be and the larger the universe of potential buyers will be.

Ultimately, all firms are worth either the present value of future cash flows OR whatever a buyer is willing to pay – so it all comes down to projected cashflows of the combined entity and how that is worth to a financial or strategic buyer. 

Studying SaaS EBITDA Multiples

In SEG’s index of 119 publicly traded SaaS firms, the average EBITDA multiple in Q3 2024 was 34.6x. So if you’re profitable, you can usually expect to command 10x to 35x EBITDA, depending on size and revenue growth rates. 

So if you’re able to make some cost reductions and demonstrate that you’ve got a clear path to $5M in EBITDA in 2025, that in-and-of-itself may be enough to warrant a $50M to $100M valuation. 

The average EBITDA multiple among profitable private software firms that were acquired in 2023 was 13.5X.

It seems that pure SaaS plays get a bit of a further multiple bump over traditional software companies.

Across a sample size of 144 SaaS M&A deals tracked by Aventis Advisors, the median 2023 EBITDA multiple was 22.4x.

Breaking this down by country, US-based SaaS companies saw a median EBITDA multiple of 31.7x in 2023.

The Top SaaS Verticals By Deal Volume

In Q3 2024, top SaaS Verticals by completed deal volume were:

1. Analytics and Data Management

2. Content and Workflow Management

3. Sales and Marketing

4. Business Management/ERP

5. Financial Applications

6. Security

Here’s some data from SEG’s report with a nice visual…

2025 Will Be An Optimal Time To Sell a SaaS Firm 

With the DJIA and NASDAQ and crypto at all time highs, strong GDP growth, and low unemployment, if you plan to sell in the next 2-3 years, 2025 may be a great time to run a process with an investment bank and at least test the market.

We’re happy to help. Join the SaasRise community where we talk about these issues all the time in our weekly masterminds or hire us to advise you on selling your firm for a fixed monthly fee. We’ll help you prepare AND refer you to the right investment bank for your size and focus. We’re a team of SaaS entrepreneurs, former investment bankers, and Harvard and Wharton MBAs with experience building, exiting, and IPOing B2B SaaS firms — so we know which are the right firms to work with as you go through this very important process of your own.

Here are some of the investment banks, M&A advisors, and M&A marketplaces we often work with or recommend at SaasRise. This slide is from our SaaS Growth Course (26 module video course) which is free for our SaasRise members. Apply to join us if you haven’t already.

If we’ve missed your SaaS-focused investment bank, feel free to reach out. We’d love to get to know you and learn about your focus. 

Don’t Wait Until Growth Slows Down to Sell

Ultimately, most developed economies tend to operate within 8-10 year boom/bust cycles (we all remember the crashes in 2001, 2008, and 2020) – so if you do plan to sell in the next couple years, don’t wait so long to sell that we end up back in a recessionary environment and you get locked in for another 5-7 years as you wait for markets (and customers) to return. 

I’ve seen many companies who could have sold for $100M end up in a recessionary environment, stagnate in revenue growth, and then end up selling for $35M many years later.

The right time to sell is probably BEFORE your revenue growth goes below 30% per year, NOT after. 

Within the SaasRise peer mastermind community of CEOs and Founders with $1M to $100M in ARR (375 of us so far) – we talk all the time about how to best position and prepare for a sale. Come join us and we can help you!

The community has a two-week free trial and then is $197 per month with no annual commitment. It may just be the best $197/month you spend in terms of the impact it can have on your enterprise value. 

I’ll be back in touch next week with more great SaaS growth and exit content. 

All the best,
Ryan

P.S. - It’s a great time in SaaS! Let me know if you need help scaling and preparing for an exit.

Join Our Community of SaaS CEOs & Founders

Thanks for reading. We hope this 2025 SaaS M&A Forecast 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, fundraising, and exit resources. You can apply here.

See you next week with more killer SaaS scaling content!

Join Our Community for SaaS CEOs at $1M+ in ARR

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.

Thanks for reading! If you liked this article, join the SaasRise community at www.saasrise.com for even more helpful growth content and weekly SaaS CEO masterminds.

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