I run a small SaaS company with about $800k ARR, growing 20% year over year, and I'm starting to think about an exit in the next 18-24 months. I keep hearing different numbers from brokers and random articles. What multiples are buyers actually paying right now for a SaaS business like mine? I'm not looking for a pie-in-the-sky number, just a realistic range so I can plan ahead.
SaaS Valuation
What multiples do buyers pay when learning how to sell a SaaS business?
From what I've seen in the lower middle market, $800k ARR with 20% growth is probably looking at 3-5x ARR. But it depends heavily on churn, margins, and how much the business relies on you. If you're the only one who can sell or code, buyers will discount it.
3-5x ARR sounds about right for that size. I've also seen some deals priced on SDE multiples, like 4-6x SDE, but that's more common for smaller or slower-growth SaaS. At $800k ARR you might get interest from strategic buyers who pay more if you have a unique niche.
Churn is the big one. If your net revenue retention is above 100%, you can push toward the higher end. If you're losing 2% monthly, buyers will walk or lowball. What's your churn like?
I sold a SaaS business two years ago at around 4x ARR. It was about $1.2M ARR, 30% growth. The process took almost a year. Honestly, the multiple was less important than the terms—I had to carry a note for 20%. So don't just focus on the headline number.
Can you share what your margins look like? That often drives the multiple more than growth at this scale. Buyers want to see predictable cash flow.
Also, are you doing any custom development for clients? That can kill your multiple because it makes revenue less recurring and more project-based
One more thing: the mariet has cooled a bit since 2021. Multiples for sub-$1M ARR SaaS are more like 2-4x now unless you have something really special. I'd talk to a few M&A advisors who specialize in SaaS to get a realistic range. Don't rely on broker listings—they tend to be optimistic.
I'm in a similar situation, about $600k ARR. I was told 2.5-4x ARR by one advisor and 5x by another. The difference was mostly about how much they thought they could drum up competition. So take any single number with a grain of salt.
If you want a data point, I've seen small SaaS with $500k-$1M ARR and good retention go for 3.5x on average in the last year. But the range was wide: 2x to 6x. The 6x was a strategic buyer who wanted the tech. So it really depends on who you sell to.