Software Companies Valuation Multiple. Valuation Multiples For Software Companies. The simplicity of this approach leads many practitioners to apply it acritically to compute valuations.
SaaS Company Valuation Multiples As of June 30 the median SaaS valuation multiple for public companies stands at 114x ARR. Many software companies operate at a loss until they scale to a large enterprise. The simplicity of this approach leads many practitioners to apply it acritically to compute valuations.
Originally just a valuation solidity check multiples have become a popular approach to value young fast growing companies.
Selecting the right multiple would be critical as a 2x vs 10x EV Sales multiples would result in an astronomical difference. Companies with run rates of 250000 to 2000000 have been given a revenue multiple of 11x to 17x. Therefore this inherent potential is reflected in the higher valuation enjoyed by tech companies in general as opposed to manufacturing companies which in turn means a higher EBIDTA multiple. Box and Microsoft are valued between the high and low hovering between 5x-8x over the last 2 years.