Volset: Private equity caps SaaS multiples at 10x; higher requires strategics
Einar Volset · Einar Volsett on How TinySeed Works · Jun 10, 2020 · at 56:06
Einar Volset, SaaS M&A advisor at Discretion Capital and partner at TinySeed, breaks down valuation multiple tiers across value PE, growth PE, and strategic buyers.
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“If you're growing zero to 20%, then like what is an easy multiple to get, I think is about three X. And then and from 20 up to about 50%, you can probably get four X, maybe five. From 50 to about a hundred percent growth. This is annual growth. You can get anywhere from five to five to seven times. And so the value buyers are the ones looking to pay. Usually they're hoping to pay one X, but those days are over. I think they're usually looking to pay two to four times revenue. And then above that, you really get into the growth club. The people are willing to pay anywhere from four to seven times, seven, eight, maybe nine, sometimes 10, depending on the size of the company and the profitability. And then above that is all strategics”
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