- The Year of the Profitable Startup
- How to Maximize Your Exit
- Multiples Report – January 2024
- A Disclaimer on the Data
- Who Built This Report?
- What’s Happening at the Macro Level?
- Confirmed Purchase Price Profit Multiple
- Confirmed SaaS Profit Multiples
- How Your Asking Price Impacts Buyer Interest
- Confirmed Sale Price to Profit Multiples
- Just How Profitable Were Acquire’d SaaS Startups?
- How Does Profitability Impact Buyer Interest?
- How You Benefit from Setting a Realistic Asking Price
- How Does Profitability Impact the Number of Offers You Get?
- How Quickly Are Startups Selling?
- Should You Expect Cash, Conditions, or Both?
- Why Aim for More Cash at Closing?
- How Do Our Multiples Compare With Other Marketplaces?
- How to Increase Your Valuation
- Is This You? It Could Be!
- Got questions about this report?
- Why have you only reported on SaaS startups?
- Can I list my SaaS business at a price above the average multiple?
- Is revenue still a factor in valuations?
- I’m not making any profit at the moment – can I still sell my business?
- Can I apply the multiple to a profit forecast?
- How can I increase my valuation?
- How does the multiple affect the terms of an acquisition?
- Where can I get help to sell my SaaS startup?
- Why should I care about anything other than the price?
Hey founders and acquirers,
The latest multiples report is here!
I know you’ve been waiting a while for this, so thanks for your patience. (Not read our previous reports? Download them now.)
What’s new in the January 2024 edition?
We listened to your feedback after the last report (Feb 2023) and pulled together more data to help you better understand which startups are selling the most, how much for – and most importantly – why.
You might be surprised to see we’ve reported on profit multiples only. Why? Unless your startup is growing like crazy with almost zero churn, customers who love you, and tens of millions in revenue that you’re reinvesting into more growth, most buyers will value your startup using a profit multiple.
So yes it’s possible to get Acquire’d far above these multiples if you’ve built something truly exceptional. But if you want to seriously sell your startup rather than wait for passive buyers who may never come, here’s the data we’re seeing.
Put more simply, this data applies to acquisitions below $10 million in total enterprise value…
The Year of the Profitable Startup
In 2023, economic uncertainty and rising interest rates made acquisition financing more expensive. Global M&A deal volume fell by a third compared to 2022. Buyers now sit on almost $2.6 trillion in undeployed capital, and with interest rates stabilizing, they’re on the hunt for profitable startups in 2024.
You can see this shift to capital efficiency in our latest acquisition data. Profitable startups not only sell faster, but we sell more of them, and they get more attention and better offers. Many listed and sold at above market averages (as much as 34x), proving how hungry buyers are for profitable startups.
You’ll also notice that SaaS valuations on Acquire.com have fallen less than those of publicly-traded companies. If the wider market is falling, why have our asking prices been so resilient?
You can draw a few conclusions from how we run the marketplace…
How to Maximize Your Exit
First, you can list your business at any multiple you can justify to our curation team. We recommend most founders stick within the reported averages to get Acquire’d quickly and at friendly terms. But if you show high net revenue retention, profits, and superfast growth (among others), you can list and sell for more.
Planning on selling your SaaS business in 2024? Spend three to six months applying some strategies to increase your valuation. Try boosting profits by growing revenue, cutting costs, and improving efficiency. Doubling your margin could result in 30 percent more buyer interest (on average).
Value is partly a matter of perception, so you can also increase your valuation by maximizing interest in your business. What do I mean? Buyers know Acquire.com for selling profitable, bootstrapped SaaS companies. Over 350k have registered, which gives you one of the largest buyer pools on the planet.
If you can attract multiple offers from these qualified buyers, you could incite a bidding war that drives up your valuation. And no, you don’t need any silver-tongued negotiation trick. Instead, learn how to sell your business with guidance from our in-house M&A team who’ve helped close 1,000s of deals.
Buyers typically want the same things in this current market. They want to see low-risk, profitable businesses with recurring revenue matching their skill sets. You need more than just impressive numbers to convince buyers to make offers – you also need a great listing, preparation, and ongoing attention.
If you run a profitable, bootstrapped SaaS making $100k in TTM revenue, drop us a line. Get the expert help you need to maximize your exit and be the above-average outlier in our next report.
Now on to the part you’ve been waiting for…
Multiples Report – January 2024
A Disclaimer on the Data
This report uses anonymized, customer-generated data. Although we can confirm the data of acquisition transactions we participate in, others could be higher or lower than those reported.
Finally, this report and its data are not intended to provide legal, financial, or any other professional advice. We compiled this data and this report for informational purposes only to help you decide on how to most effectively use our platform. We recommend you seek the services of an M&A professional before entering into any M&A transaction. It is not Acquire.com’s intention to solicit or interfere with any established relationship you may have with any M&A professional, and nothing in this report does or intends to form any professional relationship or engagement with Acquire.com.
Please consider all types of information and data when using our platform. We do not and do not purport to make any representation, warranty, or guarantee regarding the accuracy and completeness of any of the information in this report.
Who Built This Report?
We’re on a mission to build the world’s most founder-friendly startup acquisition marketplace. As well as providing you with tools and expertise to maximize your exit, we believe in absolute transparency. We started these multiple reports to give you insights that M&A professionals don’t usually publish publicly.
If this is your first visit, see why you could do no better than selling your business on Acquire.com in the slide below. Yes, we’re a startup, but with an amazing team of former SaaS founders and M&A professionals with decades of acquisition experience. Why trust your sale to anyone else?
What’s Happening at the Macro Level?
In the last two years, SaaS valuations declined from 17x to 7x, a fall of around 58 percent. Inflation, rising interest rates, geopolitical conflicts, and more have all influenced how buyers spend their capital. (SaaS valuations on Acquire.com were more resilient, falling around 20 percent, as you’ll see in a later slide.)
Confirmed Purchase Price Profit Multiple
These are our live-on-market listings versus the confirmed sale prices by profit multiple. Notice that many founders ask for higher amounts than they sell for? Being open to negotiation helps you get Acquire’d. We recommend starting low to maximize interest that then drives up your valuation.
Confirmed SaaS Profit Multiples
On average, SaaS startups got Acquire’d at a 4.3x TTM profit multiple. Some go for as little as 0.63x and others as much as 34x TTM profit (where TTM profit was greater than $1,000). In our experience, founders exit for higher multiples due to above-average performance or because they were able to negotiate up after receiving multiple offers (ask our team for help maximizing buyer interest).
How Your Asking Price Impacts Buyer Interest
You might’ve seen this slide if you attended our valuations webinar. It represents the relationship between fair market value (FMV) and serious buyer interest. As you can see, pricing at or below FMV can attract far more serious buyers, which speeds up your exit and helps you negotiate more cash and better terms.
Confirmed Sale Price to Profit Multiples
Below, you’ll see the multiples at which SaaS startups got Acquire’d in the reporting period. Larger dots represent larger purchase prices.
Just How Profitable Were Acquire’d SaaS Startups?
SaaS businesses tend to be very profitable. The reasons why are beyond the scope of this report, but note the margins. Most SaaS startups submitted on Acquire.com ran at a 50 percent profit margin or higher. If you can beat those numbers, you might also beat multiple averages when selling.
How Does Profitability Impact Buyer Interest?
Profitable startups receive more interested buyers than less profitable startups. Profitable startups with reasonable asking prices often maximize their exits by inciting a bidding war between multiple buyers.
How You Benefit from Setting a Realistic Asking Price
One thing we always see after 1,000s of closed acquisitions is too much focus on price to the detriment of everything else. Yes, you want the best price for your startup. But if you’re flexible with your asking price, you get more offers (increasing your valuation), more cash, and fewer closing conditions.
How Does Profitability Impact the Number of Offers You Get?
Profitable startups receive substantially more offers than startups with low or no stated profit. In the buyer’s journey towards an exit event, a profitable startup is a moving vehicle they can drop into and floor the gas to realize their return. An unprofitable business is still stuck at the starting line, engine stalled, needing a tune-up, and will take more work, time, and resources to move to the next exit event.
How Quickly Are Startups Selling?
Startups are selling faster in 2023 than they did in the years before, with small, simple startups selling the fastest. One contributing factor is the streamlined acquisition process and better acquisition tooling we’ve integrated into the marketplace. We also provide expert acquisition guidance that accelerates exits.
Should You Expect Cash, Conditions, or Both?
Most offers are for all cash at closing, with a slight rise in offers with conditions from our previous report. Cash offers are usually at lower valuations since the buyer takes all the risk. If you can stay on a bit, offer seller financing, or tie some of the price to meeting performance goals, you’ll increase your valuation.
Why Aim for More Cash at Closing?
Cash means freedom to do anything you want after closing day. You could seed a new venture, retire early, or invest in other startups – anything you want, really, when you have the cash. You might, therefore, accept a slightly lower valuation for the freedom an all-cash deal offers. Pushing for the highest valuation possible and an all-cash deal may reduce your buyer pool, slow your exit, and drive your valuation down.
How Do Our Multiples Compare With Other Marketplaces?
Our profit multiples stack up similarly to other marketplaces. The economic climate has exerted downwards pressure on valuations, but buyer appetite is still strong – they’re just a little more selective.
How to Increase Your Valuation
You don’t need some fancy financial model or aggressive accounting to justify a higher multiple. The factors that increase your valuation are under your control and relatively easy to execute. For example, you probably already know where you’re overspending. And have you started exit planning yet? You should!
Is This You? It Could Be!
Some startups justify a 10x valuation. Others only dream of it. If you want to be on the right side of that division, focus on emulating the attributes of 10x startups. What are those attributes? See below. And even if you can’t quite meet the criteria, ask our team to help you sell at the best multiple possible.
That concludes our latest multiple report. Again, sorry for the delay on this one. We’ll resume our biannual cadence from today. Don’t forget that when you sell on Acquire.com, you get the best M&A professionals to help maximize your exit – all support, guidance, and advice is free. Make 2024 your year to get Acquire’d and we promise to help you get the best price and terms.
Got questions about this report?
Drop us a line at email@example.com or view the FAQs below.
Why have you only reported on SaaS startups?
We’ve only reported on SaaS startups because that’s where we have the most data. SaaS is our largest market segment, so we focused the report on SaaS acquisitions where we could draw the most meaningful insights.
Can I list my SaaS business at a price above the average multiple?
Absolutely. We recommend you stick to the averages to attract more offers which you can then use to drive your valuation up. But if your business is truly exceptional, with a great product, big profits, high net revenue retention, low churn, and so on, you can sell for much higher than the multiples reported here.
Is revenue still a factor in valuations?
Yes! But whether a buyer uses a revenue or profit multiple to value your business will depend how it’s performing. For example, buyers might use a revenue multiple if your business is growing super fast, making millions in revenue, and you’re reinvesting everything into further growth. Otherwise, buyers will use a profit multiple to ensure they realize a return on their investment.
I’m not making any profit at the moment – can I still sell my business?
We’d recommend waiting until your business is profitable. There’s little buyer appetite for low or zero-profit businesses and it might take you a long time to get Acquire’d. The longer your business sits on the marketplace, the less attractive it seems to buyers. In most cases, it’s better to wait until you’re profitable before selling to maximize your exit.
Can I apply the multiple to a profit forecast?
You could try, but buyers are unlikely to accept it. While a venture capitalist (VC) might look at a forecast more favorably when deciding whether to invest in your company, an acquirer values your business on how it performs today.
How can I increase my valuation?
You can increase your valuation in two ways. One, increase profit. Two, increase buyer interest in your business. The first is relatively simple and under your control. Grow your business, cut expenses, and boost operational efficiency to increase your profit margin. Increasing buyer interest can be a little harder without expert help. Not only must you know how to highlight your startup’s best features, but also get inside the mind of buyers to negotiate the best deal. Ask our team for help maximizing interest in your business so we can drive up your valuation and get you Acquire’d at terms that make you happy.
How does the multiple affect the terms of an acquisition?
Most acquisitions involve a mix of cash at closing and conditional payment terms. You might agree to a 75 percent cash payment plus an earnout or 25 percent seller financing, for example. Being open to conditional payments and seller financing can help you negotiate a higher multiple since you’re sharing some of the buyer’s risk. But if you want more or all cash, expect buyers to negotiate the price down.
Where can I get help to sell my SaaS startup?
From us! You get acquisition guidance included for free when selling your business on Acquire.com. We can help maximize your exit by perfecting your listing, marketing your startup, and coaching you through negotiations and due diligence. And if you own a profitable SaaS business making at least $100k in TTM revenue, you could also qualify for Guided by Acquire, our in-house M&A service that gives you dedicated advisory throughout your exit.
Why should I care about anything other than the price?
Your purchase price is just one part of your acquisition. The other is the terms. Both impact what you can do after your acquisition closes, so think carefully about your post-acquisition goals. For example, if you want to seed a new venture and start working on it immediately, you probably want as much cash as you can get and a short transition period. Both increase the risk to the buyer who’ll probably try to push your valuation down. On the other hand, if you’re in no rush to leave and can stay on in the business for a year or so, you can drive up your valuation by agreeing to post-closing terms like earnouts or seller financing. In other words, the price and terms both impact your acquisition goals – consider them together.
The content on this site is not intended to provide legal, financial or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before entering into any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional.