{"id":21491,"date":"2023-02-16T15:26:41","date_gmt":"2023-02-16T23:26:41","guid":{"rendered":"https:\/\/firstpagesage.com\/?p=21491"},"modified":"2023-02-16T15:26:41","modified_gmt":"2023-02-16T23:26:41","slug":"saas-valuation-multiples-2023-report","status":"publish","type":"post","link":"https:\/\/redesign.fpsclients.com\/wp\/saas-valuation-multiples-2023-report\/","title":{"rendered":"SaaS Valuation Multiples: 2023 Report"},"content":{"rendered":"

Our analysts recently conducted a meta-analysis on SaaS valuation multiples, aggregating publicly available data on SaaS dealflow from Q1 2022 \u2013\u00a0Q1 2023. The table below shows the average valuation multiples SaaS companies are selling for today, broken down by the 3 most common valuation models: <\/span>EBITDA<\/span><\/a>, SDE, and Revenue. The data is further segmented by SaaS business type and EBITDA\/Revenue\/SDE range.<\/span><\/p>\n

2023 SaaS Valuation Multiples – EBITDA<\/b><\/h3>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Business Type<\/b><\/td>\nEBITDA Range<\/b><\/td>\n<\/tr>\n
$1-3M<\/b><\/td>\n$3-5M<\/b><\/td>\n$5-10M<\/b><\/td>\n<\/tr>\n
Advertising \/ AdTech<\/b><\/td>\n10.3x<\/span><\/i><\/td>\n10.8x<\/span><\/i><\/td>\n12.6x<\/span><\/i><\/td>\n<\/tr>\n
Agriculture \/ AgTech<\/b><\/td>\n9.7x<\/span><\/i><\/td>\n11.4x<\/span><\/i><\/td>\n12.1x<\/span><\/i><\/td>\n<\/tr>\n
Communication<\/b><\/td>\n12.8x<\/span><\/i><\/td>\n13.5x<\/span><\/i><\/td>\n14.1x<\/span><\/i><\/td>\n<\/tr>\n
Customer Relationship Management (CRM)<\/b><\/td>\n12.5x<\/span><\/i><\/td>\n13.8x<\/span><\/i><\/td>\n15.5x<\/span><\/i><\/td>\n<\/tr>\n
Cybersecurity<\/b><\/td>\n12.8x<\/span><\/i><\/td>\n14.3x<\/span><\/i><\/td>\n16x<\/span><\/i><\/td>\n<\/tr>\n
E-Commerce<\/b><\/td>\n13.2x<\/span><\/i><\/td>\n14.7x<\/span><\/i><\/td>\n15.3x<\/span><\/i><\/td>\n<\/tr>\n
Education \/ EdTech<\/b><\/td>\n11.4x<\/span><\/i><\/td>\n12.1x<\/span><\/i><\/td>\n14.8x<\/span><\/i><\/td>\n<\/tr>\n
Enterprise Resource Planning (ERP)<\/b><\/td>\n12.5x<\/span><\/i><\/td>\n14.1x<\/span><\/i><\/td>\n14.9x<\/span><\/i><\/td>\n<\/tr>\n
Enterprise<\/b><\/td>\n13.8x<\/span><\/i><\/td>\n14.5x<\/span><\/i><\/td>\n15.2x<\/span><\/i><\/td>\n<\/tr>\n
Environmental \/ CleanTech<\/b><\/td>\n12.2x<\/span><\/i><\/td>\n14.1x<\/span><\/i><\/td>\n16.2x<\/span><\/i><\/td>\n<\/tr>\n
Financial \/ Fintech<\/b><\/td>\n12.3<\/span><\/i><\/td>\n14.5x<\/span><\/i><\/td>\n15.5x<\/span><\/i><\/td>\n<\/tr>\n
Healthcare \/ MedTech<\/b><\/td>\n11.8x<\/span><\/i><\/td>\n13.9x<\/span><\/i><\/td>\n15.1x<\/span><\/i><\/td>\n<\/tr>\n
Human Resources (HR)<\/b><\/td>\n15.8x<\/span><\/i><\/td>\n17x<\/span><\/i><\/td>\n19.2x<\/span><\/i><\/td>\n<\/tr>\n
Legal \/ Legal Tech<\/b><\/td>\n10.8x<\/span><\/i><\/td>\n11.8x<\/span><\/i><\/td>\n12.6x<\/span><\/i><\/td>\n<\/tr>\n
Real Estate \/ Proptech<\/b><\/td>\n9.1x<\/span><\/i><\/td>\n10.4x<\/span><\/i><\/td>\n11.8x<\/span><\/i><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

2023 SaaS Valuation Multiples – Revenue<\/b><\/h3>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Business Type<\/b><\/td>\nRevenue Range<\/b><\/td>\n<\/tr>\n
$1-5M<\/b><\/td>\n$6-10M<\/b><\/td>\n$10-75M<\/b><\/td>\n<\/tr>\n
Advertising \/ AdTech<\/b><\/td>\n4.6x<\/span><\/i><\/td>\n5.5x<\/span><\/i><\/td>\n7.2x<\/span><\/i><\/td>\n<\/tr>\n
Agriculture \/ AgTech<\/b><\/td>\n5.3x<\/span><\/i><\/td>\n6.1x<\/span><\/i><\/td>\n8.8x<\/span><\/i><\/td>\n<\/tr>\n
Communication<\/b><\/td>\n5.8x<\/span><\/i><\/td>\n6.5x<\/span><\/i><\/td>\n7.1x<\/span><\/i><\/td>\n<\/tr>\n
Customer Relationship Management (CRM)<\/b><\/td>\n5.5x<\/span><\/i><\/td>\n6.8x<\/span><\/i><\/td>\n8.1x<\/span><\/i><\/td>\n<\/tr>\n
Cybersecurity<\/b><\/td>\n6.2x<\/span><\/i><\/td>\n6.8x<\/span><\/i><\/td>\n8.1x<\/span><\/i><\/td>\n<\/tr>\n
E-Commerce<\/b><\/td>\n6.2x<\/span><\/i><\/td>\n7.7x<\/span><\/i><\/td>\n9.3x<\/span><\/i><\/td>\n<\/tr>\n
Education \/ EdTech<\/b><\/td>\n5.3x<\/span><\/i><\/td>\n6.2x<\/span><\/i><\/td>\n6.8x<\/span><\/i><\/td>\n<\/tr>\n
Enterprise<\/b><\/td>\n5.8x<\/span><\/i><\/td>\n7.2x<\/span><\/i><\/td>\n9.7x<\/span><\/i><\/td>\n<\/tr>\n
Enterprise Resource Planning (ERP)<\/b><\/td>\n6.5x<\/span><\/i><\/td>\n8.1x<\/span><\/i><\/td>\n10x<\/span><\/i><\/td>\n<\/tr>\n
Environmental \/ CleanTech<\/b><\/td>\n6.1x<\/span><\/i><\/td>\n7.4x<\/span><\/i><\/td>\n8.0x<\/span><\/i><\/td>\n<\/tr>\n
Financial \/ FinTech<\/b><\/td>\n5.1x<\/span><\/i><\/td>\n5.9x<\/span><\/i><\/td>\n7.7x<\/span><\/i><\/td>\n<\/tr>\n
Healthcare \/ MedTech<\/b><\/td>\n6.1x<\/span><\/i><\/td>\n7x<\/span><\/i><\/td>\n9.1x<\/span><\/i><\/td>\n<\/tr>\n
Human Resources (HR)<\/b><\/td>\n5.8x<\/span><\/i><\/td>\n7x<\/span><\/i><\/td>\n9.2x<\/span><\/i><\/td>\n<\/tr>\n
Legal \/ LegalTech<\/b><\/td>\n4.8x<\/span><\/i><\/td>\n6x<\/span><\/i><\/td>\n7.5x<\/span><\/i><\/td>\n<\/tr>\n
Real Estate \/ PropTech<\/b><\/td>\n5.5x<\/span><\/i><\/td>\n6.8x<\/span><\/i><\/td>\n8.2x<\/span><\/i><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

2023 SaaS Valuation Multiples – SDE<\/b><\/h3>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Business Type<\/b><\/td>\nSDE Range<\/b><\/td>\n<\/tr>\n
$500k-1M<\/b><\/td>\n$1M-2M<\/b><\/td>\n$2M-3M<\/b><\/td>\n<\/tr>\n
Advertising \/ AdTech<\/b><\/td>\n6.2x<\/span><\/i><\/td>\n7.5x<\/span><\/i><\/td>\n8.2x<\/span><\/i><\/td>\n<\/tr>\n
Agriculture \/ AgTech<\/b><\/td>\n7.1x<\/span><\/i><\/td>\n8.4x<\/span><\/i><\/td>\n10x<\/span><\/i><\/td>\n<\/tr>\n
Communication<\/b><\/td>\n7.5x<\/span><\/i><\/td>\n8.3x<\/span><\/i><\/td>\n8.9x<\/span><\/i><\/td>\n<\/tr>\n
Customer Relationship Management (CRM)<\/b><\/td>\n7.5x<\/span><\/i><\/td>\n8.2x<\/span><\/i><\/td>\n9x<\/span><\/i><\/td>\n<\/tr>\n
Cybersecurity<\/b><\/td>\n7.8x<\/span><\/i><\/td>\n8.6x<\/span><\/i><\/td>\n9.5x<\/span><\/i><\/td>\n<\/tr>\n
Education \/ EdTech<\/b><\/td>\n6.1x<\/span><\/i><\/td>\n7.0x<\/span><\/i><\/td>\n8.3x<\/span><\/i><\/td>\n<\/tr>\n
Environmental \/ CleanTech<\/b><\/td>\n6.9x<\/span><\/i><\/td>\n8.3x<\/span><\/i><\/td>\n9.2x<\/span><\/i><\/td>\n<\/tr>\n
E-Commerce<\/b><\/td>\n7.1x<\/span><\/i><\/td>\n8.6x<\/span><\/i><\/td>\n9.5x<\/span><\/i><\/td>\n<\/tr>\n
Enterprise<\/b><\/td>\n7.8x<\/span><\/i><\/td>\n9.0x<\/span><\/i><\/td>\n10.5x<\/span><\/i><\/td>\n<\/tr>\n
Enterprise Resource Planning (ERP)<\/b><\/td>\n6.1x<\/span><\/i><\/td>\n7.2x<\/span><\/i><\/td>\n8.2x<\/span><\/i><\/td>\n<\/tr>\n
Financial \/ Fintech<\/b><\/td>\n7.7x<\/span><\/i><\/td>\n8.5x<\/span><\/i><\/td>\n9.2x<\/span><\/i><\/td>\n<\/tr>\n
Healthcare \/ MedTech<\/b><\/td>\n7.7x<\/span><\/i><\/td>\n8.9x<\/span><\/i><\/td>\n9.7x<\/span><\/i><\/td>\n<\/tr>\n
Human Resources (HR)<\/b><\/td>\n7.9x<\/span><\/i><\/td>\n8.4x<\/span><\/i><\/td>\n9.7x<\/span><\/i><\/td>\n<\/tr>\n
Legal \/ LegalTech<\/b><\/td>\n7.1x<\/span><\/i><\/td>\n8x<\/span><\/i><\/td>\n8.8x<\/span><\/i><\/td>\n<\/tr>\n
Real Estate \/ PropTech<\/b><\/td>\n6.8x<\/span><\/i><\/td>\n7.9x<\/span><\/i><\/td>\n9.2x<\/span><\/i><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The following sections provide further context to the data above by offering a high-level overview of the current M&A environment for SaaS companies, as well as suggestions for how to sell a Saas company in 2023.\u00a0<\/span><\/p>\n

The 2023 M&A Market for SaaS Companies<\/b><\/h2>\n

Globally, the SaaS industry is valued at $186.6 billion in 2023, most of which are enterprises. With a CAGR of 25.25%, the industry is expected to more than triple by 2028, coming to a total of $720.4 billion. These numbers are on track with the industry\u2019s historical expansion, having increased 7x over the last 10 years as more companies are seeking cloud-based services for their company.\u00a0<\/span><\/p>\n

Despite its projected growth, the economic downturn of Q3-Q4 2022 has negatively affected current valuation multiples. As of Q1 2023, industry reports have projected SaaS revenue multiples at a three-year low, averaging a pre-pandemic level of ~5.5x. By comparison, Q3 2021 valuations hit a record high of 9.8x. Such a dramatic decrease is both a comment on the economic impact of global events (e.g., inflation or Russian invasion of Ukraine) as well as the volatile nature of SaaS and the tech sector as a whole.\u00a0<\/span><\/p>\n

As the economy begins to recover, SaaS company owners seeking to sell their company are contending with several challenges:\u00a0<\/span><\/p>\n