SaaS EBITDA multiples for private M&A.

SaaS is one of the few sectors where two businesses with identical EBITDA can sell for very different prices. A company growing 40% a year while reinvesting everything into sales may show thin or negative EBITDA, so buyers price it on annual recurring revenue instead. A mature product growing 10% with 30% margins is priced on EBITDA, because that is what services acquisition debt and funds a private equity return.

The crossover usually happens once growth slows below roughly 20% and the business is consistently profitable. At that point, most sponsor buyers will anchor on EBITDA and use the revenue multiple only as a sense check.

Vertical SaaS serves one industry deeply, such as software for dental practices, freight brokers or property managers. It tends to become embedded in the customer's daily workflow, integrates payments or data services that lift revenue per account, and faces fewer direct competitors. That combination produces lower churn and more predictable expansion.

Horizontal tools compete across every industry against well-funded incumbents, so buyers discount for competitive risk unless retention data proves otherwise.

Net revenue retention (NRR). Above 110% signals that existing customers grow on their own. Below 95% means the business must win new logos just to stand still.

Gross margin. Software buyers expect 75% or better. Heavy hosting, services or implementation costs make a business look more like a tech-enabled service and price like one.

Rule of 40. Growth rate plus EBITDA margin. Scores above 40 support premium multiples; our SaaS valuation calculator (opens in a new tab) models this directly.

The multiple is only half the price. The other half is the EBITDA figure it is applied to. Buyers accept genuine one-off costs and above-market founder salaries as add-backs, but they push back on capitalised development costs, recurring "one-off" legal fees and stock-based compensation presented as non-cash.

A disputed add-back reduces the price by the full multiple, not just the cost itself. Our adjusted EBITDA definition (opens in a new tab) covers what normally survives diligence.

The common discounts are customer concentration (one client above 15% to 20% of revenue), founder-led sales with no repeatable pipeline, monthly contracts with no annual commitments, technical debt that a buyer must fund, and revenue in currencies or jurisdictions the buyer cannot easily hold. Each is fixable, but usually over quarters rather than weeks, so the work belongs well before a sale process starts.

Treat the table as a starting frame. Place your business in the right sub-sector, then move up or down the range based on retention, growth and margin. Compare the result with the full sector multiples dataset and, if you are preparing for a transaction, pressure-test it against the buyers who are actually active in your niche.