May 18, 2019

Buying a saas biz; what are good purchase multiples for small saas businesses?

Roger @misterhtmlcss

I'm curious what a very small saas business like $5-$15k per month gross revenue would get if it was sold. A product business though, not a content business. I'm asking because I'm both interested in the possibility of buying one if the opportunity presented itself and of course because I'm planning to start one that I might one day wish to sell myself.

  1. 2

    A business as you described has a very key point to consider - how critical is the founder to success.

    At those kind of revenues likely a small (if any) team so all key knowledge is in the founders mind. Once they sell their motivation goes, even if you lock them into working for a reasonable handover period.

    1. 1

      Thank you for your response! I really appreciate it. I know I was thin on my details, but any response was going to be informative

  2. 2

    I look for MRR, churn, age of the business and time involved to operate. Based on the information, it can go anywhere from 2.5x to 4x of annual net.

    1. 1

      Thank you for your response! I really appreciate it. I know I was thin on my details, but any response was going to be informative.

      Btw. What's MRR? Monthly Recurring Rev...did I guess right?

      1. 1
  3. 1

    Sorry, I don't really understand what you are asking, can you clarify?

    1. 1

      Edited. Does this make more sense? Also thank you for spotting my poorly crafted post, because it didn't make sense and I wouldn't have gotten a response without some more tweaking

      1. 2

        No problem, the edit is better :)

        Am pretty sure others will come up with better answers. Generally I've seen 3x annual profit (not revenue) as a general guidance. It can be much more than that, but it depends on so many things.