How to value a small SaaS business?
I'm in discussions to buy a SaaS product similar to many of the small SaaS businesses run by other IndieHackers (i.e. a business doing somewhere between $500-5000/mo).
What are your thoughts on a fair and objective way to determine a valuation for a small SaaS business?
I imagine this exercise would also be useful for IHers who receive offers on their businesses.
I have seen 2-4x ARR depending on growth. So $12,000 - $240,000
Keep us updated :)
In our experience, it's been about those multiples but based on EBITA. So, net annual revenue vs gross. I think those multiples also assume CAC is fairly low (not sure what the right number is industry-wide though).
Churn rate plays a big role because it can determine your growth ceiling.
A lot of good answers here. Buyers also tend to like businesses that have been around and have all their docs in order. You can expect a higher price if you nail these things :)
Hello there, where did you find the saas to buy? mind sharing Please?