Why Your <$2M ARR SaaS Isn’t Worth What You Think (and How to Fix It)

If you're bootstrapping a SaaS and approaching $2M in ARR, congrats. You've already beaten the odds and gotten further than most founders.

But here's the uncomfortable truth: your business probably isn’t worth what you think it is.

I’m a business broker specializing in the sale of SaaS companies. I speak with founders every week who expect a 5x to 10x revenue multiple based on what they see on Twitter, TechCrunch, or from VC-backed unicorns.

But when it comes time to sell, the reality is sobering.

The Myth of ARR Multiples
Yes, you’ll see stories of companies selling for 8x or 10x ARR. But those are usually:

VC-backed with strong growth (30–100% YoY)

Profitable at scale or on a clear path to it

Unique and hard to replicate technology addressing a multi-billion dollar market

Most bootstrapped SaaS businesses in the $2M–$5M ARR range don’t check those boxes.

The truth? If your churn is high, growth is flat, or you're still in the driver’s seat for sales, product, and ops — your valuation could be closer to 1.8x–3x revenue, or even based on EBITDA instead.

What Buyers Care About
Buyers aren’t buying the dream. They’re buying the math.

At the end of the day, they’re asking:

“How many years will it take to earn back what I’m paying for this?”

They’ll look at your EBITDA, your historical growth rate, and run a straight-line projection from the last 3 years. If your business is generating $500K in EBITDA with flat growth and you’re asking $5M, that’s a 10-year payback — which almost always kills the deal.

Most professional buyers aim to recoup their full investment within 3–5 years, ideally without requiring explosive growth to achieve this. That means your price must make sense in terms of cash flow and growth.

Final Thought
Buyers don’t pay for potential. They pay for predictable, transferable performance that earns back their investment in 3–5 years, max.

If you’re building a SaaS and want to sell eventually, make the business like someone else will own it.

I'm happy to answer questions in the comments or share what I’m seeing in real-life deals.