What Is Your SaaS Company Actually Worth in 2024?

The SaaS Valuation Reality Check

After selling two SaaS companies and advising on dozens of tech transactions, I have seen how dramatically valuations can vary based on specific metrics. Here is what actually matters.

The Metrics That Move Multiples

**Net Revenue Retention (NRR):** This is the single most important metric for SaaS valuations. Companies with NRR above 120% regularly trade at 2-3x higher multiples than those below 100%.

**Growth Rate:** Still matters, but efficiency matters more than it did in 2021. Buyers want to see a path to profitability, not just growth at any cost.

**Gross Margins:** Software-like margins (70%+) command software-like multiples. If your margins are below 60%, buyers may classify you as a services business.

What Buyers Are Actually Paying

Based on transactions I have seen in the past 12 months:

**$1-5M ARR, 20-40% growth, 100-110% NRR:** 3-5x ARR

**$5-15M ARR, 30-50% growth, 110-120% NRR:** 5-8x ARR

**$15M+ ARR, 40%+ growth, 120%+ NRR:** 8-12x ARR

These are generalities—your specific situation will vary based on market, competition, team, and dozens of other factors.

How to Maximize Your Valuation

**Focus on retention first:** Improving NRR by 10 points often matters more than adding new customers.

**Document your moat:** Why can't someone replicate this in 6 months?

**Clean up your metrics:** Make sure your ARR calculation is defensible.

**Build relationships early:** The best exits come from strategic acquirers who already know you.

Sarah Williams sold her first SaaS company for $8M and her second for $45M. She now advises tech founders on positioning for acquisition.

The SaaS Valuation Reality Check

The Metrics That Move Multiples

What Buyers Are Actually Paying

How to Maximize Your Valuation

Sarah Williams

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