18-factors-to-track-Saas-Company
Exclusive white paper

What’s your software company worth?

Are you a software executive looking at a potential exit, or acquisition? Don’t guess, know your worth. SEG’s complimentary new whitepaper can help you be sure.

Download your full copy

Know the score.

Use the valuation scorecard to track the qualitative and quantitative factors most important to estimating your company’s value. 

SaaS-Valuation-Scorecard

It’s more than the numbers.

Your company is more than the bottom line. Your delivery model, growth potential, even your management team are all considerations when valuing your software business.

Biggest-or-best

Biggest? Or best?

You don’t have to be the biggest player in your software space to be the most attractive to potential buyers. SEG’s Kris Beible guides you through what his team looks for when positioning your company for offers.

Know-your-goals

Know your goals

Are you looking to sell to a private equity firm or strategic buyer? Merge with another company? Beginning the valuation process with clearly-defined goals puts you on a clear path toward a successful exit.

Every journey starts with a single step.

When you understand all the factors that impact your company’s valuation, you can make improvements that have the greatest impact on your bottom line and your exit strategy. Our complimentary whitepaper helps you clearly see the path to success.

Download the 18 factors

Weigh & interpret the factors that matter.

What you’ll discover in this white paper

In this whitepaper, you’ll see which factors buyers and investors prioritize most as they evaluate your company, where you should focus your attention first, and how to properly position your company for a liquidity event.

QUANTITATIVE FACTORS

  • ARR / Recurring Revenue Growth
    Software companies with ARR of at least 30-40% are in an excellent position.
  • Rule of 40
    This calculation adds your revenue growth and EBITDA margin percentages together to measure how efficiently your company is growing.
  • Gross Revenue Retention Rate
    Gross revenue retention includes downgrades or reduced usage added onto your loss.
  • Net Revenue Retention Rate
    Net includes upsells or increased usage
  • LTV : CAC
    The ratio of your company's customer lifetime value to customer acquisition cost indicates your profitability and the effectiveness of your marketing efforts.
  • % Recurring Revenue
    This is the most reliable portion of your company's total revenue. Software companies with 70% or greater recurring revenue are in an excellent position.
  • Gross Margins
    Gross margin is a strong indicator of your company's scalability, so it's important to calculate this accurately.
  • Client Concentration (Top 10)
    Ideally, your top 10 clients should make up less than 20% of your revenue.
  • Total Revenue
    Total revenue on its own doesn't illustrate your customer experience in the same way retention metrics can. That's why it's given less weight compared to other factors.
  • EBITDA Margin
    EBITDA is another metric that tells a more complete story when combined with other metrics. It's not weighted as heavily, but it's important to know this number.

QUALITATIVE FACTORS

  • Delivery Model
    For SaaS companies, cloud services are much more interesting to the market and tend to yield higher valuations.
  • Product
    Product is one of the biggest determining factors in whether or not your software company is highly valued. The key characteristic is differentiation.
  • Technology
    Leading edge technology is more highly valued than legacy tech in software valuations.
  • Market Growth
    Knowing your market growth rate helps you set company goals in the short term and gives buyers and investors a sense of how sustainable your company will continue to be.
  • Market Attractiveness
    Monitoring your competition and the overall reception of new entrants into the market is key to presenting where you stand.
  • Management Team
    Buyers and investors want to see that your company's leadership team has successfully executed their business plan and has the right skills to move the company forward.
  • Total Addressable Market
    Investors want to see evidence that there's room to grow. The size of your company also plays a role.
  • Market Position
    Market position refers to where your software business is in relation to your competitors.
Kris-Beible-VP-SEG
Kris Beible, EVP of SEG

Experienced M&A advisors.

90% first-pass success rate.

Our team of experienced M&A advisors understand value drivers. We can provide insight on how to make your company more attractive to investors long before you’re ready for a liquidity event.

Download the 18 factors