How do I value a B2B SaaS company with only 8 customers?

November 05, 2025

by a searcher from Purdue University in Denver, CO, USA

Hey Everyone 👋, I'm evaluating a SaaS company that has very strong SDE but huge concentration risk with only 8 customers. Should I just pass on this opportunity and move on or bake the risk into the ARR multiple? Best, Alex

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Reply by a lender
from University of Missouri in Denver, CO, USA

Hey Alex, I think it depends on how sticky these customers are. How easy would it be for them to move on post-close? Is there competitors they could switch to? Is there any contracts holding them there? I would think at minimum it would be a lower valuation and a large seller note

Reply by an intermediary
from University of Washington in Chicago, IL, USA

We do a lot of technical DD for SaaS businesses so can chime in. - 8 paying clients must be spread out revenue-wise equally or close. Cant have one with the majority - Is there a way to get new clients organically, or paid? If you lose 1/8 client and have no way to get more, that's a bigger problem. If there is a way to naturally get more clients, then if the deal valuation is good, it's worth a look - Use the low number of clients as a negotiation tactic for a better valuation or deal terms - Definitely utilize an earnout structure - tie earnout to churn or a function of revenue drop - Lastly, how sticky is the business? How large is the subscription in dollars? Is it a combination of software + service? If so, that would make it more sticky. My 2 cents. Good luck.

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