SaaS business valuation?

searcher profile

November 24, 2025

by a searcher from The University of Chicago - Booth School of Business in Rochester Hills, MI, USA

What is the appropriate method for valuing a SaaS business that does not possess any physical assets?
1
5
113
Replies
5
commentor profile
Reply by a professional
in Karachi, Pakistan
SaaS businesses Valuations are dependent on following 1. Recurring revenue % as total revenue 2. Quality of ARR, the SaaS with longer contracts and auto renewal ones fecth higher multiples 3. Rule of 40 - ARR Growth + EBITDA margins should be more than 40% 4. Retention - Higher GRR & NRR businesses are valued at a premium as it showcase the customers are sticky 5. B2B vs B2C 6. Technical Debt - it is more to see if the SaaS architecture is not prone to system failure or is build on legacy systems and code
commentor profile
Reply by a searcher
from Technische Fachhochschule Berlin in Abu Dhabi - United Arab Emirates
I'd add to Shahs' list also how replicable the solution is. Per the latest coding LLMs, it's very easy to build Software from scratch. So, basically, how hard it is for new entrants to build or replicate your product and be serious competition from day one.
commentor profile
+3 more replies.
Join the discussion