Fast-growing technology (>75% gross margin) businesses are usually traded on a revenue multiple. Slower-growing businesses are when you'd look at EBIDTA (won't talk about slow-growing ones here, if your prospect doesn't meet the below criteria lmk and I can add info on EBIDTA multiples). Caveat: these #s may be different for non-recurring revenue / non-SaaS tech businesses.

What counts as "fast-growing" depends on scale - <1M revenue, 200%+; <5M revenue, 100%+; <10M, 75%+; 10M+, 50%.

For a fast growing business you'd see revenue multiples like 3-5X if you're 1-10M in revenue. More like 2.5-3X at the low end, higher at the higher end?

If you're above 10M and fast-growing, revenue multiples like 4-7X are market. Above 7X is definitely possible, but it's more speculative / venture valuation, rather than a PE multiple. Strategic acquisitions will drive all of these multiple numbers up ++1-10 (totally depends).

Earnout thoughts: Everyone fights above whether these "standard multiples" are multiples on GAAP revenue, point in time ARR, or "forward revenues." Typically a standard PE firm will think of things in terms of GAAP revenue, but a business owner of course wants to do point in time ARR revenue (or even better, forward revenue) because it dramatically increases their opportunity. Handling that tension with an earnout is common for these kinds of smaller entities.

In our experience selling B2B SaaS in the $2-10m ARR range, I think this is a little low. We just sold a $3m ARR B2B SaaS growing 100% yoy for 10x ARR, have a 8m ARR growing 50% under LOI for 6x. I think churn is a very big part of the equation, at least for most PE buyers.

^[redacted]‌ - Be sure to take advantage of our recent integration with BVR Deal Stats under the VALUATIONS tab at the top of this screen. Here is the direct link: https://www.searchfunder.com/bvr ^[redacted]‌, ^[redacted]‌ or ^[redacted]‌ from BVR may be able to provide additional context on fast growing fintech valuations.

Also, don't miss the relevant IBISWorld reports, including IBISWorld Mexico, available under the Industries tab at the top of this screen. https://www.searchfunder.com/ibisworld. ^[redacted]‌ or ^[redacted]‌ from IBISWorld may be able to suggest the most appropriate title for you.

You have great market input from Kendal and Einar.
I am an M&A Intermediary and also have valuation software firm. Few years ago, my client (a PublicCo) bought a start-up that just had one moth of non-recurring revenue. Price of $180 M cash. Even though everyone talks about a multiple, which is true, the reality also is that the buyer HAS to do ROI analysis. No ifs and buts here. I made interactive valuation presentations to the board and the executive management using my software. The presentation addressed assumptions and what-if analysis. The software is DCF on steroids or some have said ...it defies gravity. My main point is that you have to combine the market input with ROI and what-if analysis.