The world of stock markets can be a rollercoaster, with software company valuations soaring to incredible heights, only to plummet just as quickly. But what about the vast majority of software founders whose companies don’t fit the mold of the public giants?
In an analysis spanning from 2015 to 2023, Aventis Advisors, one of the Globalscope partner firms, uncovers the truths about private software company valuations. Unlike their high-revenue, cash-burning counterparts in the public sphere, these private software firms have their own unique stories to tell:
- Most generate a few million dollars in revenue, a far cry from the $100M+ ARR of public SaaS companies.
- Many are profitable, avoiding the luxury of burning cash for years to spur revenue growth.
- A significant portion operates outside the US, showcasing global diversity.
Delve into Aventis Advisors report, which dissects over 1,900 private software company transactions, and discover:
- The median software company was acquired at 16.8x EBITDA and 3.3x Revenue over the past 7 years
- The valuations temporarily increased in 2021 to 6.0x Revenue, but now seem to be returning to the long-term mean
- Deal size is a critical factor in valuation – the multiple doubles when a company moves from $5-20M to a $500M+ basket
- US registration adds about 4-5x to EBITDA multiple