SaaS acquisition multiples and how to read comparable deals

SaaS acquisition multiples express a deal price as a multiple of a revenue or profit measure, usually annual recurring revenue (ARR) for larger businesses and seller's discretionary earnings (SDE) for smaller ones. To use a comparable deal, you adjust its multiple for differences in growth, churn, retention, margin and size before applying it.

Multiples are useful because they turn very different businesses into a common language. A price of 2 million USD means little on its own. A price of a certain multiple of ARR can be set beside other deals and argued about. But a multiple is only as good as the comparison behind it, and reading comparable SaaS deals well takes more care than reading comparable domain sales. This guide explains the two main multiples, the adjustments that matter, and the mistakes that make a comps-based SaaS valuation misleading.

A note on scope before we start. SoldComparables does not hold a database of SaaS or website acquisition deals. What is live in the product today is domain comps: 128,867 recorded domain sales from May 2021 to May 2026. This article explains the comparable-acquisitions method so you can apply it with whatever deal evidence you have. It does not quote market multiples, because we do not hold a dataset that would let us state them reliably.

What an acquisition multiple measures

An acquisition multiple is simply price divided by a financial measure.

• ARR multiple = purchase price divided by annual recurring revenue.
• SDE multiple = purchase price divided by seller's discretionary earnings.
• EBITDA multiple = purchase price divided by earnings before interest, taxes, depreciation and amortisation. Common for larger, more mature companies.

Which one a deal uses depends mostly on size and profile. Small, owner-run SaaS products are usually priced on SDE, because the buyer is often buying an income stream that one person can run. Larger, growing companies are usually priced on ARR, because buyers care more about the size and quality of the recurring revenue than about current profit.

ARR multiples explained

ARR is the annualised value of recurring subscription revenue at a point in time. If a business has 50,000 USD of monthly recurring revenue, its ARR is 600,000 USD. One-time fees, setup charges and services revenue are normally excluded, because they do not repeat.

An ARR multiple rewards the qualities that make recurring revenue valuable: it grows, it stays, and it expands. Two businesses with the same ARR can deserve very different multiples if one is growing fast with customers who stay and the other is flat with customers who leave.

Things to check before you trust an ARR figure

• Is it really recurring, or does it include one-time revenue?
• Is it net of discounts and refunds?
• Are annual contracts counted once, not twelve times?
• Are customers in arrears or on paused plans included?

A multiple applied to an inflated ARR produces an inflated price. Normalise the figure first.

SDE multiples explained

SDE is profit before the owner's own salary and discretionary expenses. It starts with net profit and adds back the owner's compensation, one-off costs and personal expenses run through the business. The idea is to show what a single owner-operator would earn from the business.

SDE multiples are common for smaller online businesses because they match how buyers of those businesses think: what income will this produce for me, and how many years of that income am I paying for. The risk is in the add-backs. Every add-back should be documented, and a buyer should ask whether the business really runs without each cost that has been added back.

Why multiples differ between deals

The same revenue does not command the same multiple in every deal. Five factors explain most of the gap between one comparable and another.

Growth

Faster growth means more revenue in future years, so buyers pay more for each dollar of current revenue. When comparing two deals, note the growth rate of each at the time of sale. A comp that was growing much faster than your business deserves a downward adjustment before you apply its multiple.

Churn and retention

Churn is the share of customers or revenue lost in a period. Net revenue retention measures how revenue from an existing customer group changes over time, including expansion from upgrades. High churn means the business must keep replacing customers just to stand still. Strong net retention means existing customers grow on their own. Retention is often the single biggest driver of a SaaS multiple, because it decides how durable the revenue is.

Margin

Gross margin shows how much of each dollar of revenue is left after the direct cost of delivering the product. A product with high hosting, support or third party costs keeps less of its revenue, so each dollar of ARR is worth less. For SDE deals, operating margin matters directly, because it is the profit being multiplied.

Size

Larger businesses usually command higher multiples than small ones. They tend to have more customers, less dependence on one person, more diversified revenue and a wider pool of potential buyers. A comp ten times the size of your business is not a direct guide to your multiple.

Concentration and dependence

If one customer is a large share of revenue, or the business depends on a single channel, a single platform or the founder's personal involvement, buyers discount for that risk. Two deals with the same growth and churn can still differ because one has these concentrations and the other does not.

Adjusting a comparable deal, step by step

Here is how the method works on numbers. Everything in this section is hypothetical arithmetic to show the mechanics. None of the multiples below is a market figure.

Suppose you are valuing Business A, a SaaS product with 600,000 USD of ARR. You have found a comparable deal, Business B, which sold for a price equal to 4.0 times its ARR.

Now adjust B's multiple for each difference, stating the reasoning.

1. Growth. B grew twice as fast. Apply a hypothetical downward adjustment of 0.6, taking the multiple to 3.4.
2. Retention. A retains revenue slightly better. Apply a hypothetical upward adjustment of 0.2, taking it to 3.6.
3. Margin. The same. No adjustment.
4. Size. A is much smaller. Apply a hypothetical downward adjustment of 0.4, taking it to 3.2.

The adjusted hypothetical multiple of 3.2 applied to A's 600,000 USD ARR gives 1,920,000 USD. In practice you would repeat this with several comps and present the results as a range, for example from the lowest to the highest adjusted figure, with the most similar comp weighted most heavily.

The size of each adjustment is a judgement. The point of writing them down is that anyone reading the valuation can see the judgement and challenge it, rather than receiving a single number with no reasoning.

Where comparable SaaS deal data comes from

This is the hard part, and it is worth being honest about it. Unlike domain sales, where public reports list thousands of transactions each year with a venue and a date, most SaaS acquisitions are private. Prices are often confidential, and when they are disclosed, the underlying metrics (growth, churn, margin) usually are not.

Typical sources include marketplace listings and published sold listings, broker reports, disclosures from public acquirers, and the buyer's or broker's own past deals. Each has gaps. A listing price is not a sale price. A broker report may describe its own deals, which are not a random sample. A public company's disclosure may cover only very large deals. Before relying on any multiple, ask who published it, which deals it covers, and how the measure was defined.

If someone quotes you a market multiple without a named source and a description of the deals behind it, treat it as an opinion. We deliberately do not quote market multiples in this article for exactly that reason.

Common mistakes when reading SaaS comps

• Mixing ARR and SDE multiples. They divide price by different things and are not interchangeable.
• Comparing across very different sizes without adjusting.
• Ignoring deal structure. A headline price may include earn-outs, seller financing or stock. The cash at close can be much lower.
• Trusting listing prices. Asking prices are not sales.
• Skipping normalisation. Using unadjusted ARR or undocumented add-backs.
• Using one comp. One deal is an anecdote. A range from several is evidence.

The domain is part of the deal

When a SaaS business changes hands, its domain name goes with it, and for some products the name is a meaningful share of the value. A strong exact match .com or a short .ai name can carry type-in traffic and trust that a buyer would pay for separately. In our records, short commercial names have sold for large sums on their own, for example spend.com at 802,500 USD (DropCatch, 2025-01-23) and cloud.ai at 600,000 USD (GoDaddy, 2025-07-02).

If the domain looks unusually valuable relative to the business, it is worth pricing it separately with domain comps, so the buyer and seller can see how much of the price is the business and how much is the name.

How SoldComparables fits in

SoldComparables is built on the comparable-sales method. For domain names, the method is live: you enter a name and get recorded sales of similar names with venue, date and a relevance score, plus a low, likely and high estimate with a rationale that cites each comp. For websites and SaaS businesses, we do not hold an acquisitions database. Our pages on SaaS valuation multiples and website valuation explain the method in more depth so you can apply it to the deal evidence you have.

Frequently asked questions

What is a good ARR multiple for a SaaS business?

There is no single good figure. Multiples depend on growth, retention, margin, size and the market at the time. Any quoted range should come with a named source and a description of the deals behind it.

When is SDE used instead of ARR?

SDE is common for small, owner-run businesses, where the buyer is mainly buying an income stream. ARR is more common for larger or faster growing SaaS companies, where the size and quality of recurring revenue matter more than current profit.

Does SoldComparables have SaaS deal data?

No. SoldComparables does not hold a database of SaaS or website acquisitions. Domain comps are what is live today, based on 128,867 recorded domain sales from May 2021 to May 2026.

To price the domain side of a deal with real recorded sales, run a domain appraisal or compare plans on the pricing page.