3 Quick Steps To Calculating the Value of Your SaaS Business (+ How to Know if It’s the Right Time)

  • Calculate your SDE.

  • + Business Profit before taxes

  • + Founder(s) salary

  • + Founder(s) benefits

  • + Depreciation

  • + Adjustments for any other non-essential expenses

  • Calculate your long-term potential value with SaaS multipliers.

    Examples: Assume ~3X if your numbers look like this: 

    Profit Margin = 25%, MRR = 20K, YOY Growth = 20%, Churn Rate = 15%

    And 5X+ if your numbers look like this: 

    Profit Margin = 75%+, MRR = 100K+, YOY Growth = 100%+, Churn Rate = 0%

  • Consider these questions to get to a whole number you’re happy with.

  • Is the buyer offering cash, or does the deal need to be financed?

  • What do other founders say about the buyer?

  • Is the buyer offering you a full or partial exit?

  • How easy are you to replace?

  • What opportunities is the buyer offering for your business and team?

  • How to know if it’s the right time to sell. Consider selling if...

  • You have multiple projects going on and the desire to focus on one and sell the others

  • You’ve hit a growth or risk ceiling and want an exit to secure your financial future

  • You’re experiencing a big life change or are preparing for one (children, marriage, moving, etc.)

  • It feels like the right time for you (that’s ultimately what matters most).

This checklist was created by sureswift

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