Performance Report: SaaS Enterprise Value and Leverage Analysis
Lincoln International analyzed more than 100 Software as a Service (SaaS) transactions and performed over 1,750 recurring SaaS portfolio valuations from 2020 to 2023 to identify potential pandemic and economic impacts on SaaS companies. Below are some key takeaways from our recent report:
- Annual recurring revenue (ARR) multiples for SaaS technology deals have eased since their peak in 2021, but remain elevated above 2020 levels
- Only the largest deals are getting done, leaving mid-size SaaS companies (approximately <€1 billion of enterprise value) with limited access to capital
- Leverage for ARR deals has been cut nearly in half, while all-in yields are up 2-3.5% (spreads being up +25 basis points, and payment-in-kind interest nearly doubling)
- The so-called “Rule of 40” valuation model (based on the sum of revenue growth and gross margin) continues to hold up in the current deal environment
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Summary
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Lincoln International shares key insights on Software as a Service company performance in a recent report.
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Contributors
I enjoy sharing insights about market and valuation trends with my clients, while also leading a differentiated and high-touch process.
Brian Garfield
Managing Director & Head of U.S. Portfolio Valuations
New York
I enjoy the opportunity to provide clients with insightful and unbiased advice that will help them make the most informed decisions possible.
Ron Kahn
Managing Director & Co-head of Valuations & Opinions
Chicago
I am driven by the opportunity to provide accurate and thoughtful valuation services that help clients succeed and grow.
Patricia Luscombe
Managing Director & Co-head of Valuations & Opinions
Chicago
Communication and critical thinking are paramount to meeting the needs of my clients both today and in their future.
Richard Olson
Managing Director & Head of Valuations, Europe
LondonProfessionals with complementary expertise
By linking my experience in debt advisory and mergers and acquisitions, I look forward to delivering flexible and innovative financing solutions to make an impact that matters with long-term target clients, as Lincoln does best.
Daniele Candiani
Managing Director & Co-head of Capital Advisory, Europe
Milan
I strive to develop meaningful, trusting, personal and mutually beneficial relationships with our clients.
Curt Tatham
Managing Director & Co-head of FSG
Chicago
I strive to be a strong advocate for my clients and offer a fresh and creative perspective to financing situations that exceed expectations and provide the flexibility needed to grow their businesses.
Christine Tiseo
Managing Director & Co-head of Capital Advisory
Chicago