Dirk Sahlmer’s Post

A very helpful framework for <$5M ARR SaaS companies to think through valuation.

Great insight from Dirk Sahlmer and the saas.group team. Valuation is always a sticking point, and at first glance it makes sense to see both parties as diametrically opposed to each other. Founders want to maximize value, buyers want to minimize. In practice, both parties should be striving to get to a fair price. No business gets done if you have unrealistic expectations or you constantly undervalue and lowball people. At the end of the day, what matters is performance, especially for smaller companies. Multiples tend to be lower compared to the broader market because the assets here are, well, smaller. There is less of an existing base for acquirers to build growth off of, and it tends to require more sweat equity post-close. Business performance is key. Of course, if you are delivering high end results (Green column in Dirk's scorecard), you are worthy of a rich valuation multiple. Most companies' performance, however, is probably a mix across the board.

📩 My latest newsletter is out! SaaS Valuation Framework - Simple Scorecard for SaaS < $5M ARR. Link below.👇 #saas #startup #valuation #arr #kpi #mergersamdacquisitions

Great post. Being a SaaS and PLG evangelist, it would be interesting to understand what challenges businesses face when underperforming in any one, or more, of these areas. Having a low LTV:CAC ratio, low Gross Margins, weak Retention, and struggling to get beyond $5m Revenue might be indicators that you can “Sell the Dream”, but lack product-market fit - this might also be an opportunity to acquire a bargain, if you’re a technology innovator?

📈For founders who are reaching the end of the ‘funding track’ here’s some guidance on how a potential acquirer might look at your case 📉📊 I think the 5m revenue threshold sounds high, but might be true for a private-equity type of buyer. The rest gives some pretty good pointers IMHO

📊 Accounting Term Spotlight: Revenue Recognition 💼 Why It Matters: Proper revenue recognition impacts profit reporting, influencing decision-making and investor perception. Accurate revenue recognition is crucial for providing an honest and transparent view of a company's financial performance. #revenuerecognition #accountinginsights #financialtransparency #financeandaccounting #saas #startups

Interesting thoughts on what interests investors in SaaS start-ups

If you are a software entrepreneur, you are probably aware that merging with or being acquired by another company could present an attractive exit opportunity for you, your stakeholders, and the business itself. KEEP IN MIND: Not all M&A deals are equal... Read more here. https://lnkd.in/gf8ppiQG #saasmna #saas #mergersandacquisitions

What sub-industry of tech do investors want to buy right now? Online education companies. This year alone online education companies have been one of the most in-demand business models. Why? A consistent evergreen market, solid growth, and generally steady yearly profits. While ed tech might not be as sexy as AI, it’s hard to see this market slowing down anytime soon. #acquisitions #saas #mergersandacquisitions #entrepeneur #founders