This is a YouTube video titled "Valuation 1:1 - How to Assess the Value of a Business" created in February 2025. The content is an educational presentation explaining the three most common methods to value a business—EBITDA multiples, revenue multiples, and market comparables—focusing on SaaS businesses. It also discusses factors that influence valuation such as growth rate, recurring revenue, churn, profit margins, scalability, and owner involvement. The video appears to be produced by acquire.com to help buyers and sellers understand fair business valuations and create win-win acquisition opportunities.
Valuation 101 how to assess the Value of a Business what's a business really worth? If you don't know how to properly assess a business, you risk overpaying or missing out on the deal entirely. So here's a simple breakdown on how to properly value a business right way so you can buy with confidence. So I'm going to be going over the three most common valuation methods. The first one is going to be EBITDA multiples. This is going to be best for profitable businesses. EBITDA stands for earnings before interest, taxes, depreciation and amortization. Typically what we see is a valuation between three to six times ebitda. So what this means is if you're looking to acquire a SaaS business that is profitable by 500,000 per year, this could be worth between 1.5 to 3 million. Now, the second most popular valuation method is going to be revenue multiples. This is best for high growth startups. This is when you hear about acquisitions from Google and revenue times a hundred. Again, this is when profits are low and everything is being reinvested back into the business for growth. And typically some SaaS businesses can sell for really high multiples if they're growing fast between 2 to 20 times annual recurring revenue or ARR. So this would be a SaaS business with 10 typically millions in ARR. So let's say 2 million in recurring revenue would trade at 5 to 10 times in your current revenue because it's growing 400% year over year. And this is the reason why SaaS businesses can be so valuable is they can grow really, really fast. Now this is going to be the exception and not the norm. So typically we value businesses off an e because the SaaS businesses that you typically see for sale are going to be profitable and growth is going to be slower, which presents an opportunity for you in two ways. They are priced very reasonably and they have growth opportunities that you can definitely execute on to get growth back on track to increase the multiples. The third most common valuation method is going to be using market comparables. So this is where you benchmark against similar sales. So for example, you can look at a similar SaaS company that sold in a similar market. We typically don't see this one too commonly as well because online businesses are all very, very different. But it is used now what drives a higher valuation. So right at the top is going to be the growth rate of the business. If it is growing double digits or even triple digits, it's going to come in a much, much higher multiple. Than if it's not growing at all or worse, it's declining. You also want to look at things like how is the revenue? Is it recurring? Is the churn low? If churn is really high, then that is going to push down the multiple of the business as well. For all intents and purposes though, I would recommend viewing SaaS businesses that we typically work with at acquire.com utilizing a profit multiple. So if we see a business that has really strong recurring revenue low churn, this is going to be on the upper end of our multiples at the five and six times net profit or ebitda. You're also going to want to look at things like profit margins. Is the business wildly profitable? If so, the multiple is going to be on the upper end of that range that I gave Scalability can the business grow without major investment? This essentially means you buy the business, you got to reinvest to remake the whole platform, refactor all the code that's going to drive the multiple down, unfortunately. So you want to look for businesses that just don't need a lot of major investment investment to continue to grow. And then the last one here is minimal involvement from the owner. Buyers pay more for businesses that run without the founder for good reason because they're looking to buy a business and not a job. Keep in mind again, acquire.com helps buyers compare valuations across all businesses, across all markets to find a deal that isn't overpriced and is in the accurate valuation range for you as a buyer. So both the seller and yourself can have a win win acquisition where everyone walks away feeling like they got a great deal from the acquisition. Now, valuing a business isn't just about the numbers, it's about growth potential. So at acquire.com, we help buyers assess businesses with vetted financials, industry benchmarks and transparent pricing to create true win win acquisition opportunities for buyers and sellers around the globe.
