SaaS valuation multiples for £2m–£200m revenue companies: what earns a higher multiple

B2B software companies are usually valued as a multiple of their annual recurring revenue (ARR) or revenue. For companies with £2m to £200m of revenue the multiple can range from under 3x to over 10x. This post explains where the market sits and which metrics move a company up the range. Benchmarks are from the sources listed; the company examples are illustrative.

Where multiples are now

Public SaaS companies are the reference point. Their median enterprise value was 4.6x revenue at the end of August 2026, according to Aventis Advisors' analysis of S&P Capital IQ data, after falling to 3.2x in June. Private companies usually sell at a discount to public peers, because they're smaller, less liquid and less proven. SaaS Capital's private valuation model, based on year-end 2024 data, put private SaaS at 4.8x ARR for bootstrapped companies and 5.3x for equity-backed ones, when the public median was higher than today.

Small differences in the multiple are worth a lot. For a company with £20m of ARR, each turn of multiple adds £20m of value:

What moves the multiple

• Growth. The biggest single driver. Buyers pay for future revenue, so a company growing 35% a year is worth far more per pound of ARR than one growing 10%.
• Net revenue retention (NRR). Revenue from last year's customers this year, including upgrades and after churn. Above 110% means the customer base grows on its own; below 100% means the company has to replace lost revenue before it can grow.
• Gross margin. 75–80% or more is typical for software. Lower margins, often from services or hosting costs, mean less profit from each pound of revenue.
• The Rule of 40. Growth plus profit margin. It rewards growth that isn't bought with heavy losses. In Aventis's 2025 data, each 10 points was associated with about one extra turn of revenue multiple. See our Rule of 40 explainer.
• Scale. Larger companies usually command higher multiples: more predictable revenue, deeper management teams and more potential buyers.
• Revenue quality. A high share of recurring (rather than one-off) revenue, multi-year contracts, and no dependence on a few large customers.

Two companies with the same ARR

Take two illustrative companies with £20m of ARR. Company B grows faster, keeps and expands its customers, has higher margins and scores 45 on the Rule of 40, against Company A's 20. It also depends far less on its ten largest customers. On the 2025 rule of thumb above, a 25-point Rule of 40 gap alone would be worth around 2.5 turns of multiple: roughly £50m at £20m of ARR.

Getting to a higher multiple

The levers are the same at £2m and £200m: grow ARR, raise net revenue retention through upgrades and lower churn, protect gross margin, and show a path to profit so the Rule of 40 improves. Investors also look for clean, consistent metrics, so reporting ARR, NRR and CAC payback the same way every month matters before any sale or fundraise.

Make these charts with your own numbers

Founders and finance teams use charts like these in board packs and fundraising decks. Paste your metrics into the grouped bar chart or the horizontal bar chart and download it as an image or PowerPoint slide.

Sources and method