Intangible Assets Triple SaaS Valuation Multiple

Smartphone application for online searching, buying, selling and booking real estate. Unusual 3D illustration of beautiful house on smartphone in hand


  • Software-as-a-service (SaaS) company offered 2-3x revenue multiple
  • SaaS sector entering slower revenue growth
  • Company conducts audit of its intangible assets
  • Discovers significant untapped value
  • Closes the deal at a 7.3x revenue multiple

Client Introduction

Intangible asset audit allows SaaS company to secure a top-end valuation despite a stagnating sector.

The Problem

As the software-as-a-service (SaaS) sector was reaching maturity, hundreds of different firms had annual revenues north of $100 million. These revenues had grown steadily for years. But by the time a US-based private equity firm went shopping for SaaS businesses that it could roll up into a larger corporate vehicle, revenue growth in the SaaS sector had already hit a ceiling.

The PE firm had a price in mind for buying a SaaS company: a 2-3x multiple. So, when it approached a real-estate CRM company with a proposal, the leadership wanted to prove the business was worth much more.

The Solution

By analysing the CRM company’s intangible assets, it quickly became clear that it was at the tipping point of controlling the entire real-estate CRM sector in its native Australia. It boasted a >60% market share and the closest rival had only a 14% market share.

Its dominance was creating a network effect, in which the cost of adding new customers got cheaper and cheaper as word-of-mouth did all the heavy lifting of marketing. The company’s brand was also well-known, its software easy to use and it had plenty of high-quality data on all kinds of customer profiles.

Tabulating these assets into the valuation, the SaaS company came up with a 7.3x multiple. The broker on the other side of the deal immediately dismissed the valuation as crazy and the CEO of the company was nervous that the price might blow up the deal.

Results & Benefits

The CEO didn’t need to worry because when all the parties looked at the rationale, line by line, to understand its intangible assets, the valuation made sense. There was simply no other SaaS company in that space that had such a constellation of excellent intangible assets.

The deal closed and both parties went away under the full impression that they got a good deal.

Free 1 hour Consultation

Want a 30,000ft view of your company’s intangible assets?

Subscribe to Newsletter