Valuation Multiple

A ratio used to determine a company's value relative to a financial metric such as revenue, EBITDA, or earnings, commonly applied to benchmark valuations or negotiate acquisition prices.

Understanding valuation multiples allows founders to contextualise offers, set realistic fundraising expectations, and understand how investors are pricing their business relative to comparable companies in the same sector.

SaaS businesses with strong growth are often valued at 5 to 10 times annual recurring revenue. A founder with £400,000 ARR can use this knowledge to anchor her valuation conversation around £2 to 4 million, rather than accepting an uninformed offer.