SaaS company valuations are recovering slightly. An analysis by M&A specialist Clearwater of deals involving 211 SaaS companies shows that the median revenue multiple rose from 2.7x to 3.4x between April and August 2026. Pre-2022 levels nevertheless remain well out of reach.
Clearwater bases its conclusions on M&A transactions from the past five years, which the firm has compiled in the report Structuring SaaS Exits in an Uncertain Market. The median EV/Revenue multiple, the ratio of enterprise value to revenue, stood at 8.2x before 2022. By April 2026, it had fallen to 2.7x. In August, the multiple came in at 3.4x, an increase of 26 per cent compared with April. Over the same period, the median EV/EBITDA multiple rose from 10.4x to 11.5x, an increase of 11 per cent.
According to Clearwater, the market has thus entered a new phase in which the bar for software companies is structurally higher. The firm says buyers are taking a more critical look at what sets a software company apart and what is difficult to replicate.
Three phases in SaaS valuations
Clearwater identifies three phases. Before 2022, investors focused primarily on growth. Between 2022 and 2025, the emphasis was on the Rule of 40, the benchmark whereby a SaaS company’s revenue growth and EBITDA margin together amount to at least 40 per cent. In the current phase, the firm says, AI is increasingly determining how buyers assess software companies.
Willem Daris, partner at Clearwater in the Netherlands, argues that AI is making software development faster and cheaper. As a result, he says, investors’ attention is shifting to factors that are hard to copy, such as unique datasets, deeply integrated business processes, sector-specific expertise and customer relationships. Daris expects these elements to carry increasing weight in the valuation of software companies.
Rule of 40 still carries significant weight
The research shows that financial quality continues to play an important role. SaaS companies meeting the Rule of 40 were valued at a median EV/Revenue multiple of 6.7x in June 2025. By August 2026, this was 5.8x. Despite that decline, their multiple remains well above that of companies scoring between 20 and 40 per cent (3.7x) and that of companies falling below 20 per cent (1.5x).
Software combined with services
Clearwater also notes the rise of Software with a Service (SwaS), in which software is combined with specialist services. The firm sees this as a response to growing customer demand for tangible business outcomes, now that technological functionality is easier to copy.
Daris notes that for years many software companies tried to limit their one-off services, as investors focused mainly on scalability. He now sees that expertise, implementation and domain knowledge can contribute to a more defensible offering.
The full report is available at Structuring SaaS Exits in an Uncertain Market.
This article was originally published in Dutch on MSP Business. Read the original →
