It’s no secret that SaaS valuation multiples are higher than ever. Just take a look at Saas Capital’s – SaaS Capital Index and you’ll see that SaaS valuation multiples hit an all-time high on Oct 31, 2020.
Yes, companies that are leveraging the SaaS (Software-as-a-Service) business model are hot! Entrepreneurs are building them, investors are funding them and buyers want to acquire them.
At Augurian we’ve worked with SaaS companies in different stages of their LIFE-CYCLE.
We’ve helped SaaS start-ups get launched and find the somewhat elusive repeatable and profitable customer acquisition channel they need to prove traction and get early stage investment.
High-Growth SaaS Companies
We’ve helped high-growth SaaS companies take their digital marketing to the next level. Uncovering opportunities to increase and accelerate the amount of desirable and defensible traffic that can come from SEO and Paid Media channels.
Acquisition Ready SaaS Companies
After helping our high-growth Saas clients grow, we’ve also been a key partner in setting them up for success when they’ve deemed it time to sell. By making sure the channels we’re managing are fully optimized, documented and mapping these efforts back to the key metrics that buyers pay attention to, like:
- Customer Acquisition Cost (CAC)
- Lifetime Value (LTV)
- Monthly Recurring Revenue (MRR)
If you want to learn about these metrics and more, check out our Top 3 Saas Business Performance Calculations To Add To Your Marketing Metrics Scorecard.
If you’re looking to get your SaaS company “acquisition ready” this post is for you, because we’ve compiled what we’ve learned in doing just that for our SaaS clients.
Here’s how your digital marketing agency can help you hit the SaaS valuation multiples you’re looking for.
Proving You’ve Got A Valid Growth Engine
In Saas your engine of growth is your acquisition channels. They drive the business up and to the right. Without great acquisition channels you won’t see the growth buyers are looking for. These are the principle acquisition channels for SaaS we manage:
- Search Engine Optimization (SEO) – more on this next
- Paid Search (Google ads, Bing ads)
- Paid Social (Facebook ads, LinkedIn ads, etc)
It is extremely important for buyers to see that you’ve got these channels optimized, efficient, profitable and reliably producing for you.
How SEO Will Boost SaaS Valuation Multiples
Search engine optimization can be one of the most powerful acquisition channels for buyers. We’re not saying Paid Media isn’t important – but showing that you’ve ranked for the target keywords that drive profitable traffic is like an annuity that will pay off for months and years for the business. SEO is also a great way to fend off competitors. Once you’re winning in SEO this channel becomes far more profitable than many others and is a sure fire way to increase your overall gross profit margins. With higher gross profits come higher net profits and greater SaaS valuation multiples.
Understanding the Competitive Landscape
Competition is a fact of life in business. Buyers want to see that you’ve done the hard work to understand the competitive landscape and digital marketing can help here as well. Two important pieces of information that an expert digital marketer can uncover are:
How savvy are your competitors at marketing?
If you can prove that you’re outplaying your competitors and have built a solid defense online, you’ll be in a great position to be acquired.
How deep of pockets do your competitors have?
Competitors with deep pockets can spend a lot of money and drive your CAC up so high that they can push you out of the market. While buyers prefer competitors without deep pockets, proving that you can hold your own against well funded competitors is a must.
Knowing Your Customer Better Than Anyone Else
Another way around big well funded competitors is knowing the customer better than they do. This allows you to stay 3-steps ahead of them at all times. Being able to understand your prospects online customer journey as well as pairing the appropriate messaging within each stage of this journey is the number one way to answer the key questions…”what makes you different? how do you stand out and stay ahead?”.
Prepping For A Smooth Knowledge Transfer
Lastly, SaaS valuation multiples can be greatly impacted by how well you’ve got your systems documented and you’ve got some built-in redundancies. There isn’t a buyer who wants to purchase an asset that is entirely dependent on one or two individuals’ technical skills or knowledge. By working with a digital marketing partner that values transparency and builds your campaigns, analytics and reporting in a way that ensures you own your data and makes everything easily transferable – you’ll be eliminating buyer concerns from the very beginning.
By focusing on these 4 key areas your digital marketing agency can help you hit the SaaS valuation multiples you’re looking for:
- Proving you’ve got a valid growth engine
- Understanding the competitive landscape
- Knowing your customer better than anyone else
- Prepping for a smooth knowledge transfer
Once you’ve done this you’ll be well positioned to take full advantage of those SaaS valuation multiples that just hit an all-time high!
Interested in talking with Augurian about how we can help you hit the SaaS valuation multiples you’re looking for? Contact us.