Valuation Comps Skill#

Build comparable company and transaction analyses for startups, growth companies, and private businesses. This skill guides Sam Ledger through selecting peer companies, pulling multiples, running DCF, and producing a defensible valuation range for fundraising, M&A, or strategic planning.

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When to Use This Skill#

Trigger phrases:

• "What's our company worth?"
• "Build a comps analysis"
• "What multiple should we use for valuation?"
• "We're raising a Series A — what's a fair valuation?"
• "Run comps against public SaaS peers"
• "What's the M&A precedent for companies like ours?"
• "Build a football field chart"
• "What's our DCF value?"
• "Benchmark our valuation vs. competitors"
• "Help me justify our $20M valuation to investors"

NOT for:

• Formal 409A appraisals — requires a licensed appraiser (IRC 409A compliance)
• Audit-grade fairness opinions — requires Big 4 or investment bank sign-off
• Tax filings requiring certified business valuation
• Real-time public stock screening (use financial data APIs directly)
• Crypto/token valuation (different methodology — see defi-position-tracker)
• Debt valuation or fixed-income analysis

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Valuation Methodologies#

1. Trading Comps (Public Company Comparables)#

Benchmarks your company against publicly traded peers. Most relevant for growth-stage companies approaching IPO or raising later-stage rounds.

Key multiples by stage and type:

Company TypePrimary MultipleSecondary MultiplePre-revenue SaaSEV/Forward ARRTeam/market multipleGrowth SaaS (<$10M ARR)EV/NTM RevenueRule of 40 premiumScale SaaS (>$50M ARR)EV/NTM Revenue + EV/NTM EBITDAFCF yieldMarketplaceEV/NTM GMV or RevenueTake rate × GMV multipleServices/AgencyEV/EBITDAEV/RevenueB2B SaaSEV/ARRNTM Revenue growth multipleFinTechP/E or EV/RevenueAUM multiple

EV (Enterprise Value) formula:

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EV = Market Cap + Total Debt - Cash & Equivalents
   = Share Price × Diluted Shares + Debt - Cash

Common multiples:

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EV/Revenue = EV ÷ LTM (or NTM) Revenue
EV/EBITDA  = EV ÷ LTM EBITDA
EV/ARR     = EV ÷ Annual Recurring Revenue
P/E        = Share Price ÷ EPS
EV/FCF     = EV ÷ Free Cash Flow

Growth-adjusted multiple (PEG-style for SaaS):

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Revenue Multiple ÷ Revenue Growth Rate = Growth-Adjusted Multiple
Example: 10x EV/Revenue at 50% growth = 0.2x growth-adjusted (attractive)
         10x EV/Revenue at 10% growth = 1.0x growth-adjusted (expensive)

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2. Transaction Comps (M&A Precedents)#

Historical acquisition prices paid for comparable companies. Always reflects a control premium (20-40% above trading comps). Most useful for M&A exit modeling.

Data sources for precedent transactions:

• SEC EDGAR (8-K filings for public acquirees)
• PitchBook / CapIQ (subscription)
• CB Insights (startup M&A)
• TechCrunch / Crunchbase (public disclosures)
• Press releases and deal announcements

Transaction comp template:

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Target Company | Acquirer | Date | Deal Size | Revenue | EBITDA | EV/Rev | EV/EBITDA | Notes
Acme SaaS      | BigCo    | 2024 | $120M    | $12M    | $2M    | 10.0x  | 60x       | 85% gross margin
Rival Corp     | PE Firm  | 2023 | $80M     | $10M    | $0.5M  | 8.0x   | 160x      | High growth, -$3M EBITDA adj.

Control premium guidance:

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Typical range: 20-40% premium over public trading comps
Strategic buyer: 30-50% (synergy value)
Financial buyer (PE): 15-25% (return-driven)
Distressed asset: at or below trading comps

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3. DCF (Discounted Cash Flow)#

Intrinsic value methodology. Most defensible for mature cash-flow-positive companies; less reliable for early-stage startups with negative FCF.

DCF formula:

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Intrinsic Value = Σ [FCF_t / (1 + WACC)^t] + Terminal Value / (1 + WACC)^n

Where:
  FCF_t = Free Cash Flow in year t
  WACC  = Weighted Average Cost of Capital
  n     = projection period (typically 5-10 years)
  Terminal Value = FCF_n × (1 + g) / (WACC - g)  [Gordon Growth Model]
  g     = perpetual growth rate (typically 2-3%)

WACC for private companies:

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WACC = (E/V × Re) + (D/V × Rd × (1 - Tax Rate))

Where:
  E/V = Equity weight (for pre-revenue startup ≈ 1.0)
  Re  = Cost of equity (CAPM: Rf + β × ERP + size/illiquidity premium)
  D/V = Debt weight
  Rd  = Cost of debt (interest rate)

For early-stage startups:
  Rf  = 10-year Treasury yield (~4.5% as of 2026)
  ERP = Equity Risk Premium (~5-6%)
  β   = 1.5-2.5 (high-growth tech)
  Size/illiquidity premium = 3-8%
  → Typical startup discount rate: 20-35%

EBITDA → FCF bridge:

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EBITDA
  - Cash Taxes (EBITDA × effective tax rate)
  - CapEx
  ± Change in Working Capital
= Unlevered FCF (UFCF)

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4. VC Method (Venture Capital Valuation)#

Standard for pre-revenue and early-revenue startups raising VC. Works backward from exit value.

VC Method formula:

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Post-Money Valuation = Exit Value / (1 + Target Return)^years

Step 1: Estimate exit value at year 5-7
  Exit Value = Projected Revenue × Exit Multiple
  Example: $20M revenue × 8x = $160M exit

Step 2: Apply required return
  VC target return: 10x+ (Series A), 5x+ (Series B)
  Post-Money = $160M / 10x = $16M

Step 3: Calculate pre-money
  Pre-Money = Post-Money - Investment Amount
  Example: $16M - $3M = $13M pre-money

Step 4: Calculate dilution
  Ownership = Investment / Post-Money
  Example: $3M / $16M = 18.75%

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5. Revenue Multiple Benchmarks (SaaS 2025-2026)#

Current market multiples for private SaaS companies (approximate, varies by growth profile):

ARR RangeGrowth RateTypical EV/ARR Multiple<$1M>100% YoY3-6x ARR$1M-$5M80-120% YoY5-10x ARR$5M-$20M50-80% YoY6-12x ARR$20M-$50M30-50% YoY8-15x ARR$50M+20-30% YoY10-20x ARR

Multiple adjustments (+ or - from base):

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+2-4x: NRR > 130%, CAC payback < 12 months, gross margin > 80%
+1-2x: Strong brand moat, enterprise contracts, zero churn
-2-4x: High churn (>5%/month), single-customer concentration >30%
-3-5x: Declining growth, commodity product, low gross margin (<60%)

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Comparable Company Selection Framework#

Step 1: Define the Peer Group#

Criteria for selecting comps:

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□ Business model (SaaS, marketplace, services, etc.)
□ Revenue scale (within 0.3x-3x of subject company)
□ Growth rate (similar trajectory ± 20%)
□ Gross margin profile (within 10-15% of subject)
□ Geography (domestic vs. international)
□ End market / vertical (fintech, HR tech, etc.)
□ Customer type (SMB, mid-market, enterprise)

Minimum comp set: 5-8 companies Ideal comp set: 10-15 companies (trim outliers)

Step 2: Collect Multiples#

For each comp, gather:

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Company Name | Ticker | EV | LTM Rev | NTM Rev | LTM EBITDA | ARR | Growth % | NTM EV/Rev | EV/EBITDA

Data sources:

• Public: SEC filings (10-K, 10-Q), Yahoo Finance, Bloomberg, CapIQ
• Private: PitchBook, Crunchbase, CB Insights press releases
• SaaS benchmarks: Bessemer Cloud Index, Battery Ventures Cloud 100

Step 3: Calculate Statistics#

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Mean, Median, 25th percentile, 75th percentile for each multiple

Use median as primary reference (eliminates outlier distortion)
Use 25th-75th percentile as defensible range

Example:
  NTM EV/Revenue multiples: [6x, 8x, 9x, 10x, 11x, 14x, 20x]
  Mean: 11.1x | Median: 10x | 25th: 8x | 75th: 13x
  → Valuation range: 8x-13x NTM Revenue

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Football Field Chart#

Visual representation of valuation across methodologies.

Format (text output for import to Excel/Sheets):

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Methodology              | Low      | Mid      | High     | Implied EV Range
-------------------------|----------|----------|----------|-----------------
Trading Comps            | $45M     | $62M     | $85M     | 8x-13x NTM Rev
Transaction Comps        | $60M     | $80M     | $110M    | +30% control prem.
DCF (Base Case)          | $40M     | $58M     | $75M     | 20-25% discount rate
DCF (Bull Case)          | $55M     | $78M     | $105M    | 18% discount rate
VC Method (5yr exit)     | $50M     | $70M     | $95M     | 10x return target
52-Week Public Peer Range| $48M     | $65M     | $90M     | Market range
-------------------------|----------|----------|----------|-----------------
COMPOSITE RANGE          | $45M     | $69M     | $110M    |
RECOMMENDED RANGE        | $60M     | $75M     | $90M     | Defensible to investors

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Step-by-Step Workflow#

When a user requests a valuation or comps analysis:

Step 1: Intake#

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□ Company name, stage (seed/A/B/growth)
□ Business model (SaaS, marketplace, services)
□ Current ARR/MRR or LTM Revenue
□ Revenue growth rate (YoY or MoM)
□ Gross margin %
□ EBITDA (or burn rate if negative)
□ NTM (next 12 month) revenue projection
□ Valuation purpose: fundraising, M&A, 409A reference, board reporting
□ Any prior round valuations or term sheets received

Step 2: Select Methodology#

• Pre-revenue / seed: VC Method + market comps (qualitative)
• <$1M ARR: VC Method + ARR multiple
• $1M-$20M ARR: ARR multiple + transaction comps
• >$20M ARR: Trading comps + DCF + transaction comps

Step 3: Identify Comps#

• List 5-10 comparable companies
• Gather multiples from public sources or proxies
• Apply adjustments for private company discount (20-30% vs. public)

Step 4: Calculate Range#

• Apply median multiple to subject company metrics
• Build 25th-75th percentile range
• Add DCF check if cash-flow profile warrants

Step 5: Football Field#

• Assemble valuation outputs across methodologies
• Identify point where 3+ methods converge → defensible range

Step 6: Output#

• Valuation range table
• Football field data
• Narrative: "Based on comps and growth profile, a $X-$Y valuation is defensible because..."
• Key sensitivity: what variable most affects valuation?

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Example Usage#

User: "We're raising a Series A. $1.2M ARR, growing 15% MoM, 75% gross margin, B2B SaaS. What valuation can we defend?"

Sam's response:

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Valuation Analysis — Series A

Company Profile:
  ARR: $1.2M | MoM Growth: 15% (214% annualized) | Gross Margin: 75%
  NTM ARR estimate: ~$4.8M (at 15% MoM sustained)

Methodology 1 — ARR Multiple (Current ARR)
  Peer range for high-growth B2B SaaS at $1M-$5M ARR: 6x-12x ARR
  At median (8x): $9.6M post-money
  At high (12x): $14.4M post-money

Methodology 2 — NTM Revenue Multiple
  NTM ARR ~$4.8M × 6x-10x = $28.8M-$48M
  Discount 30% for early stage: $20M-$33M

Methodology 3 — VC Method
  Exit at year 5: $50M ARR × 10x = $500M
  Required 10x return on Series A → Post-money = $50M
  (Optimistic; assumes execution to plan)

DEFENSIBLE RANGE: $12M-$18M post-money
  → $10-14M pre-money + $2-4M raise = 17-28% dilution

Why: 15% MoM is elite growth. 75% gross margin is healthy.
At $1.2M ARR, comps support 8-12x current ARR. Investors
paying for NTM will want to underwrite to $4-5M ARR delivery.

Investor pushback prep:
  - "Why not 15x ARR?" → Only justified if NRR > 120% or enterprise logo density
  - "Why not 5x ARR?" → Growth rate doesn't support pessimistic multiple
  - Anchor: $15M post-money, accept $12M if lead investor adds strategic value

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SaaS Benchmarking Reference#

Rule of 40 premium:

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Rule of 40 = Revenue Growth % + EBITDA Margin %
Score ≥ 40: Standard multiple applies
Score ≥ 60: +15-25% multiple premium
Score < 20: -20-30% discount

Example: 80% growth + (-30% EBITDA) = 50 → healthy, standard multiple

NRR impact on multiples:

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NRR < 90%:   -30% to multiple (churn destroying value)
NRR 90-100%: Baseline
NRR 100-110%: +10-15%
NRR 110-120%: +20-30%
NRR > 120%:  +30-50% (expansion-led growth)

Gross margin impact:

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< 50%:  -25% to SaaS multiple (cost of delivery too high)
50-65%: -10%
65-75%: Baseline
75-85%: +10-15%
> 85%:  +20-30% (pure software economics)

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Integration Points#

• startup-financial-model — Build the NTM projections that feed into NTM multiple valuation
• cap-table-manager — Translate valuation range into dilution modeling and SAFE conversion
• investor-memo-generator — Wrap the valuation analysis into the investor narrative
• due-diligence-dataroom — Package comps analysis alongside other diligence materials
• fractional-cfo-playbook — Valuation section of the CFO advisory playbook

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Quick Reference: Multiple Cheat Sheet#

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Stage            | Typical Multiple  | Basis
Pre-seed/seed    | 5-15x ARR         | ARR or VC method
Series A         | 8-20x ARR         | NTM Revenue × multiple
Series B         | 10-25x ARR        | NTM Revenue, Rule of 40
Series C+        | 8-20x NTM Rev     | Growth + margin mix
Profitable SaaS  | 5-12x EBITDA      | EBITDA quality
Distressed       | 1-2x Revenue      | Acqui-hire or liquidation value

Market Context (2025-2026):
  High-growth SaaS (>50% YoY): 8-15x NTM Revenue
  Mid-growth SaaS (20-50%):    5-10x NTM Revenue
  Mature SaaS (<20%):          3-7x NTM Revenue
  Services/Consulting:         0.8-2x Revenue, 4-10x EBITDA
  Marketplace (high take rate): 5-12x NTM Revenue

Private company discount: Apply 20-30% discount vs. public trading comps to reflect:

• Illiquidity premium
• Concentration risk (founder-dependent)
• Limited operating history / smaller scale
• Less rigorous financial controls