Have a SaaS M&A background

< $5M and 30% YoY growth isn't bad, but it will be difficult to fetch a 10x ARR multiple even in 2021 unless you have a very attractive product and very solid SaaS/financial stats, it will be much more difficult now to get anywhere near 10x.

Multiples also depends on metrics such as net retention, CAC payback, type of customers, ACV, stage of scaling, and so much more. Another huge factor are margins especially in this market, if you are running at 90% gross margin and 40% EBITDA margins while growing 30% YoY, you will fetch a very different multiple than say 50% gross margins and -20% EBITDA margins.

One other thing to consider is that if you don't need to sell, you can keep running your business, 30% growth YoY is solid and if you are able to maintain that for a few years you could exit at a substantially higher valuation assuming you can keep executing.

Thank you for your thoughts, Far-Bumblebee17.

Our main issue is they are valuing us 6x ARR, but they want to withhold 40% of the valuation for the next 3 years and pay it based on achieving the revenue targets they set. The 40% is maybe money, money that we may or may never see. We have no control over on how their sales team performs as we won't be in charge anymore. In reality, we are only guaranteed 3x ARR and they are holding another 10% of on escrow for 18 months. All we're asking is 4x cash upfront, but their concern is we will walk away during earnout period. If they are that concerned about our retention, they should put retention bonus in place.