Allied Advisers updated Brief Analysis (SaaS): Rule of 40 report for 1H2023, shows that software companies which exceed Rule of 40 continue to trade at significant premium valuations compared to companies that fall below Rule of 40. In today’s challenging market conditions, we are seeing clients and prospects who meet or exceed Rule of 40 are getting multiple bids at valuation multiples that exceeds their peers who don’t.
Rule of 40 continues to become more fashionable in today’s capital constrained environment and is a useful tool for founders, management and investors to keep in mind as they build their companies for optimal financing and exit valuation.
