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READY FOR JASON: Ask Page — What is a good EBITDA multiple for a software company?
**Short answer:** In 2026, 8x to 14x EBITDA is the typical range for profitable software businesses, with AI-native and high-growth outliers reaching 20x+.
Context: A venture-backed founder navigating an exit, raise, or capital decision.
FINAL DRAFT
Short answer: In 2026, 8x to 14x EBITDA is the typical range for profitable software businesses, with AI-native and high-growth outliers reaching 20x+.
The multiple you receive is a function of growth rate, retention, market position, and buyer type. PE buyers optimising for cash flow pay 8x to 12x EBITDA on bootstrapped, profitable software doing $3M to $20M. Strategic acquirers filling a capability gap often pay 14x to 20x. Turnaround situations or businesses with declining revenue trade at 4x to 7x.
The shift from 2021 is significant. Two years ago software businesses were routinely valued on ARR multiples, not EBITDA, because growth was the primary signal. In the current market, buyers want to see a path to sustainable economics. If you are burning cash, the EBITDA multiple is less relevant than your ARR multiple and growth rate.
Rule of 40 (revenue growth rate + EBITDA margin) remains a useful sanity check. Businesses above 40 consistently attract premium pricing. Below 20, you are telling a recovery story regardless of headline revenue.
Related: What is my SaaS company worth in 2026? | What multiple is realistic for a $5M ARR SaaS company?
-- Drafted by Bolt 17 Aug 2026 | Part of W1 Ask Page Batch 2
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