Private B2B SaaS companies in the lower middle market are trading at roughly 3–9× ARR in 2026, with the exact multiple driven by Rule of 40, net revenue retention, and growth. Here's what the transaction data shows by ARR band.
Get your exact number → free 2026 valuation + Exit Readiness Score| ARR band | Low | Median | High |
|---|---|---|---|
| <$1M ARR | 3× | 4× | 6× |
| $1-5M ARR | 4× | 5× | 8× |
| $5-20M ARR | 4.5× | 6× | 9× |
Ranges from real 2026 lower-middle-market transaction data. Sources: aventis-advisors.com/saas-valuation-multiples, ctacquisitions.com/ebitda-multiple-by-industry-2026, equidam.com/ebitda-multiples-trbc-industries, praxisrock.com/insights/ebitda-multiples-by-industry, l40.com/insights/saas-multiples. Your specific multiple depends on the value drivers below.
Two SaaS companies with the same ARR can sell 2× apart. Buyers pay up for: Rule of 40 above 40 (each 10 points ≈ +1×), net revenue retention above 110% (120%+ reaches the top of the range), gross margin above 75%, durable growth, and low logo churn. Profitability now outweighs raw growth — the 2026 structural shift.
See where your business lands → instant valuationPrivate lower-middle-market SaaS trades about 3–9× ARR in 2026; the median is roughly 5×. Companies with Rule of 40 above 50 and NRR above 110% command 6–8×, and 7–9× with NRR above 120%.
Apply an ARR multiple set by your revenue band, then adjust up or down for Rule of 40, net revenue retention, gross margin, growth, and churn. Enterprise value = ARR × multiple.
Lift net revenue retention, cut logo churn, push Rule of 40 above 40, and document clean recurring-revenue metrics. Each lever moves you toward the top of your comp range.
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