Rules Of Thumbs

A rule of thumb for the acquisition value of a revenue stream from software maintenance is 3 to 4 times trailing twelve months revenue (3-4x revenue multiple).  This assumes that the maintenance stream has a high renewal rate (typically in the 85% to 90% range) with high gross margins (80% or higher).

Tags: Maintenance, Multiple, Revenue, Rule of Thumb, Software, Valuation

This entry was posted on Friday, November 21st, 2008 at 11:50 am and is filed under Acquisition, Valuation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.