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Ever wonder how all your multiyear SaaS subscriptions are actually valued? It might surprise you.

This is one of the biggest questions we get asked by the companies we work with. So, I thought I’d ask an expert who is uniquely qualified to answer this question. 

Shane Seelig is the Co-owner and Managing Partner of Kaizen Equity Partners, a sell-side investment bank that represents software companies in both capital raises and the sale of their businesses. He has $10 Billion of transaction experience and represented my previous SaaS business in our successful transaction after we grew the business to $39 Million in revenue. 

At my previous SaaS company, our customers financed multiyear subscriptions, which allowed us to get paid upfront for three to five years of subscription revenue. This is the customer financing model that my new firm, Keystone Growth Advisory, helps other B2B SaaS founders and operators implement. 

Multiyear subscriptions were a massive contributor to our premium valuation, and Shane increased our net proceeds via the treatment of deferred revenue in the sale of our business. Given Shane's experience selling our business and many more SaaS businesses with deferred revenue from their annual subscriptions, he helps break down the impact of a longer-term contract on your valuation. Then, he takes us through the negotiations that happen on the final mile with a buyer and how that can impact your net proceeds in a transaction.

I learn something new from Shane every time we talk. He has a wealth of knowledge and experience about an outcome that most founders and operators spend years working towards and usually only experience once, if at all, in their careers.

If you’re running a SaaS business with annual or multiyear subscriptions, take the opportunity to absorb this 9-minute education. It may inform some of your decisions as you design your growth strategy with an exit in mind.


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