Comps Analysis for SaaS Valuation: Building Your Benchmark Set
A step-by-step guide to selecting comps, normalizing metrics, and presenting a credible valuation range.
Trust & methodology
Author: Amanda White
Last updated: 2026-01-12
Last reviewed: 2026-01-12
Methodology: Benchmarks are cross-checked across market reports, transaction comps, and founder-level operating data.
Disclosure: This content is general information, not financial advice.
On this page
- What you'll learn
- Why it matters
- The metric or formula
- Benchmarks & ranges
- Common mistakes
- How to improve it
- Examples
- Checklist
- FAQs
- Summary
- Sources & further reading
- Internal links
- Next steps
- Related resources
- Run the calculator
Jump to the section you need, or keep scrolling for the full playbook.
What you'll learn
You will learn how to select comparable companies and transactions, and why scale, growth, and retention must align for meaningful comparisons.
We also cover how to normalize metrics—ARR definitions, margins, and growth—to avoid misleading comps.
Finally, you will learn how to present comps in a narrative that supports your valuation range rather than anchors it too low.
Quick definition (TL;DR)
SaaS valuation deep diveComps analysis is the process of benchmarking your company against similar companies or transactions to estimate valuation. For SaaS, the key variables are ARR, growth, retention, margin, and market category.
Good comps show you where your multiple should sit relative to peers, and what factors justify a premium or discount.
Why it matters
Comps provide a market-based anchor that investors and buyers trust.
They help justify your multiple with evidence rather than opinion.
A strong comps set helps you negotiate with credibility.
Comps highlight where you need to improve to earn a higher multiple.
The metric or formula
Use EV/ARR or EV/Revenue multiples for SaaS comps. Normalize growth, retention, and margin before comparison.
Adjust for differences in scale and risk; smaller, private companies often trade at discounts to public comps.
Benchmarks & ranges
Use 5–10 comps with similar ARR and growth bands.
Adjust public comps downward by 20%–40% for liquidity and scale differences.
Transactions with similar retention profiles are the most valuable comps.
Avoid comps with radically different business models (e.g., services-heavy or hardware-heavy).
Common mistakes
Using only public comps without adjusting for scale differences.
Ignoring retention and margin when selecting comps.
Relying on outdated transactions from a different market cycle.
Cherry-picking comps that support a desired valuation rather than a credible range.
How to improve it
Build a comps set that includes both public companies and recent private transactions.
Normalize ARR definitions so comparisons are consistent.
Segment comps by ARR band and growth tier to keep comparisons fair.
Use median and quartile multiples rather than single-point comparisons.
Update comps quarterly to reflect market shifts.
Examples
Proof points you can reuse
Mid-market SaaS comps set
A $9M ARR company selects five public comps and three private transactions with 30%–50% growth. After adjusting for scale, the median multiple is 6.5x ARR. With strong retention, they justify a 7.5x range.
Vertical SaaS comps correction
A founder used broad horizontal SaaS comps to justify a high multiple, but buyers pushed back. After switching to vertical SaaS comps with similar retention, the valuation range narrowed and became more credible.
Checklist (copy/paste)
Identify 5–10 comps with similar ARR and growth.
Normalize ARR, margin, and retention definitions across comps.
Adjust public comps for liquidity and scale differences.
Use median and quartile multiples for range setting.
Document why each comp is relevant to your business.
Refresh comps each quarter to stay current.
FAQs
Should I use public or private comps?
Use both. Public comps provide transparency, while private transactions reflect actual deal outcomes.
How many comps are enough?
Five to ten well-matched comps are usually sufficient. Quality matters more than quantity.
How do I adjust for size differences?
Smaller companies typically trade at a discount due to scale and liquidity. Adjust multiples downward accordingly.
Can I use comps from different industries?
Only if the business model and retention dynamics are similar. Otherwise, the comps will mislead.
Do comps matter in a strategic acquisition?
Yes, but strategic buyers may pay premiums. Comps still anchor the baseline range.
How often should I update my comps?
Quarterly updates are ideal, especially in volatile markets.
Summary
Comps analysis provides a market-based anchor for SaaS valuation. Strong comps sets align on ARR, growth, retention, and margin.
Use comps to build a credible range and to show why your business deserves a premium or discount.
Sources & further reading
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Next steps to act on this guide
RecommendedTranslate the insights into a valuation narrative by running the calculator, then use the tools and category playbooks to tighten your metrics before you talk to buyers or investors.
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