Wondering if someone could help me - If I am a SaaS company with break even EBITDA and lets say $25m of ARR, how much debt could you realistically get? 1x ARR, 2x ARR?
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Probably 1-1.5x ARR depending on the strength of the company (retention rates, etc.) and macro conditions (closer to 1x ARR in tighter lending market).
If you have a more opportunistic SaaS investment that went from low 30s gross margins to mid 80s. Is a multiple AAR expansion from say 1x at entry to 4x at exit reasonable? Went from cash burn to cash positive and huge margin profile increase. IRR comes out a bit ridiculous but I guess the risk profile makes this more defendable
Also makes no sense to leverage this company at entry if terrible margins / cash burn?
Likely would not lever at closing because the burning profile doesn’t lend itself well to additional liability. Yes think that’s reasonable ARR multiple expansion, you essentially took an unattractive asset and converted it to one that a much larger set of potential buyers would be willing to take on. Higher risk, higher reward.
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