Valuation: Comps & PrecedentsMedium

What is the Rule of 40, and how does it connect to SaaS valuation multiples?

Model answer

The Rule of 40 says a healthy software company's revenue growth rate plus its profitability margin (commonly FCF or EBITDA margin - definitions vary) should total at least 40%. It captures the…

The full, human-reviewed answer is in the bank.

Sign up free and Daily 10 serves you 10 questions a day from all 1,500+ — or go Pro for unlimited reps.

More from Valuation: Comps & Precedents

Browse all topics