Emerging-industry valuations. SaaS, climate tech, AI services, marketplace businesses. Share a common problem: the data is unreliable. Either there are too few private comparables, or the public ones (think US-listed SaaS) trade at multiples that bear no relationship to UK SME reality.
Anchor on unit economics
For SaaS and subscription businesses, gross margin, net revenue retention, CAC payback and the Rule of 40 are the inputs that drive multiples. We size the multiple from the unit economics, not the other way round.
Triangulate, don't extrapolate
A DCF based on the next three years of contracted revenue, an EBITDA multiple haircut for execution risk, and a revenue multiple cross-check. Where the three converge is usually where the negotiation lands.
Price the risk explicitly
Regulatory uncertainty (climate tech), model risk (AI services), platform dependence (marketplaces). These aren't reasons to give a discount silently. Quantify the risk and let the buyer choose to underwrite it or not.
Beware the headline number
Earn-outs, deferred consideration and rollover equity dominate deal structure in emerging-industry transactions. The headline number is rarely the take-home number. Model both before you sign heads of terms.