Rob Walling

So your last question is, I've heard exit multiples typically range from four to seven X ARR.

Does that range factor in differences in profitability?

If you're growing, they don't care.

If you're growing, they don't care.

And if I were to sell a business doing $3 million a year and it was profitable versus $3 million a year and it was break-even and they were both growing as fast, yeah, I guess maybe the profitable one would get a slight, maybe, slight bump.

But you know what?

If you're profitable, you're not investing in growth.

You're putting cash in the bank, and so you're not going to be growing as fast.

almost inevitably.

And so to take two businesses at the same ARR and say they're going to be growing the same amount while one is more profitable, the one that's more profitable could actually be growing faster if you weren't putting all that money in the bank.

Profitability is a drain on growth.

And since growth is what drives exit multiples, that's the thing that I personally would be looking at if I wanted an amazing life-changing exit.

So thanks for that question, Alan.

Hope it was helpful.

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