Tech company valuations

Allan Wille and Lauren Thibodeau sit down with Ed Bryant, President and CEO of Sampford Advisors, to unpack how tech company valuations actually work, and what founders get wrong about them.

What is a tech company valuation?

A valuation is the price a buyer will pay for your business, either through an outright purchase or as part of a merger and acquisition (M&A) transaction.

Ed's view is direct: the only way to know what your company is truly worth is to go to market and collect real bids from potential buyers. Any number before that is an estimate.

Financial buyers vs. strategic buyers

Ed draws a clear line between two types of acquirers:

• Financial buyers include private equity firms and venture capitalists. Their goal is a return on investment.
• Strategic buyers are companies acquiring other companies to strengthen their own position, enter new markets, or eliminate competition.

The distinction is blurring. Many strategic buyers are now backed by financial players, which changes how they evaluate deals and what they're willing to pay.

Factors that drive valuation

Four variables consistently shape how buyers assess a tech company:

• Scale: How large is the business? Revenue, customer count, and market presence all matter.
• Growth: Is the company expanding, and how fast?
• Profitability: Especially important for later-stage investors and acquirers who want to see a path to sustainable returns.
• Retention: Are customers staying? High churn is a red flag at every stage.

Ed emphasizes that profitability carries more weight than many founders expect, particularly when deal activity slows and buyers become more selective.

How market conditions shape M&A

Mergers and acquisitions move in cycles. When market conditions tighten, valuations compress and deal volume drops. When conditions improve, activity picks up and multiples expand.

Ed describes the current environment as bifurcated: healthy businesses with strong fundamentals are commanding solid valuations, while companies with weaker metrics face a much harder path. He anticipates increased M&A activity and a more positive environment for software transactions as the market recovers.

Common mistakes founders make

Ed has seen the same patterns repeat across deals. Founders often:

• Over-index on technology and underinvest in understanding their business metrics
• Neglect customer retention, which buyers scrutinize closely
• Misread growth signals, confusing top-line momentum with sustainable business health

The founders who command the best valuations understand their numbers as well as their product.

Where to follow valuation trends

For founders tracking the current market, Ed recommends:

• Sampford Advisors' monthly market report, which tracks M&A activity and valuation trends in the tech sector
• Tomasz Tunguz, a venture capitalist known for data-driven analysis of SaaS metrics and market conditions
• VC, private equity, and M&A community content more broadly, which surfaces real-time signals about buyer sentiment and deal flow