Why so little? It contrasts sharply with the valuations at which the startups (or even established companies, which no longer grow like crazy) are invested into at.
Why would i sell my business at 3x SDC (which, if it's a small one-person shop, probably just 15-20 months' worth of all 'take home money')? Only if was a 'crap business' as said, and i know it is heading straight into the ground and can somehow conceal it from the buyer.
I've worked at a few companies where we've been sold to VCs and the like.
Anything more, and the risk of no recuperating the invested money is too great. (unless you find a sucker to dump it on, which is basically the current buisness model for most of silicon valley)
Average P/E across all business sectors tends to be around 15 long term, with fluctuations mostly staying between 10 and 25, getting out of these ranges only in extreme cases like a war or a major international crisis (in XX century, U.S. average p/e was under 10 for any significant time only during WWI, WWII, and the 1970s oil shock). If some business is really worth only 3x of its annual profit it must be a really, really dodgy one (only one of the hundreds of tracked business sectors with P/E under 3 now is TV broadcasting, which is agreeably on its death track).
A company’s valuation multiple can be highly sensitive to the choice of denominator. You are making an apples-to-grapefruits comparison by trying to equate “seller discretionary revenue” with US GAAP net income per share.
The SDR calculation [1] excludes compensation and looks like a generous net revenue measure. Earnings per share -- from which P/E multiples on public companies are typically calculated -- includes compensation, interest expense, various non-cash adjustments, and adjustment for dilution.[2] Generally you would expect the SDR number to be higher than net income and correspondingly attract a lower multiple in estimating firm value.
As others have commented, there are additional reasons why valuation metrics for large-cap listed companies don’t make for useful comparison with SaaS startups. See also Heidi Roizen’s cautionary tale [3] about the perils of multiple envy.
Why would i sell my business at 3x SDC (which, if it's a small one-person shop, probably just 15-20 months' worth of all 'take home money')? Only if was a 'crap business' as said, and i know it is heading straight into the ground and can somehow conceal it from the buyer.