Kroll's data says the Rule of 40 stopped predicting software multiples
SaaStr·medium signal
Kroll's Summer 2026 Global Software Sector Update, covering deals through June 30, finds companies with identical Rule of 40 scores trading far apart: Engineering and HCM both score 46% but command 5.2x and 3.0x revenue, a 73% gap. EBITDA margins of 25-30% are now table stakes with no premium above that, while moving from 19% to 21% growth outweighs any margin optimization. Strategic buyers are 74% of transactions at nearly double public multiples versus PE flat at ~4.4x EBITDA, and a single deal, SpaceX's reported $60 billion acquisition of Cursor, accounts for half of all announced deal value.