Startups & VC

Rule of 40 Is Half Dead: Growth Is All That Matters, Margins Above 25% Don't Help, and Category Beats Both. The Latest From Kroll

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The Kroll Global Software Sector Update for Summer 2026 highlights several key trends in the B2B software market that are crucial for companies to understand. Here's a summary and analysis of these trends:

Key Findings

AI is the New Currency: The report emphasizes that AI capability, proprietary data, and workflow position have become critical assets driving acquisition valuations. Companies with strong AI capabilities are commanding significantly higher multiples compared to those without.
Growth Cliff Steeper: Public EV/CY26 revenue multiples show a stark difference based on growth rates:
- Below 0% growth: 2.4x median
- 0-10% growth: 3.1x
- 10-20% growth: 4.1x
- Above 20% growth: 7.2x
This indicates that the market is willing to pay a premium for companies with high growth rates, especially those above 20%.
Profitability Has Become Table Stakes: Median EBITDA margins are relatively flat across different growth brackets:
- Below 0% growth: 28.9%

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