A New โThis Is M&Aโ Episode with Bob Cronin, Managing Director at Telegraph Hill Advisors
SaaS used to be the most predictable business model in technology. High retention, efficient growth, strong margins, and well-defined metrics created a valuation playbook that held steady for more than two decades. But that world is changingโand fast.
In the latest episode of This Is M&A, host Steven Monterroso sits down with Bob Cronin, Managing Director at Telegraph Hill Advisors, to discuss how AI is fundamentally restructuring how SaaS companies are valued, acquired, and positioned for exit.
Cronin has spent 30+ years advising founders through sell-side processes and strategic acquisitions, including deals with Salesforce, Commvault, and Upland. His perspective is clear:
AI isnโt just another feature categoryโitโs resetting the entire valuation landscape.
The Comfortable SaaS Valuation Era Is Ending
For years, SaaS valuations were driven by ARR growth, net retention, CAC efficiency, and gross margins. These metrics still matter, but they no longer guarantee a premium outcome.
Cronin explains that buyersโstrategics, PE firms, and growth investorsโare already separating companies into two camps:
- AI-native or AI-forward platforms, which can command 25ร to 150ร ARR in certain markets
- Traditional SaaS companies, which are now trending toward discounted multiples unless they show meaningful AI adoption
This divergence is widening quickly, and founders who assume the old rules still apply may find themselves misaligned with buyer expectations.
Why AI Companies Earn Outsized Multiples
AI-native companies are not being rewarded just for using AIโtheyโre being rewarded for what AI enables:
- Smaller teams with high EBITDA
- Rapid scalability
- Unique data advantages
- Category-defining product differentiation
In the conversation, Cronin outlines how buyers interpret these businesses. Traditional SaaS grows linearly; AI companies grow exponentially when executed correctly. That shift is enough to pull valuation bands far outside legacy SaaS norms.
The takeaway:
Multiples follow value creation patterns, and AI is creating new patterns entirely.
The 12โ15 Month Warning for Pure SaaS Companies
One of the most urgent insights from the episode is Croninโs view that pure SaaS businesses have a limited timeline before discounts deepen.
He estimates that the market will continue valuing traditional SaaS on familiar metrics for another 12 to 15 months. After that, buyers will begin accelerating discounts for companies lacking an AI footingโespecially those with slower growth or weak category differentiation.
Founders targeting an exit in the next 24โ36 months need to think strategically about where AI fits into their roadmap and how to position their company before the window tightens.
Valuation Gaps Are Emerging Inside the Same Categories
Cronin shares real examples where companies with nearly identical ARR, growth, and retention are trading at wildly different valuationsโsimply because one has a credible AI strategy and the other does not.
Even in highly mature SaaS markets, AI is becoming the dividing line between premium acquisitions and clear underperformance.
The message is not โadd AI for the sake of AI.โ
The message is: buyers are pricing future defensibility, and AI is shaping that future.
A Practical Checklist for Founders Planning an Exit
Throughout the episode, Cronin provides a tactical framework for CEOs, CFOs, and corporate development leads. A few highlights include:
- Build a credible AI roadmap, not just AI marketing language
- Understand where you sit in your categoryโand how AI might shift that category
- Identify the metrics and milestones buyers now prioritize
- Avoid waiting for โperfectโ market conditions; timing missteps are costly
- Upgrade your documentation and diligence readiness early
This is one of the most actionable episodes for software founders looking ahead to an exit.
Listen to the Full Episode
๐ง Watch or listen to โMaximizing SaaS Value in the Age of AIโ
Featuring Bob Cronin, Managing Director at Telegraph Hill Advisors
Hosted by Steven Monterroso, CEO of ShareVault
For founders preparing for a transaction, explore ShareVaultโs resources on deal preparation, secure document sharing, and diligence readiness.
Need a data room for your next high-stakes deal? Try ShareVault for free.
