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The Private Equity Perspective on Acquiring, Operating, and Selling Software Companies

In The Trenches

CHAPTER

The Rule of 40 in Software Investing

The rule of 40 essentially says your revenue growth rate plus your EBITDA margin should equal roughly 40% or even higher. Jordan: How good of a predictor ultimately is the rule of 40 of the ultimate return of that investment? "It does matter, but it's not the end all be all," he said.

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