What Metrics Buyers Check When Evaluating a SaaS Business
The 12 metrics every serious buyer checks before making an offer.
·7 min read
The 12 metrics every serious buyer checks before making an offer range from revenue predictability to operational efficiency, each directly shaping valuation multiples between 2x and 5x ARR in 2026.
Revenue Quality and Predictability
Buyers first examine MRR and ARR trends over the past 24 months. Consistent month-over-month growth above 15% supports higher multiples, while any contraction triggers deeper scrutiny. Net revenue retention above 110% signals strong expansion revenue that offsets churn.Churn and Customer Retention
Monthly logo churn below 2% and net revenue churn below 5% are non-negotiable benchmarks on platforms like Acquire.com and FE International. High churn immediately caps multiples at 2-3x ARR because buyers model future cash flows conservatively. Cohort analysis showing improving retention after month six further strengthens the narrative.Customer Acquisition Economics
CAC payback period under 12 months remains the standard threshold for SaaS businesses trading above 4x ARR. Buyers calculate LTV:CAC ratios using 36-month gross margins and expect at least 3:1. Any reliance on paid channels exceeding 70% of new customers raises sustainability flags during due diligence.Gross Margin and Unit Economics
SaaS gross margins above 75% after hosting and third-party API costs are now expected. Lower margins compress EBITDA and force buyers to apply lower SDE multiples when reviewing smaller assets under $500k ARR. Detailed COGS breakdowns are requested within the first data room access.Recurring Revenue Mix
The percentage of revenue labeled as contractual versus usage-based matters. Buyers discount usage-heavy models by 0.5-1.0x ARR because of forecasting difficulty. Empire Flippers and MicroAcquire both publish average multiples showing 4.2x for pure subscription versus 3.1x for hybrid models in 2025-2026.Operational Scalability
Headcount relative to ARR reveals leverage. Efficient businesses maintain fewer than 0.8 employees per $100k ARR. High support ticket volumes or manual onboarding processes are red flags that buyers quantify through support ticket data and churn attribution.Technical and Security Posture
SOC 2 Type II certification and clean dependency audits reduce perceived risk. Missing security documentation can delay an APA by 30-60 days while escrow terms widen to 20% of purchase price. Buyers on hades.ae routinely request penetration test results before signing any LOI.Key Benchmarks Buyers Track in 2026
- Net revenue retention: 105-120%
- Monthly logo churn: 1-2%
- CAC payback: 6-14 months
- Gross margin: 75-85%
- ARR per employee: $125k-$250k
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