The Key KPIs That Matter Most in M&A for Acquirers
Acquirers don’t just look at revenue—they focus on a set of critical KPIs
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When it comes to M&A transactions, acquirers don’t just focus on top-line revenue—they analyze key performance indicators (KPIs) that determine a company’s sustainability, profitability, and scalability.
If you're a founder planning an exit or an investor evaluating deals, understanding these metrics is critical for maximizing value
The Most Relevant KPIs in M&A
-ARR / Revenue Growth
High-growth companies (+30% YoY) are more attractive, but predictability is key.
Sustainable, recurring revenue wins over short-term spikes.
-Rule of 40
Growth rate (%) + EBITDA margin (%) should exceed 40%.
A strong balance between growth and profitability signals financial health.
-Gross & Net Revenue Retention
Gross Retention >90% ensures customers stay.
Net Retention >100% means customers expand their contracts—driving long-term value.
-LTV/CAC Ratio
A 5x+ ratio indicates strong unit economics—each customer generates significantly more than their acquisition cost.
-% of Recurring Revenue
Companies with >90% recurring revenue (subscriptions, SaaS, etc.) get higher valuations due to predictable cash flow.
-Customer Concentration
Revenue dependency on a few clients (>75%) is a red flag.
Diversified customer bases reduce risk and enhance deal attractiveness.
-Total Revenue & EBITDA Margin
Companies with $10M+ in revenue and >30% EBITDA margins attract premium valuations.
Why These KPIs Matter
For founders, optimizing these metrics before an exit can dramatically increase valuation and buyer interest.
These KPIs act as filters for investors and acquirers to identify high-potential companies while avoiding risky bets.
💡 If you’re considering an M&A transaction—whether selling, buying, or investing—understanding these KPIs can make all the difference.
Let’s connect if you’d like to discuss how to optimize these metrics for a successful deal! 🚀
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