Khaled Azar 
I have sat in hundreds of first calls between buyers and sellers over the past 18 years. The pattern is always the same. Within the first 15 minutes, every serious buyer asks for the same five numbers. Not ten. Not twenty. Five. Get those five right, and the conversation moves forward. Fumble them, and the buyer’s interest drops before you finish your second cup of coffee.
The sellers who close at premium multiples are not necessarily the ones with the best numbers. They are the ones who present their numbers clearly, in context, with the story behind each one already prepared. Here are the five metrics buyers ask for first, what “good” looks like for each, and how I coach sellers to present them.
1. Revenue Run Rate and Growth Trajectory
Buyers do not buy your best quarter. They buy the trend line.
The very first question in almost every buyer call is some version of: “What’s your trailing twelve months?” They want the TTM revenue number, but what they actually care about is the shape of the curve underneath it. Flat revenue at $3M tells a completely different story than $3M with 25% year-over-year growth.
What to have ready: TTM revenue, year-over-year growth rate, and a monthly or quarterly breakdown going back 24 months. If you have a seasonal business, flag it. Buyers who see a Q4 dip without context will assume the worst.
What good looks like: For SaaS businesses in the lower middle market, 15% to 30% annual growth is the sweet spot where buyers get excited without questioning sustainability. Below 10%, buyers start treating the business as a cash-flow acquisition and discount accordingly. Above 40%, they start pressure-testing whether the growth is organic or bought through unsustainable spend.
What bad looks like: Declining revenue with no clear explanation. I worked with a $4M ARR company last year where revenue had dipped 8% because they intentionally churned low-margin clients to improve unit economics. Smart move, but they had not prepared the narrative. The first two buyers passed before we reframed the story around margin expansion. The third buyer, who heard the full context, offered 6.2x ARR.
Always present revenue with the “why” behind the trend. A number without context is just a number. A number with a story is a valuation driver.
2. Profitability: SDE or EBITDA
Revenue gets you in the door. Profitability determines the offer. Buyers want to know how much cash the business actually generates after accounting for everything it takes to run it.
What to have ready: If your business does under $5M in revenue and the owner is heavily involved, prepare Seller’s Discretionary Earnings (SDE). For larger or more institutionally run businesses, prepare EBITDA with a clean add-back schedule. Either way, have 3 years of historical numbers and a clear bridge from your tax returns to the adjusted figure.
What good looks like: SDE margins above 25% for service businesses, EBITDA margins above 20% for SaaS. Consistency matters as much as the number itself. A business earning $800K in SDE three years running is more attractive than one that swings between $400K and $1.2M. According to the IBBA Market Pulse Report, deal closings in the lower middle market correlate strongly with clean, verifiable financials.
How to present it: Build a one-page add-back schedule. List every adjustment: owner salary above market rate, personal expenses, one-time legal costs, that RV you ran through the business. Buyers expect add-backs. What they do not expect, and what kills trust, is finding add-backs they have to discover themselves during due diligence.
Businesses with consistent profitability above this threshold typically see 3 or more competing offers in a structured sale process.
3. Customer Concentration
One question decides whether the buyer sleeps well at night: “What happens if your biggest client leaves?”
This is the metric that kills more deals than sellers expect. A business can have strong revenue, healthy margins, and growing fast, but if 35% of revenue comes from a single client, every buyer sees a ticking time bomb.
What to have ready: A revenue breakdown by customer showing the top 1, top 5, and top 10 clients as a percentage of total revenue. Include contract terms, tenure, and renewal history for each major account.
What good looks like: No single customer above 15% of revenue. Top 5 clients below 40% combined. Long-term contracts or demonstrable multi-year relationships with key accounts. I have seen businesses with moderate concentration still command strong multiples when they can show that their largest client has been with them for 8 or more years and recently expanded the relationship.
What bad looks like: Any single client above 25% with no contract. We represented a $2.8M revenue IT services firm where one client accounted for 31% of revenue on a handshake agreement. Two buyers explicitly cited that concentration as the reason for passing. The deal eventually closed, but at a 1.5x multiple discount and with an earn-out tied to that client’s retention for 18 months post-close.
If you know concentration is a weakness, start diversifying 12 to 18 months before going to market. Even incremental progress changes the buyer’s risk calculus.
4. Retention and Churn
For any business with recurring revenue, this is the metric buyers use to predict the future. Revenue tells them where you have been. Retention tells them where you are going.
What to have ready: Monthly and annual gross revenue retention (GRR), net revenue retention (NRR) if you have expansion revenue, and logo churn rate. Present these as trailing 12-month figures, not cherry-picked best months.
What good looks like vs. bad:
| Metric | Strong | Acceptable | Red Flag |
|---|---|---|---|
| Gross Revenue Retention | Above 90% | 85% to 90% | Below 80% |
| Net Revenue Retention | Above 110% | 100% to 110% | Below 95% |
| Annual Logo Churn | Under 8% | 8% to 15% | Above 15% |
| Monthly Revenue Churn | Under 1% | 1% to 2% | Above 3% |
These benchmarks align with what SaaS valuation models use in 2026 exit transactions. Businesses with NRR above 110% routinely command 7x to 10x ARR multiples because the buyer is acquiring a revenue base that grows on its own.
How to present it: Show the cohort data if you have it. A chart showing that customers acquired 2 years ago are now spending 30% more is worth more than any pitch deck slide. If your churn is above average, show the trend line improving and explain what you changed. Buyers can forgive imperfect numbers. They cannot forgive a seller who does not know their own retention metrics.
5. Owner Dependency
This is not on any spreadsheet. Buyers figure it out in the first 10 minutes anyway.
Every buyer is silently assessing one thing throughout the first call: what happens to this business if the owner walks away? It is not a financial metric. It is an operational one. And it might be the most important factor in whether a buyer moves to LOI or moves on.
What to have ready: An honest assessment of your weekly hours, which functions you personally handle (sales, product, client relationships, hiring), and who on your team can cover each one. If you have documented SOPs, say so. If you have a second-in-command, introduce them early.
What good looks like: The owner works 15 to 25 hours per week, primarily on strategy and relationships. Day-to-day operations run through a management layer. Key client relationships are held by account managers, not the founder. The business has operated for at least a few weeks without the owner present and nothing broke.
What bad looks like: The owner is the top salesperson, the product visionary, and the only person clients trust. I have seen buyers offer 40% less for businesses where the owner touches every deal. One PE firm told me directly after passing on a $5M EBITDA company: “Great business, but we are buying a job, not an asset.”
Owner dependency is the one metric you can improve fastest with the biggest impact on valuation. Even 6 months of deliberate delegation, hiring a key manager, and stepping back from client work changes how buyers perceive the business. The Hiring and Operational Maturity guide walks through how to structure this transition.
The Quick Reference: What to Have Ready
| Metric | What Buyers Ask | What to Prepare | Green Flag | Red Flag |
|---|---|---|---|---|
| Revenue | “What’s your TTM and growth rate?” | 24 months of monthly revenue, YoY growth | 15-30% YoY growth | Declining with no narrative |
| Profitability | “What’s your adjusted SDE/EBITDA?” | 3-year P&L with add-back schedule | 25%+ SDE margin, consistent | Volatile with hidden add-backs |
| Concentration | “How much is your top client?” | Revenue by customer, top 1/5/10 | No client above 15% | Single client above 25% |
| Retention | “What’s your churn rate?” | TTM GRR, NRR, logo churn, cohort data | GRR above 90%, NRR above 110% | Monthly churn above 3% |
| Owner Role | “How involved are you day to day?” | Hours/week, functions handled, team depth | 15-25 hrs/week, management layer | Owner is the business |
Frequently Asked Questions
What metrics do buyers look at first when evaluating a business?
Buyers consistently prioritize five metrics in initial conversations: trailing 12-month revenue and growth rate, adjusted profitability (SDE or EBITDA), customer concentration, retention and churn rates, and owner dependency. These five numbers determine whether a buyer moves to a second meeting or passes.
How do I present my financials to a buyer in a first meeting?
Prepare a one-page summary with your TTM revenue, growth trend, adjusted SDE or EBITDA with a clean add-back schedule, customer concentration breakdown, and retention metrics. Present numbers in context with the story behind each trend. Clarity and preparation build trust faster than perfect numbers.
What customer concentration level scares buyers away?
Any single customer representing more than 25% of total revenue without a long-term contract is a significant red flag. Most buyers prefer no single client above 15% and top 5 clients below 40% combined. High concentration often leads to earn-out structures or valuation discounts of 1x to 2x multiples.
What is a good net revenue retention rate for selling a SaaS business?
NRR above 110% is considered strong for SaaS businesses going to market in 2026. Businesses with NRR above 120% consistently command premium multiples of 8x to 12x ARR. Below 95% NRR signals a leaky bucket that buyers will price in as a risk factor.
Next Steps
Knowing these five metrics is step one. Knowing how they compare to what buyers are paying for right now is step two. We will benchmark your numbers against recent comparable transactions and show you exactly where you stand.