The line between a 4 × and a 15 × ARR exit is rarely technology.
It’s preparation.
Half of all VC‑backed SaaS acquisitions close before a Series A. That’s right—most exits happen long before a true growth-stage round.
Meanwhile, public markets aren’t adding capacity. The number of listed U.S. companies has flat‑lined for a decade. Most startup founders realize their most likely liquidity event is a strategic sale into a Fortune 500 balance sheet. So how do you shortlist top buyers?
Your Banker Is Your Demand‑Gen Engine
I’m allergic to shotgun weddings—especially the one you’ll face if an unsolicited term sheet lands and you have zero relationships in M&A land. My playbook is:
1. Hit $1‑3 M ARR with ≥100 % YoY growth.
- That’s when the best boutique bankers start to care.
2. Cultivate 2‑4 sector specialists early.
- Quarterly 15‑minute updates are fine—just keep the story rolling.
3. Nail the 60‑second pitch.
- Bankers are the most distracted mammals on Earth; if you can’t hook them in a minute they’ll never get a buyer excited.
Why bother? Because these bankers live inside the org charts of your future acquirers. They know when a Thompson Reuters or Google Cloud is under mandate to plug a product gap and will pay 10‑25× ARR for the right fit. Without that intelligence, you’re guessing.
The Audit‑Ready Foundation for Acquisition Readiness
Once you’ve gotten the attention of an opportunity, smart founders know high‑multiple deals vaporize over messy books or loose IP. The minimum viable hygiene is:
GAAP, not guesses.
Use deferred‑revenue rules (ASC 606) from the first paid customer—even if you’re still on QuickBooks.
Separation of duties.
No founder should approve and pay a bill.
Delaware C-corp, Carta cap table, signed invention assignment.
One missing signature can crater a $50 M sale (don’t ask me how I know).
Net retention > 100 % and churn < 5 %.
Buyers pay up for expansion revenue; they penalize churn.
Rule of 40 mindset.
Growth minus EBITDA margin above 40 % signals capital efficiency and commands premium multiples.’
Concrete Takeaways to Always Be Acquisition Ready
- Block two hours this week to draft a one‑minute, metrics‑heavy pitch. Use it to open dialogues with three bankers who closed SaaS deals under $500 M in the last 18 months.
- Book your controller (or fractional CFO) to implement GAAP revenue recognition and monthly bank recs. Costly later, cheap now.
- Run an IP hygiene sprint. Verify every contractor agreement assigns code to the company. File provisional patents where it matters. Check in with this quarterly and keep it tight.
- Institutionalize hiring. Tight job descriptions, three‑person interview panels, 90‑day performance reviews, four‑year option vesting with one‑year cliff. Fire fast, and this will keep your talent equation optimizing for a great exit, too.
Pick one strategic you’d love to acquire you and make them a customer or integration partner this quarter.
Nothing de‑risks you like production usage inside the buyer’s walls. Repeat quarterly.
Bottom line: Acquisition readiness isn’t a project you tackle when an LOI appears—by then it’s too late. It’s a muscle you build steadily so that, when the market window narrows and money gets picky, you’re the obvious, low‑friction, premium‑multiple choice.
— Gary Peat