How to Evaluate a SaaS Business Before Acquisition
Complete due diligence framework for SaaS acquisition targets.
Acquiring a SaaS business without proper due diligence is like buying a house without an inspection. Revenue can look healthy on the surface while hiding serious retention problems.
The 5-Point SaaS Due Diligence Framework
Revenue quality: is MRR sustainable or inflated by one-time deals?
Cohort retention: are older cohorts retaining or churning over time?
Customer concentration: does one customer represent more than 10% of MRR?
Churn velocity: is churn accelerating or decelerating?
Expansion potential: is there room for upsell and cross-sell?
Red Flags in SaaS Acquisition
Watch for: declining NRR, increasing CAC, shrinking expansion revenue, customer concentration risk, and churn that spikes after annual contract renewals.
Frequently Asked Questions
What documents do I need for SaaS due diligence?
You need access to Stripe/billing data, cohort retention reports, customer communication history, churn reasons, CAC by channel, and the cap table. ChurnLens automates much of this analysis.
ChurnLens — SaaS churn analytics and revenue retention intelligence. Learn more →
80% Overpay for Churn
4.2× Real vs Reported
$340K Avg Overpayment
23 Audit Checklist Points
The seller's churn number is almost always wrong. Upload the CSV and find out before you wire.