Keeping customers gets you the meeting. Growing them sets the price.
Over twelve months the listed software index fell from 5.7 to 3.2 times revenue, while the median private software transaction moved from 4.2 to 4.0. Private prices held. The gap between what owners expect and what clears is now the most cited reason deals fail.
Request a Pre-Market Assessmentof dealmakers surveyed attributed failed deals in the first half of 2026 to valuation expectations. For 2025 it was 28 percent.
Lower-middle-market dealmakers surveyed by a deal platform in July 2026, on deals that failed in the first half of the year, against 28 percent for 2025. Seventy-nine respondents. Published August 11, 2026.
The retention figure is the median. The end market is the argument.
A buyer will recompute your retention from your own records, and then ask who your customers are and who is buying them.
No named publisher measures what growth, margin or preparation adds to the price of a private software company. The published premiums are for listed companies. Anyone putting a specific multiple on preparation is quoting their own marketing, and we will not.
Software Equity Group, 2Q26 SaaS M&A and Public Market Report, August 5, 2026. SaaS Capital, annual survey of more than 1,000 private B2B SaaS companies, April 24, 2026. ChartMogul, December 10, 2025. Benchmarkit, 2026. The retention figures measure different populations and are shown side by side, not averaged. A lower-middle-market deal platform’s published study of broken letters of intent, January 27, 2026: seventy-five broken letters across eight buyer types and eight industries, with 2023 comparisons from the same series. The percentages are separate reported categories and are not summed here.
Six lines a buyer recomputes from your own records.
Retention is the meeting. What a buyer prices is the evidence behind it: who the customers are, what they signed, and what it costs to keep them.
A buyer rebuilds retention from invoices, by customer cohort and by month, and compares it with the figure in your deck. The cohort that signed two years ago is the one that gets read.
Annual recurring revenue excludes one-time fees and professional services, even where they recur. A buyer restates ARR to the standard before pricing it.
Annual billing in advance creates a liability a buyer treats as debt-like at closing. The working capital target is set from it.
Capitalized development flatters earnings and builds an asset a buyer will write off. The buyer reads the policy, then the earnings without it.
A buyer reads your five largest customers, then the end market those customers sell into. In vertical software, the end market is the argument.
Auto-renewal, price escalators, termination for convenience and change-of-control clauses. Each one is a term a buyer counts before pricing the certainty of close.
As owners keep it. As a buyer reads it.
| Area | As most owners keep it | As a buyer reads it |
|---|---|---|
| Revenue | Bookings, invoices and cash, in one line. | Recognized revenue under a written policy, with ARR restated to the standard and one-time items out. |
| Retention | Logo retention, from the CRM. | Gross and net revenue retention by cohort, rebuilt from invoices and bank deposits. |
| Gross margin | Hosting and support, sometimes. | Subscription margin and services margin apart, with hosting, support, implementation and third-party software allocated. |
| Development | Salaries, in one line. | Research, maintenance and new product separated; the capitalization policy read; earnings shown both ways. |
| Customers | The top ten, by revenue. | Concentration, contract terms, renewal dates and the end market’s own condition, customer by customer. |
| Working capital | The bank balance. | Deferred revenue, receivables and payables on a monthly trend; a target set from the trailing twelve months. |
Five things worth fixing before a buyer prices them.
In order of what moves the price, from the records the review reads.
- Restate recurring revenue to the standardPull one-time fees and services out of ARR before a buyer does. The figure gets smaller and more believable at the same time.
- Rebuild retention from invoicesBy cohort, by month, gross and net. If your deck says 103 percent and the invoices say 96, the invoices win.
- Write the revenue recognition policy downOne page: when revenue is recognized, how multi-year contracts are treated, how deferred revenue is carried.
- Document every adjustmentOwner compensation, personal expenses, one-time costs, each with the document behind it. Undocumented add-backs are removed, not argued.
- List the consentsEvery customer, vendor and license agreement with a change-of-control or assignment clause, and the counterparty who can say no.
Three steps, and you decide what happens after each one.
About the business, its market and your timing.
Starts with an agreed information request under a signed NDA. Scope is agreed in writing before any work begins.
A report and workbook you keep. Act on it, wait, or hand it to your own advisor.
Sell now, sell later or keep building. Nothing reaches a buyer without your written permission.
Plain answers, then a conversation if you want one.
Is my retention figure wrong?
It is usually measured differently from the way a buyer measures it. Logo retention from a CRM and net revenue retention by cohort from invoices are different figures, and a buyer prices the second. The review rebuilds the second from your own records.
Does a services arm hurt my price?
Not by itself. What decides the price is whether the services and the software are reported apart, with their own margins. The hybrid page covers it.
What does a buyer do with capitalized development?
Reads the policy, then reads the earnings without it. If the policy is written and consistently applied, the adjustment is a conversation. If it is not, the adjustment is the buyer’s.
Will the review raise my price?
We will not promise that. It shows what your numbers support and gives you the chance to fix what they do not before a buyer prices it.
Who sees the findings?
You. Nothing reaches a buyer, an advisor or anyone else without your written permission.
The questions a buyer’s quality of earnings will ask, answered on your side of the table.
This is non-attest preparation. It shows you what a buyer’s quality of earnings is likely to find, while there is still time to act on it.
Revenue reconciled to bank deposits, and reported earnings tied to the records behind them.
Each add-back you or your advisor proposes is marked supported or unsupported, with the document that decides it.
Concentration, retention and contract terms, read the way a buyer will read them.
Assignability, change-of-control terms, and the compliance items a buyer’s counsel will ask about.
What was found, what it affects, and what to fix first. Yours to keep. See the full review.
Come prepared.
Capital Row is the M&A firm that reads your numbers the way a buyer will, before you go to market. Every figure is traced to a source document, every adjustment is marked supported or unsupported, and the findings are yours to keep.
Scope is agreed in writing before any work begins. Nothing from your review reaches a buyer, or anyone else, without your written permission.