We have over $50bn of transaction experience globally
We have over $50bn of transaction experience globally
When it comes time to sell your online business, buyers will look beyond revenue. They’re not just acquiring your current numbers. They’re assessing the engine behind those numbers: the economics that determine whether the business can grow, stay profitable, and ultimately be worth more under new ownership.
After speaking with hundreds of buyers across e-commerce, SaaS, mobile apps, and content businesses, we’ve seen the same question come up again and again: is this business fundamentally sound?
There are six key levers that buyers use to answer that question. These are typically assessed in the first few minutes of evaluating a business. Let’s break them down and explain what they mean for your valuation, your exit, and how you can get ahead.
Buyers value momentum. If revenue is steadily increasing month over month or quarter over quarter, it indicates that the business is resonating with the market. But just as important as the growth itself is the source of that growth.
If your growth is driven primarily by paid advertising, particularly through a single platform, that can raise concerns. Platforms like Meta, Google, and TikTok frequently change their algorithms and advertising policies. What works today might not work tomorrow. A business that relies on one channel for most of its customer acquisition is considered high risk.
A healthy growth rate depends on the industry, but generally, annual growth of 15 to 30 percent is considered solid. Buyers want to see steady, repeatable growth that isn’t dependent on a few hacks or one-time tactics.
Acquiring a customer is expensive. Keeping a customer is where the value lies.
Retention allows you to generate revenue from the same customer more than once, reducing the pressure to constantly find new ones. Buyers look at this closely, because a retained customer is more profitable over time and contributes to stability and predictability.
This ties directly into the concept of the Customer Lifetime Value (CLV) to Customer Acquisition Cost (CAC) ratio. This ratio compares how much gross profit a customer brings over time to how much it cost to acquire them. A healthy ratio is typically at least 3 to 1. In other words, for every euro spent on acquisition, you earn three euros in profit over that customer’s life.
If customers don’t return, your CLV remains low, and you’re forced to chase growth with more spending. That’s rarely sustainable.
Customer Acquisition Cost is a critical metric for buyers. They want to know how efficiently you’re growing. CAC tells them how much you spend, on average, to acquire each paying customer.
They’ll often compare CAC with other key metrics, such as Return on Ad Spend (ROAS). ROAS measures how much revenue you generate for each euro spent on ads. A typical benchmark for healthy ROAS in e-commerce is between 2.5 and 3.0.
Buyers also assess whether acquisition costs are stable or rising over time, and whether the business is overly dependent on a single platform or channel. Diversification reduces risk and shows that the business has more than one growth lever.
Revenue alone doesn’t build a valuable business. What matters is how much of that revenue turns into actual profit.
Buyers look at your contribution margin, which is the profit you make per sale after deducting direct costs such as product cost, shipping, payment processing fees, and CAC. In other words, how much is left after you deliver the product and acquire the customer.
In e-commerce, a contribution margin of 20 to 40 percent is often considered healthy. In SaaS or digital businesses with lower direct costs, margins can be even higher.
Businesses with strong contribution margins have the cash to reinvest in growth, weather downturns, and maintain profitability as they scale.
Even if your financials are strong, buyers will hesitate if the business can’t operate without the founder.
A business that depends on one person to manage suppliers, launch campaigns, or answer customer service tickets feels risky and hard to scale. Buyers want to step into something that is organized, transferable, and low-friction.
This is one of the easiest issues to fix in advance of a sale. Start by delegating recurring responsibilities, even if it’s just a few hours per week. Document how key tasks are performed using Standard Operating Procedures (SOPs). Use simple tools like Asana, Trello, or Notion to manage workflows. The goal is to build a system that someone else can operate, with or without you.
Not all revenue is equally valuable. Buyers want to know if your revenue is predictable, diversified, and sustainable.
If your entire business relies on a single product, one advertising channel, or a small group of customers, that creates risk. A change in policy, a supplier issue, or a shift in consumer demand can have an outsized impact.
In contrast, revenue that is recurring, spread across product lines, supported by multiple traffic sources, and spread across regions or demographics is more durable. Buyers are willing to pay more for that kind of stability.
These six levers — growth, retention, CAC, margin, operations, and revenue quality — are what buyers look at first. Before they request documents or schedule a call, they’re assessing these fundamentals to see whether your business is worth pursuing.
If the economics are sound, the rest becomes negotiable.
At Deal Execution Academy, we help founders improve and present these metrics in a way that maximizes buyer interest and valuation. Whether you’re preparing for a sale in the near term or just want to increase the value of your business over time, it starts with getting these fundamentals right.
Book a free strategy session with one of our M&A experts. We’ll walk through your key metrics and show you how buyers would evaluate your business — and what you can do to increase value before you go to market.