Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

February 18, 2020

Businesses with Recurring Revenue: Getting a Good Deal

By Achim Neumann

Business owners selling a business with recurring revenue start from a position of strength in the process.

Recurring revenue streams are attractive to prospective buyers due to the stable bottom line cash flow they provide to a business. Stable cash flow can support the potential for growth, success, sustainability and overall business stability. Recurring revenue streams can help you get a good deal when selling your business in the ways described below.

Include Evidence in Your Sales Pitch

Showing a prospective buyer that your business has the potential to sustain and increase recurring revenue will increase the probability of gaining the highest sales price. Examples of recurring revenues include active subscriptions, monthly or annual maintenance fees, SaaS licensing, long-term client relationships and large projects that are in progress. As a seller, you should ensure that you highlight the importance of these streams in your sales pitch. Recurring revenues show that the business has a client-base to support ongoing income generation.

Increase Buyer Confidence

A business with recurring revenue will help to convince a buyer that they can count on success in the post-closing period. When a buyer contemplates acquiring a business, it can only take a few negative signals for them to get cold feet. This is where an assurance of consistent revenue is invaluable. Having the confidence that the business will continue to bring in revenue even if they made little to no effort to develop it, helps buyers to feel comfortable and increases your chances of closing a deal that is both favorable and profitable.

Recurring revenue allows buyers to plan for future expenses and determine financial growth projections and make a plan for managing the long-term viability of the business. The ability to demonstrate this will reassure the buyer about their decision and instill them with the confidence to go through with the deal.

Recurring Revenue Metrics: Know Your Stuff

When selling a business with recurring revenue, it is vital that you work out what percentage of your cash flow is made up of recurring revenue, how long your customers have been with you, the value of existing contacts and how existing contracts are set to expire. It should be your goal to develop a document that showcases that your business delivers exceptional results for operations, customer service and marketing. Such prospectus will be essential to demonstrate that your business is positioned strategically for the future.

If you’d like to speak further about reoccurring revenue or anything from a business valuation to planning an exit strategy from your business, then please don’t hesitate to reach out to one of our qualified M&A Advisors in Pennsylvania, New York, Connecticut  and along the entire East Coast at A. Neumann & Associates, LLC.


About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or

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“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

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Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs

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