The podcast discusses how tech-enabled services companies can secure premium offers during mergers and acquisitions. Key insights include: Valuation Factors:

• Deals are typically valued at 6-11x trailing 12-month EBITDA
• Growth rates of 15-25% are crucial
• EBITDA margins above 15% are ideal
• Recurring revenue above 60-70% is attractive to buyers

Critical Elements for Premium Offers:

1. Organic Growth

• Consistent year-over-year growth
• Demonstrated sales and marketing capabilities
• Strong leadership team

2. Profitability

• High EBITDA margins
• Efficient operational processes
• Rule of 45 (growth % + profit % ≈ 45)

3. Market Positioning

• Verticalized focus
• Broad geographic reach
• Specialized service offerings

4. Customer Relationships

• Multi-year contracts
• Low customer churn
• Repeat business
• Strong customer retention metrics

5. Deal Structure

• Flexibility in owner transition
• Balanced risk allocation
• Potential for earn-outs or seller notes

The podcast emphasizes working with M&A advisors like Revenue Rocket to optimize these factors and prepare a company for a premium acquisition offer.

RELATED EPISODES:

Episode 166: Understanding Revenue Models and How They Impact Valuations. Listen now >>

Episode 145: Why Sellers with Vertical Market Approaches Earn Premium Valuations. Listen now >>

Recurring Revenue

Episode 19: The Rule of 45. Listen now >>

Check out our podcast playlist on Organic Growth Strategy >>

Listen to Shoot the Moon on Apple Podcasts or Spotify.

Buy, sell, or grow your tech-enabled services firm with Revenue Rocket.