The Digital Infrastructure of a Deal: Tooling Expectations in M&A
When a founder decides to explore an exit, the focus naturally drifts toward the headline number. You consider revenue multiples, comparable transactions, and the strategic narrative that will captivate potential acquirers. However, before a Letter of Intent (LOI) is signed and long before funds are wired, your business will undergo a forensic examination known as due diligence.
During this phase, buyers do not simply ask for your financial statements. They ask for the raw data that underpins them. They want to see the granular evidence of every customer interaction, every dollar billed, and every feature used.
This is where your choice of SaaS tooling becomes a critical factor in deal execution. According to McKinsey research, nearly 70 per cent of mergers and acquisitions fail to deliver expected value, with inadequate due diligence cited as a primary factor. The quality of your operational data directly impacts whether your deal falls into the successful minority.
Sophisticated buyers, whether private equity firms or strategic acquirers, view your tech stack as a proxy for operational maturity. A fragmented, spreadsheet-heavy back office suggests a business that is difficult to scale and risky to integrate. Conversely, a coherent, integrated stack signals a disciplined operation where data is treated as an asset.
The goal is not to purchase enterprise-grade software for the sake of it. The goal is auditability. Below, we outline the categories of tooling that buyers expect to see implemented and populated with clean historical data well before a sale process begins.
The CRM as the Source of Revenue Truth
For most B2B technology companies, the Customer Relationship Management (CRM) system is the single most important repository of data outside of the general ledger. Buyers expect tools like Salesforce or HubSpot to be the central nervous system of your commercial operations.
However, owning the licence is not enough. We frequently encounter companies where the CRM is treated as a digital rolodex rather than a revenue engine. Buyers expect to see a structured sales process that tracks a lead from initial contact to closed-won, with time-stamped stage changes.
Why this matters to a buyer:
During financial diligence, a buyer will often perform a "pipeline build" analysis. They want to verify that your historical conversion rates support your future growth projections. If your forecast predicts significant new bookings next year, but your CRM data shows inconsistent stage definitions or missing probability weightings, your projection will be discounted.
The analytical reality:
Buyers will export your raw opportunity data to calculate metrics such as pipeline velocity and conversion rates by cohort. If you cannot produce a report showing the history of deal stage changes, you cannot prove the reliability of your sales engine.
Ensure your CRM is configured to capture:
- Lead Source: To calculate Customer Acquisition Cost (CAC) accurately.
- Granular Stage History: To identify where deals stall.
- Loss Reasons: To understand product-market fit gaps.
Subscription Management and Billing Integrity
In the early days of a startup, it is common to manage invoicing through manual accounting entries or basic payment processors. As you approach an exit, this is rarely sufficient. Buyers prefer automated subscription management platforms such as Stripe Billing, Chargebee, or Maxio (formerly SaaSOptics).
The primary reason for this preference is the complexity of revenue recognition (ASC 606 or IFRS 15). There is a significant difference between cash collected and revenue recognised.
Why this matters to a buyer:
A buyer needs to validate your Monthly Recurring Revenue (MRR) bridge. This is not just a top-line number; it is a mathematical explanation of how your revenue evolved over a specific period.
The standard formula for the MRR bridge is:
Ending MRR = Beginning MRR + New MRR + Expansion MRR − Contraction MRR − Churned MRR
If your billing data lives in spreadsheets, errors are almost guaranteed. A buyer's financial diligence team (often a Big Four accounting firm) will attempt to recreate your revenue schedule from the bottom up. If their number differs from yours by even a small margin, it casts doubt on your financial controls. Automated billing tools provide a rigid audit trail that withstands this scrutiny.
Customer Success and Retention Tracking
Valuation multiples in modern software M&A are heavily influenced by the quality of revenue, not just the quantity. The primary indicator of quality is Net Revenue Retention (NRR).
Defining the metric:
NRR = (Starting ARR + Expansion − Contraction − Churn) ÷ Starting ARR
To a buyer, an NRR of 120 per cent indicates that the business can grow even without acquiring new customers. This significantly lowers the risk profile of the investment.
To prove this, you need tools that track customer health and behaviour, such as Gainsight, Catalyst, or a heavily customised instance of your CRM. Buyers expect to see that you are proactively managing renewals rather than reacting to cancellation notices.
Practical implication:
During diligence, buyers will ask for a "retention cohort analysis." They want to see how customers acquired in 2021 are behaving compared to those acquired in 2023. Dedicated customer success platforms make generating these cohorts straightforward. Without them, you are left scrambling to piece together disparate emails and support tickets to prove your customers are happy.
Product Analytics and Engagement
For product-led growth (PLG) companies, or any SaaS business claiming "stickiness," financial metrics are only half the story. Buyers want to verify that users are actually engaging with the software. This requires product analytics tools like Mixpanel, Amplitude, or Pendo.
Why this matters to a buyer:
Revenue is a lagging indicator; usage is a leading indicator. A customer may be locked into a contract for another year (revenue looks safe), but if they stopped logging in three months ago (usage is zero), they have effectively already churned.
Buyers will look for ratios such as DAU/MAU (Daily Active Users divided by Monthly Active Users) to assess habit formation. They will also look at "activation rates", the percentage of users who take a specific high-value action within the first week of signing up.
The misconception:
Founders often present "total registered users" as a key metric. Sophisticated buyers generally ignore this. They care about active, value-generating users. If you lack the tooling to differentiate between a dormant account and a power user, you cannot articulate the true value of your user base.
The Virtual Data Room (VDR) Preparation
While not a tool you use to run the business, the Virtual Data Room (VDR) is the tool you use to sell it. Platforms like Intralinks, Datasite, or secure corporate environments in Box/Dropbox are standard.
Many founders wait until a deal is live to organise their documentation. This is a mistake. The "pre-diligence" phase should involve building a structured repository of corporate documents, contracts, IP assignments, and employment agreements. Thorough preparation materially improves the likelihood of achieving strategic objectives post-merger.
Why this matters to a buyer:
Speed kills deals, but lack of organisation kills them faster. When a buyer submits a diligence request list, receiving a well-structured, indexed folder of documents within 24 hours builds immense trust. It suggests that the business is always "audit-ready."
Delays caused by hunting for unsigned contracts or missing board minutes allow time for buyer fatigue to set in. We recommend maintaining a "light" version of a data room as part of your regular administrative hygiene, ensuring that when the moment comes, the switch can be flipped immediately.
Your Data as Your Advocate
The tools listed above are not magic bullets. Buying a subscription to Salesforce does not fix a broken sales process, and installing Mixpanel does not improve a poor product. However, these tools provide the framework for data integrity that institutional buyers demand.
When you sell your business, you are handing over a machine. The buyer needs to know the machine works, how to operate it, and where the controls are. Your tech stack is the dashboard, and technology integration issues are among the most commonly cited reasons for post-merger value destruction, making your infrastructure choices a material factor in deal success.
If you are 12 to 24 months away from a potential exit, now is the time to audit your tooling. Move away from spreadsheets. Ensure your systems talk to one another. Build a history of data that tells a compelling, defensible story. By the time diligence begins, your data should be your strongest advocate, not your greatest liability.
If you are thinking about an exit and would value a discreet, no-pressure conversation about your readiness, get in touch with our team.