Where to start
Start by reconciling recurring revenue to invoices and collections for the same period. Then test retention, customer concentration, buyer operating costs and the ownership of code, accounts and customer relationships. Keep every unresolved claim attached to the evidence needed to settle it.
1. Reconcile MRR, cash collected and annual plans
MRR is a monthly-normalized subscription measure. Cash receipts can include annual prepayments, one-time services, taxes or usage credits. Ask which discounts, overdue subscriptions and refunds are reflected. Stripe permits configurable metric definitions, so two dashboards can disagree without either being fabricated. Keep a dated schedule of monthly and annual subscriptions and upcoming renewals.
Ask for: A month-by-month MRR bridge, paid invoice export, refunds, annual-plan renewal schedule and bank or processor payout reconciliation. Start with 12 months where available; preserve gaps for younger businesses.
Decision gate: Do not annualize a cash spike or one-time payment as recurring revenue. Resolve the definitions before using an ARR multiple.
2. Separate customer acquisition from customer retention
A growing MRR total can hide older customers leaving while new customers replace them. Examine customer cohorts, expansion, contraction and cancellations separately. Define whether churn measures customers or revenue, the period and denominator. A customer paying for an annual plan can remain in the revenue schedule despite having stopped using the product.
Ask for: Cohort retention by signup month, churn definitions, cancellation reasons, product usage for paying accounts and the last renewal date for annual customers.
Decision gate: If recent promotions drive most current revenue, request another renewal or retention observation before assuming the latest month is durable.
3. Identify who or what can remove revenue
Look at the largest customer and top five customers by recurring revenue, not just account count. Connect those customers to contract terms, acquisition channels and owner relationships. Organic acquisition can still depend on one page, one directory, one influencer or the founder’s personal reputation.
Ask for: An anonymized customer-revenue breakdown, contract/termination terms, acquisition sources and notes on any founder-led sales or support commitments.
Decision gate: Model the loss of the largest exposed customer or channel. Ask whether that downside still supports the price and buyer workload.
4. Calculate profit for the next operator
List hosting, model/API usage, support, contractor work, software and payment fees. Separate recurring cash costs from temporary credits and genuinely one-off expenses. No paid advertising does not establish zero acquisition cost: content, sales and support still require time. Do not deduct an expense twice if it is already included in profit.
Ask for: Monthly P&L, normal-rate infrastructure bills, credit-expiry terms, contractor invoices and a two-week owner task log. For AI software, request usage and cost per paying customer or workload.
Decision gate: Use a separate buyer-cost scenario. Preserve the seller’s reported profit alongside the adjusted figure and explain every adjustment.
5. Test a handover, not just a repository transfer
The business may depend on deployment secrets, scheduled jobs, OAuth apps, email domains, code licenses and a payment account. Have an appropriately qualified person review code rights and run a deployment exercise in a clean buyer-controlled environment. The seller knowing how to repair the system is different from the buyer being able to do it.
Ask for: Repository access, contributor/IP records, dependency licenses, deployment and recovery instructions, infrastructure inventory, incident history and the proposed billing/account migration path.
Decision gate: Make unresolved essential account approvals, rights or deployment failures explicit conditions. Do not assume subscriptions move simply because code does.
6. Turn the evidence into a decision
For each material concern, record the seller’s response, the original records inspected and whether the claim matched. A statement that records will be supplied remains a promise. Compare the updated economics with the original report so a change in assumptions is visible. Bring material legal, tax, security or financial issues to the relevant professional before committing.
Ask for: A prioritized issue list with an owner, requested record, current evidence state and a condition for proceeding.
Decision gate: Proceed to deeper diligence when the evidence supports it; pause, renegotiate or abandon when material conditions remain unresolved.
Use the numbers
Worked example: the same MRR, a different buyer margin
Illustrative figures: a seller reports $3,000 MRR and $2,500 monthly profit at a $75,000 asking price. You identify $600/month of replacement support work not already in expenses.
Seller-profit payback: 75,000 ÷ 2,500 = 30 months. Buyer-cost scenario: 2,500 − 600 = 1,900; 75,000 ÷ 1,900 = 39.5 months. This excludes financing, taxes and future changes.
Bring the checks into your actual deal
The free preview screens supplied economics and major risk flags. A complete report adds prioritized seller questions and your private evidence workspace. Record replies, reconcile source data and update the report when facts change. Deal Preflight does not independently authenticate seller records.
Common buyer questions
Is Stripe access enough to verify a SaaS acquisition?
It can help establish billing activity. It does not establish code ownership, customer usage, the buyer’s future costs or the ability to transfer every operating account. Reconcile billing to the other evidence.
Should I value the business using revenue or profit?
Record both multiples and their periods. A revenue multiple ignores operating costs; a profit multiple depends on complete, repeatable profit. Deal Preflight calculates the supplied economics but does not determine a professional valuation.
Can Deal Preflight calculate churn from a pasted listing?
It can use a disclosed churn figure and identify missing or inconsistent claims. It does not invent customer cohorts or independently inspect billing data. Ask the seller for the underlying records.
Sources and further reading
Provider sources reviewed 13 September 2026. Workflows and account rules can change; check the linked source for the seller’s circumstances. This buyer-side due-diligence checklist is not professional financial, legal, tax, technical, or investment advice.