Valuation of tech companies does not follow the same rules as traditional sectors
Yes, the income statement, balance sheet, and cash flow are reviewed. But in digital businesses (SaaS, marketplaces, platforms, apps, etc.), KPIs are as important as accounting numbers, and sometimes even more.
These indicators help understand growth, recurrence, retention, commercial efficiency, marketplace liquidity, and ultimately the real medium-term potential of the business.
Here is a guide with many of the relevant KPIs for tech M&A, grouped and with their formulas.
Terms and KPIs used in tech M&A: SaaS, marketplaces, digital, e-commerce
MRR (Monthly Recurring Revenue)
Recurring monthly revenue.
Formula: MRR = sum of all monthly subscriptions
ARR (Annual Recurring Revenue)
Annualized recurring revenue.
Formula: ARR = MRR × 12
ARPU (Average Revenue per User)
Average revenue per user.
Formula: ARPU = MRR / total number of users
ARPPU (Average Revenue per Paying User)
Average revenue per paying user.
Formula: ARPPU = revenue from paying users / paying users
MAU (Monthly Active Users)
Unique active users per month
GMV (Gross Merchandise Value)
Total transaction value.
Formula: GMV = total value of transactions
Average Basket Size (Ticket Size)
Formula: Average Basket Size = GMV / number of orders
Take Rate
% captured by the platform over GMV.
Formula: Take Rate = revenue / GMV
Take Rate Evolution
Evolution of retained commission.
Formula: Variation = (Current Take Rate – Previous Take Rate) / Previous Take Rate
Customer Churn Rate
% of customers who cancel.
Formula: Churn Rate = lost customers / total customers × 100
Logo Retention Rate
% of retained customers (by “logos”).
Formula: Logo Retention = (1 – customer churn) × 100
Customer Retention Rate (CRR)
Formula: CRR = retained customers / initial customers × 100
GRR (Gross Revenue Retention)
Retention excluding expansions.
Formula: GRR = (Previous MRR – churn – contraction) / Previous MRR × 100
NRR (Net Revenue Retention)
Net retention including expansions.
Formula: NRR = (Previous MRR + expansion – churn – contraction) / Previous MRR × 100
Recurrent Buyers %
% of returning buyers.
Formula: Recurrent Buyers % = recurring buyers / total buyers × 100
Seller Retention Rate
Retention of sellers in a marketplace.
Formula: Seller Retention = active sellers after 6–12 months / initial sellers × 100
Cohort Analysis
Behavior analysis by cohorts
CAC (Customer Acquisition Cost)
Formula: CAC = sales & marketing spend / new customers
Seller Acquisition Cost
Formula: Seller Acquisition Cost = seller acquisition spend / new sellers
CAC vs Seller Acquisition Cost
Comparison between cost to acquire buyers and sellers
CLTV (Customer Lifetime Value)
Formula: CLTV = ARPU × gross margin × (1 / monthly churn)
LTV/CAC Ratio
Formula: LTV/CAC = CLTV / CAC
CAC Payback Period
Time to recover CAC.
Formula: CAC Payback = CAC / (ARPA × gross margin)
Contribution Margin
Formula: Contribution Margin = revenue – variable costs
Quick Ratio
Net growth efficiency.
Formula: Quick Ratio = (new MRR + expansion MRR) / (churn MRR + contraction MRR)
Magic Number
Sales efficiency.
Formula: Magic Number = net new ARR / S&M spend from previous quarter
Upsell Revenue
Additional revenue from existing customers
GMV per Active Seller
Formula: GMV per Active Seller = GMV / active sellers
Liquidity Ratio (Marketplaces)
% of products that find a buyer.
Formula: Liquidity Ratio = sold products / listed products
Buyer/Seller Ratio
Balance between supply and demand.
Formula: Buyer/Seller Ratio = active buyers / active sellers
Time to Transaction
Average time to sale.
Formula: Time to Transaction = average days between listing and sale
Runway
Months before running out of cash.
Formula: Runway = available cash / monthly burn
Fraud Rate
% of fraudulent transactions.
Formula: Fraud Rate = fraudulent transactions / total transactions × 100
Customer Support Cost per Order
Formula: Customer Support Cost per Order = total support cost / total orders
GRR (Gross Revenue Retention)
% of revenue retained excluding expansions.
Formula: GRR = (Previous MRR – churn – contraction) / Previous MRR × 100
NRR (Net Revenue Retention)
% of revenue retained including expansions, reductions, and cancellations.
Formula: NRR = (Previous MRR + expansion – churn – contraction) / Previous MRR × 100
Churn Rate
% of customers who cancel in a given period.
Formula: Churn Rate = lost customers / total customers × 100
Logo Retention Rate
% of customers retained measured by number of logos.
Formula: Logo Retention Rate = (1 – customer churn) × 100
By Joshua Novick, partner at Bondo Advisors
Fuente:https://www.joshuanovick.com/p/kpis-clave-para-valorar-empresas
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