The headline price is only the starting point of an acquisition. Closing cash, debt-like items, working capital, inventory, transaction expenses, and performance conditions can change the amount the seller actually receives.

Cash-free debt-free is a common pricing convention in which the seller retains excess cash and delivers the company without agreed debt-like obligations. The phrase sounds simple, but the definitions can materially change the amount paid at closing.

A working capital peg defines the normal level of short-term operating capital expected to remain in a company at closing. It protects the buyer from receiving an underfunded business and protects the seller from an arbitrary adjustment.

Deferred revenue arises when a company receives payment before fully delivering the contracted service. In a SaaS acquisition, it affects cash, working capital, post-close delivery obligations, and the negotiation of the economic balance sheet.

A SaaS buyer must distinguish cash collected, billings, annual contract value, recurring revenue, and recognised accounting revenue. These measures answer different questions and can materially change the interpretation of growth and profitability.

The LTV-to-CAC ratio compares estimated customer value with the cost of acquiring that customer. In acquisitions, the calculation matters less than the assumptions behind retention, gross margin, attribution, and payback.

The Rule of 40 combines SaaS growth and profitability into one screening metric. Buyers use it as a starting point, not a substitute for understanding retention, market size, revenue quality, and the investment required to sustain performance.

Net revenue retention shows how recurring revenue from an existing customer base changes after upgrades, downgrades, churn, and contraction. For SaaS buyers, it can reveal whether growth is built on durable customer expansion or constant replacement of lost revenue.

Quality of earnings analysis asks whether reported profit reflects repeatable operating performance. It is not simply an accounting exercise: it tests the bridge between the seller’s numbers and the cash flow a buyer can realistically expect.