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After Acquisition: The Revenue Metrics to Watch

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Michael Lowe
Director, Brand and Content Marketing



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Stylistic illustration of a bar chart with one highlighted bar

An acquisition can spell major growth and opportunity—if done right.  To ensure a smooth transition that benefits everyone, there are vital sales metrics that a private equity firm or other interest will need to track in a newly acquired SaaS business.

In Part I of this two-part series, we covered the three crucial data points you’ll need to monitor prior to any potential acquisition. Before a takeover, you can assume your revenue operations team has tracked key performance indicators that have been elevated to the level of strategic growth initiatives. 

While everyone seems to use KPIs as benchmarks today, KPIs can be more than measurement for measurement’s sake. They’re representative of strategic output and can be leveraged as secret weapons. They exist in service of organizational-level strategic growth initiatives, also known as SGIs, that can help confirm assumptions about an organization’s strategy or illuminate where adjustments are needed. 

While private equity firms bring additional expertise to their portfolio companies, being part of a private equity portfolio often necessitates streamlined programs and consistent processes with a close eye on those strategic growth initiatives that yield the best return on their investment. Portfolio companies are often heavily scrutinized and, as a result, pressure is high to attain predictable revenue. 

Here we detail five critical metrics you’ll want to track after the acquisition is official to set the stage for successful collaboration. 

Metrics to Track After Private Equity Acquisition

1. Number of overlapping customers

The number of overlapping customers refers to the number of duplicates between the buying company’s customer base and the target company’s customer base. This number will typically be assessed during the due diligence stage of an acquisition, but it should continue to be monitored afterward, too. 

“Is the bigger company able to sell more to the smaller company’s [customers]?” asks Gary Sahota, senior manager director of analytics at Clari. “Is the smaller company able to cross-sell into the bigger company?”

You want to ensure that the overlap doesn’t translate into one company cannibalizing the other company’s customers, but rather leads to additional growth and sales opportunities.

Sahota notes that you should monitor the number of overlapping customers in tandem with your net dollar retention, as this will give you a good sense of your customer experience post-acquisition. 

Doing this will help you answer important questions such as: 

  • Did we retain and grow?
  • Did we lose some customers?
  • Are customers generally happy with us?

2. Average revenue per user

Average revenue per user, or ARPU, measures how much money a subscriber, user, or account brings in during a particular time period. 

Tracking ARPU over time shows how your revenue progressed. If the number holds steady or grows, your customers see value in your services. You likely don’t need to indulge in big discounts to attract customers, which means you’re less likely to scramble to hit your number at the end of the quarter. 

ARPU may also reveal the best market fit for your product. For example, if you notice certain business segments are your highest ARPU clients, you might double down on those segments because they’re willing to pay the asking price for your products. 

On the flip side, if some customer channels prove less than profitable, tracking the ARPU helps identify them so the business can refocus the sales and marketing strategy on the more valuable prospects. Tracking your ARPU also helps you monitor your business in relation to your competitors.

Further, ARPU is critical during a buyout or merger, because different companies will have different ARPUs and thresholds for profitability. 

For example, say the acquiring company follows a 50% profit ratio, meaning they always make sure to charge 50% more than the cost to make the product, to ensure steady profitability. If the target firm has a lower or even a negative ARPU ratio, they’re losing money to acquire customers. When they merge, these businesses may need to adjust their product pricing.

3. Annual recurring revenue

Annual recurring revenue (ARR) should be tracked prior to the acquisition, as mentioned previously, as well as after the ownership change. Ideally those numbers won’t dip. But one of the challenges to tracking the post-acquisition ARR lies with the calendar. 

“Our fiscal year at Clari starts on February 1,” says Sahota. “Some fiscal years start January 1, and some start on November 1.”

If a firm with a fiscal year start in January tries to align with one that starts in February, the year-end reporting could be a month off, and that could mark the difference between a powerful ARR and one that has an acquiring firm thinking twice about the deal they just signed. 

Ensuring the fiscal periods for measuring ARR are standardized across businesses becomes key, Sahota says.

4. Pipeline duplication

Much like customer overlap, pipeline duplication—or the number of potential customers that are in both companies’ pipelines—should be assessed after an acquisition to ensure that the sales reps from the two different companies don’t target the same accounts at the same time. 

“That could potentially be confusing, or a waste of resources. How much of your pipeline is the same or can be consolidated?” Sahota asks. “Sometimes it makes sense to look at your total pipeline and see where sales teams can merge and really take things on together.”

Pipeline inspection is where Clari really shines. Not only are all changes to sales opportunity data reflected instantly, meaning you’re always looking at the most accurate representation of your pipeline, but Clari also gives you an up-to-the-minute look at which deals are moving, stalled, or at risk—allowing managers to engage in data-driven sales coaching with their reps for improved outcomes. AI-generated opportunity scoring, which factors in all sales activity data, gives reps and managers an at-a-glance overview deals-in-progress. That means more time strategizing and less time chasing down numbers and reports. 

In the event of an acquisition, Clari’s advanced visualizations can easily show sales managers of both companies where overlaps exist. This information helps them quickly and effectively create a playbook for how to handle these opportunities going forward. 

5. Win rate and conversion rate

A PE firm or other entity acquiring a company will want to pay close attention to that company’s win rate, or the percentage of deals that close-win within a specific time period, and its conversion rate, or the number of qualified leads that result in closed-won deals. That’s because tracking these metrics before and after acquisition will reveal whether the purchase was a good investment or a poor one.

“If suddenly your win rates tank, and you're not converting as many deals, that's a bad investment,” says Sahota. “If the reverse happens, and suddenly you have more horsepower so your win rate suddenly skyrockets, it's a good acquisition.”

Clari’s Flow module makes tracking these metrics easy, accurate, and instantaneous by pulling in all relevant data—everything from your AI-generated CRM Score to team activity—and showcasing it graphically so that you can see in real time how the pipeline has changed. 

You get visibility into:

  • How deals projected to close this quarter are moving through the pipeline 
  • Where you may be able to pull a slipped deal forward to maneuver a fast win
  • The root causes of slipped deals so you can get them back on track and avoid the same missteps next quarter

You can even drill down by territory and see how different areas or segments are shaping up. All of this capability is “super potent” in helping businesses assess progress and course-correct if necessary, Sahota says.

Ultimately, by tracking these important sales metrics, your business will be in prime position for a successful and mutually beneficial acquisition.

To learn more about strategic revenue KPIs, SGIs, and how they tie into the broader revenue operations playbook, read our whitepaper, “Strategic KPIs to Fuel Growth Initiatives,” published in conjunction with Clari’s Revenue Operations Council. This group brings together top revenue operations leaders from companies like Zoom and Okta to share their knowledge with the broader marketplace.

Read more: 

The Sales Activity That Matters Most to Growth

Running Your Revenue Operation with Adaptive Forecasting

Sales Forecasting: The Heartbeat of Your Revenue Operation