Preparing the Exit
Recurring Revenue
Recurring revenue is one of the most valued financial characteristics in mergers and acquisitions because it provides stability, predictability, and visibility into future cash flows. Unlike one-time or transactional revenue, recurring revenue—typically generated through subscriptions, service contracts, or repeat customer relationships—reduces earnings volatility and demonstrates customer loyalty and product-market fit. In the M&A context, acquirers view recurring revenue as a strong indicator of sustainable business performance and a lower-risk investment. It allows for more accurate financial modeling, supports higher valuation multiples, and can smooth integration challenges post-acquisition by maintaining consistent revenue inflows. Businesses with recurring revenue streams often command premium prices because buyers can rely on continued income after closing, accelerating the payback period and improving return on investment. Ultimately, recurring revenue transforms a company’s economic profile from opportunistic to strategic, making it far more attractive to investors and acquirers seeking long-term value creation.
