Why Software Buyers Are Now Auditing Revenue Quality

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Why Software Buyers Are Now Auditing Revenue Quality

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Episode 74 of Tech M&A with Fexingo examines the new due diligence frontier: revenue quality audits. Lucas and Luna discuss how strategic buyers like Microsoft and Oracle are scrutinizing recurring revenue sources for churn-prone, non-recurring components—such as one-time setup fees, professional services, and short-term consulting contracts masked as ARR. Citing Oracle's 17.3% stock drop this week and the 7.0% decline in Microsoft shares, they connect market anxiety about revenue sustainability to M&A practice. They explore a recent example where a $200 million SaaS acquisition unraveled after a forensic audit revealed 40% of reported ARR came from non-recurring services. The episode covers new waterfall disclosure templates, indemnity clauses tied to revenue composition, and how Net Revenue Retention (NRR) is being redefined to exclude 'bad' recurring revenue. A timely look at how macro volatility is reshaping deal terms. #RevenueQualityAudit #SoftwareM&A #TechDeals #Oracle #Microsoft #SaaS #ARR #DueDiligence #NetRevenueRetention #Earnouts #Business #Technology #FexingoBusiness #BusinessPodcast #TechMA #MergersAndAcquisitions #StrategicBuyers #RevenueRecognition Keep every episode free: buymeacoffee.com/fexingo

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