Tech M&A Glossary, The 30 essential terms

The tech M&A market has its own vocabulary, and terminological confusion is often the first barrier for founders considering a sale. This glossary covers the essential terms, from SaaS metrics to contractual mechanisms.

Valuation metrics

• ARR (Annual Recurring Revenue), The annual recurring revenue, basis for SaaS valuation multiples. Do not confuse with total revenue which includes one-shot revenues.
• MRR (Monthly Recurring Revenue), ARR divided by 12. Useful for young or fast-growing assets.
• NRR (Net Revenue Retention), Measures revenue evolution on a cohort of existing clients. NRR > 100% = net expansion. Critical indicator for premium multiples.
• Churn, Attrition rate. Client churn (% of clients lost) vs revenue churn (% of revenue lost). Revenue churn is more significant.
• LTV (Lifetime Value), Total revenue generated by a client over their lifetime. LTV = ARPU × 1/monthly churn.
• CAC (Customer Acquisition Cost), Cost of acquiring a client. LTV:CAC ratio > 3:1 is the minimum threshold for a healthy B2B SaaS.
• ARR multiple, Sale price expressed as a multiple of annual ARR. Example: asset with €500K ARR sold for €2M = 4x ARR multiple.

Transaction mechanisms

• LOI (Letter of Intent), Non-binding letter of intent. First formalisation of the agreement between buyer and seller on the indicative price and main conditions.
• SPA (Share Purchase Agreement), Final transfer deed in the case of a share deal (acquisition of the company holding the asset).
• Asset deal, Acquisition of assets only (code, IP, contracts, clients) without taking on the legal company structure.
• Earnout, Conditional price supplement paid after closing, based on achieving defined targets (ARR, growth, retention).
• Escrow, Amount held by a third party (bank or notary) during the period between signing the promise and closing.
• Due diligence, In-depth audit process conducted by the acquirer before closing. Covers technical, legal, financial, and commercial dimensions.
• Closing, Legal and financial completion of the transaction. SPA signature + balance transfer + rights transfer.

Certification and grade

• AEG Grade, Independent certification from Aegryn analysts on a tech asset, issued following a reproducible protocol. From ★ (Exceptional) to B (Standard). Not assigned = Refused.
• Dimension C (Code), Codebase quality: technical debt, tests, documentation, CI/CD, application security.
• Dimension I (IP), Intellectual property: trademarks, software rights, licences, contractor contracts.
• Dimension F (Finance), Financial metrics: audited ARR, NRR, churn, margins, growth.
• Dimension S (Security), Security posture: pentest, GDPR/NIS2 compliance, security architecture.
• Data room, Secure document sharing space between seller and qualified acquirer, under NDA. Contains complete audit materials.

Acquirer profiles

• PE (Private Equity), Investment fund that acquires to restructure and resell at a 3–7 year horizon. Represents 58% of SaaS acquirers in 2025.
• Family Office, Structure managing a family's wealth. Long-term investment horizon, appetite for stable and profitable assets.
• Search Fund, Vehicle created by an entrepreneur (the searcher) to raise capital, find a company to acquire, and operate it personally.
• Strategic buyer, Industrial acquirer who integrates the asset into their existing activity (acqui-hire, technical integration, vertical expansion).