In 2025, 73% of small-business acquisitions in the United States fell apart after the letter of intent was signed. Not before. After. The buyer had already said yes in principle, already committed legal fees, already told their partners they had found the target. Then the deal collapsed.

The reason, in almost every case, came down to the same two numbers.

The first number is recurring revenue as a percentage of total revenue. The second is what happens to the business if the owner disappears for 90 days. Everything else — the brand, the product, the market opportunity, the team — sits underneath those two questions. And experienced buyers know it.

A business that earns $2 million a year from one-off projects is not the same asset as a business that earns $2 million a year from subscriptions, retainers, or contracts. The revenue figure is identical. The risk profile is not.

One-off revenue requires constant replenishment. Every quarter starts at zero. The pipeline must be refilled, the marketing must produce, and the sales team must close. If any of those links breaks — even for a month — the number drops.

Recurring revenue compounds. A subscription renewed is a subscription you did not have to sell again. A retainer extended is proof the client stayed. A contract renewed is a forward indicator that the revenue is real, not aspirational.

Buyers express this as a multiple. A business with 80% recurring revenue might command 5x to 7x annual earnings. The same business with 30% recurring revenue might struggle to reach 3x. The product hasn't changed. The customers haven't changed. Only the predictability of the cash flow has changed — and that is what the buyer is actually purchasing.

The second number is harder to measure, but every buyer asks the same question in different ways: what happens if the founder leaves?

They will phrase it politely. "How involved are you in day-to-day operations?" "What does your management team look like?" "Walk me through a typical week." But the underlying question is always the same. If you stepped away for 90 days, would the revenue hold?

If the answer is no — if the founder is the primary salesperson, the key client relationship, the product visionary, and the operational decision-maker — then the buyer is not purchasing a business. They are purchasing a job. And nobody pays a premium for a job.

The businesses that sell at the highest multiples are the ones where the founder could take a three-month sabbatical and the revenue line would barely move. That requires systems, delegation, documented processes, and — most critically — a management layer that can make decisions without checking in.

Due diligence is not a financial audit. It is a stress test. Buyers do not simply verify your numbers are correct. They verify your numbers are durable.

For recurring revenue, they will ask for cohort data. Not just total subscriptions, but how long each cohort has stayed. A business with 10,000 subscribers and 4% monthly churn is losing nearly half its base every year. A business with 10,000 subscribers and 1% monthly churn retains 88% annually. Both can report the same headline subscriber count this quarter. In twelve months, they will look nothing alike.

For owner dependency, they will interview your team — without you in the room. They will ask your operations manager what decisions require the founder's approval. They will ask your sales lead what happens when a prospect wants to speak to the boss. They will ask your finance person who signs off on expenditure above a certain threshold.

If every answer points back to the founder, the deal reprices or dies.

The work of selling a business starts two to three years before the transaction. It starts with shifting the revenue model toward predictability and shifting the operational model away from the founder.

Neither change is fast. Converting project revenue to retainers requires renegotiating client relationships. Building a management layer requires hiring, training, and genuinely letting go of decisions. Both feel uncomfortable. Both reduce the founder's sense of control.

That discomfort is the point. A business that is comfortable to run — where the founder touches everything, knows every client, approves every decision — is a business that is difficult to sell. A business that is uncomfortable to run — where the founder feels slightly redundant, where systems handle what instinct used to handle — is a business that is ready.

The two numbers tell the buyer everything they need to know. They should tell you the same thing before you ever pick up the phone.