Introduction
ARR growth and profitability matter, but customer retention is the ultimate test of SaaS durability. OPEXEngine’s analysis of a cohort of SaaS companies in the 1-2 years before a strategic exit shows a consistent trend: buyers prize Net Dollar Retention (NDR) above 100% as proof of customer stickiness and expansion.
Looking at companies in the 1-2 years leading up to exit, one signal stands out clearly:
- Sustained high NDR: ~101% and higher than the market median, reflecting both renewals and expansion within existing accounts.
- Buyer View: Expansion ARR is lower-risk and more predictable than chasing new logos.
- Exit Lesson: High retention is proof of product-market fit and loyalty, which drives premium valuations.
Exit Readiness Takeaway
Retention isn’t optional -- it’s a prerequisite. In this pre-exit cohort, SaaS companies that sustain NDR above 100% in the 1-2 years before exit prove their business model is sticky and scalable, making them far more attractive to buyers.
FAQs
Is 101% retention the benchmark for all SaaS companies?
No. This reflects OPEXEngine’s exit-prep cohort, showing performance patterns 1-2 years before strategic exits.
Why is retention such a strongsignal?
Because it demonstrates customer loyalty and predictable expansion. Highretention reduces risk and future acquisition costs.
What concerns buyers aboutweak retention?
Declining retention or over-reliance on new logos to offset churn signalsinstability and often reduces valuation multiples.
