When you’re preparing to sell your business, buyers aren’t just evaluating your financials — they’re measuring your market position. They want to know how your company performs relative to competitors, how efficiently you operate, and how clearly you can prove your leadership.
That’s where key performance indicators (KPIs) and benchmarks come in.
At Legacy Advisors, we often tell founders that KPIs are more than metrics — they’re a language buyers speak fluently. They translate operational performance into valuation confidence. When you can clearly show that your company outperforms industry norms, you make your business easier to trust, easier to understand, and easier to buy.
Why KPIs and Benchmarks Matter in M&A
Buyers make decisions based on data, not promises. They use KPIs and benchmarks to evaluate the health, efficiency, and scalability of your business.
Strong KPI reporting demonstrates that your company:
- Tracks what matters — not vanity metrics, but those tied to profitability and growth.
- Operates with discipline — showing management maturity and consistency.
- Outperforms its peers — validating your market leadership.
In The Entrepreneur’s Exit Playbook, I wrote: “Buyers don’t want to discover your value — they want you to show it to them. KPIs are how you tell that story in numbers.”
The KPIs Buyers Care About Most
While specific KPIs vary by industry, there are a few universal ones that almost every buyer reviews closely:
- Revenue Growth Rate: Demonstrates momentum and scalability.
- Gross and Net Margins: Reveal efficiency and profitability.
- Customer Acquisition Cost (CAC): Indicates marketing effectiveness.
- Customer Lifetime Value (LTV): Reflects relationship strength and retention.
- Churn Rate: Measures customer satisfaction and sustainability.
- EBITDA and Adjusted EBITDA: Show true cash-generating power.
- Operating Cash Flow: Confirms business health and liquidity.
- Revenue per Employee: Demonstrates operational efficiency.
The key isn’t just tracking these metrics — it’s contextualizing them against benchmarks that show how your company stacks up.
Using Benchmarks to Prove Leadership
Benchmarks turn raw numbers into insights. Buyers want to know: are you better than average? Are your results trending upward? Do your margins outperform industry peers?
For example:
- A SaaS company with a CAC:LTV ratio of 1:6 instantly signals efficiency and retention strength.
- A service business with 30% higher revenue per employee than competitors shows superior operations.
- A manufacturer with lower defect rates or faster delivery times proves executional excellence.
Benchmarking helps buyers visualize your market leadership — not just through storytelling, but through quantifiable results.
Lessons from Experience
When I sold Pepperjam, we didn’t just present financials — we presented performance. Our marketing and growth KPIs were benchmarked against industry leaders, showing that we outperformed average margins and client retention rates. Those metrics became a key part of our narrative and helped justify a higher multiple.
On the Legacy Advisors Podcast (https://legacyadvisors.io/podcast/), Ed and I often discuss deals where founders underestimate the power of KPI storytelling. One company we advised nearly lost momentum because their team couldn’t produce clean performance data. Once they organized and benchmarked it, buyer confidence surged — and so did valuation.
How to Prepare Your KPI Story Before Going to Market
Here’s how to turn your performance data into a strategic advantage:
1. Identify your core KPIs.
Focus on metrics that truly drive business value — growth, profitability, and customer retention.
2. Benchmark against industry standards.
Use trade reports, analyst data, or public comps to compare your numbers with peers.
3. Clean up your data.
Ensure accuracy and consistency across time periods. Missing or inconsistent data can erode trust.
4. Visualize your performance.
Charts, dashboards, and summaries help buyers quickly interpret your story.
5. Tie KPIs to your narrative.
Explain how your performance metrics reflect your strategy, strengths, and market leadership.
When you quantify your story, buyers see a business that’s not just performing well — it’s performing better than the rest.
The Valuation Advantage
Buyers don’t just value profitability — they value predictability. KPIs and benchmarks demonstrate both.
When your numbers show consistent performance and outperformance, buyers feel confident your business will continue to deliver post-acquisition. That confidence reduces perceived risk — and risk reduction always translates to higher valuation.
The better you can quantify your leadership, the easier it is to defend your asking price and attract multiple offers.
Final Thoughts
KPIs and benchmarks transform your company’s success from anecdotal to undeniable. They show buyers, in hard data, that your business isn’t just operating — it’s leading.
Exits don’t happen when you feel ready — they happen when your business is ready. And readiness means having a KPI story that proves your market leadership beyond question.
Find the Right Partner to Help Sell Your Business
At Legacy Advisors, we help founders prepare for exit by identifying, tracking, and benchmarking the KPIs that matter most to buyers.
Visit legacyadvisors.io to connect with our team, listen to the Legacy Advisors Podcast (https://legacyadvisors.io/podcast/), and explore insights from The Entrepreneur’s Exit Playbook. Together, we’ll turn your metrics into a story buyers can believe in — and pay a premium for.
Frequently Asked Questions About KPIs, Benchmarks, and M&A
Why do KPIs and benchmarks matter so much to buyers?
Because they turn your company’s performance into measurable proof of value. Buyers use KPIs and benchmarks to assess how efficiently you operate and how your business stacks up against competitors. They want evidence that your success is repeatable and scalable — not anecdotal. Strong KPIs show operational maturity and discipline, while benchmarks demonstrate that your company doesn’t just compete in your market — it leads it. In M&A, numbers tell the story buyers trust most.
Which KPIs should I focus on before going to market?
The most important KPIs depend on your business model, but some are universal. Buyers almost always examine:
- Revenue growth rate
- Gross and net margins
- Customer acquisition cost (CAC)
- Customer lifetime value (LTV)
- Churn or retention rate
- EBITDA and adjusted EBITDA
- Cash flow stability
- Revenue per employee
Focus on KPIs that show momentum, predictability, and profitability. As I explain in The Entrepreneur’s Exit Playbook, “Your goal is to show that the business isn’t just performing — it’s outperforming.”
What’s the difference between KPIs and benchmarks?
KPIs measure your company’s internal performance — how efficiently you operate and grow. Benchmarks, on the other hand, compare that performance to external standards, like industry averages or public competitors. For example, having a 20% EBITDA margin is good; showing that your industry average is 12% proves leadership. Benchmarks turn your KPIs into context — they show buyers that your numbers are not only strong, but superior.
How can I use KPIs and benchmarks to strengthen my valuation?
By using data to tell a story of consistency and outperformance. When you can show buyers clear, verified trends — higher margins, faster growth, stronger retention — they see lower risk and greater upside. Benchmarking those metrics against peers reinforces that your results aren’t typical; they’re exceptional. This combination of internal KPIs and external benchmarks builds buyer confidence and supports a premium multiple. Clean, consistent data is one of the most powerful valuation tools you have.
How can Legacy Advisors help me use KPIs and benchmarks to attract buyers?
At Legacy Advisors, we help founders identify, track, and present the metrics that matter most to buyers. We analyze your operational data, compare it with industry benchmarks, and create a performance narrative that strengthens your market position. Our approach — drawn from The Entrepreneur’s Exit Playbook and discussed frequently on the Legacy Advisors Podcast (https://legacyadvisors.io/podcast/) — ensures your KPIs become a persuasive part of your M&A story. The goal isn’t just to show that you’re succeeding — it’s to prove you’re leading.