Claims to verify · Before you buy
How to verify recurring revenue in a small-business acquisition
Published · Reviewed by The Diligence Standard Team · Updated
Group revenue by commitment type, then examine retention, termination rights, renewal behavior, pricing and owner relationships. Repeat purchases are valuable evidence but are not the same as contracted revenue.
A realistic transaction story
A commercial pest-control company described 82% of revenue as recurring. Most customers did reorder, but many agreements were month-to-month and the seller personally handled the largest property managers. The revenue was repeatable, not guaranteed.
What the evidence changed
Retention history supported value, while cancellation rights and relationship concentration reduced certainty.
What to check
- Write down the exact claim and who supplied it.
- Ask what was independently tested, by whom and under what scope.
- Build customer cohorts and separate binding commitments, auto-renewals, repeat purchasing and one-time work.
- Translate any unresolved gap into cash, price, terms, timing or a decision not to proceed.