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SaaS Buyer Lost $340K After Missing True 9.4% Churn Hidden in Seller Data

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An entrepreneur acquired a SaaS business after the seller reported a 2.3% monthly churn rate, only to discover the real figure was 9.4% once raw billing data was analysed four months post-purchase. The discrepancy stemmed from methodological choices by the seller, including counting logo churn instead of revenue churn, concealing customer concentration risks, and including revenue from inactive accounts. Three customers accounted for over 60% of monthly recurring revenue, and 12% of reported revenue came from users who had not logged in for over 90 days. The buyer has since built a due-diligence tool called ChurnLens that allows prospective SaaS acquirers to upload raw subscription CSVs and receive an independent risk report. The experience highlights the importance of independently verifying raw subscription data rather than relying solely on seller-provided summaries during acquisition due diligence.

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SaaS Buyer Lost $340K After Missing True 9.4% Churn Hidden in Seller Data · ShortSingh