As CFOs prepare for an exit in a market that remains unpredictable, understanding what may influence valuations has never been more important. At our recent breakfast event, held with PwC and YFM Equity Partners, we brought together CFOs and finance leaders from private equity-backed businesses to hear from the speakers on the shifting landscape, what is currently viewed as a “sought-after asset”, and how finance leaders might position their business for the strongest multiple.
A market defined by selectivity and scarcity
The speakers noted that despite persistent macro sluggishness – and no great expectations of a major shift in the short term – valuations appear to have cooled slightly and deal volumes remain flat against previous years. Even so, they highlighted that there is still significant capital available, particularly for top-tier assets. Investors are said to be deploying that capital more selectively than before, often doubling down on fewer, higher-quality opportunities rather than spreading risk widely.
This dynamic is contributing to a somewhat bifurcated market: some businesses are finding it harder to raise, while those with strong fundamentals, clear growth evidence and robust forecasting continue to attract competitive multiples. In certain cases, scarcity alone may be pushing valuations upwards.
Where investors are hunting: beyond the AI hype
The speakers observed continued appetite for scalable, profitable software – particularly models valued on ARR and “rule of 40” metrics. Big deals trading at 10-12x ARR were referenced as still possible, but only where there is demonstrable proof of profitability and predictability.
AI remains a prominent theme, though it was suggested that many businesses positioning themselves as “AI-first” are not materially so. Investors are increasingly applying a filter to distinguish genuine capability from branding. While hype-driven inflation may exist, it only tends to translate into value when underpinned by sound fundamentals.
Beyond AI, several software verticals were highlighted as areas of investor interest: cybersecurity, anti-financial crime, tech-led cross-border payments and broader RegTech are all growing. Consolidation plays also continue to gain traction, with interest in platforms capable of bolt-on growth.
Conversely, sales enablement and RevOps tooling were identified as congested markets, where businesses may struggle to establish a competitive edge, thereby lacking some investor appeal.
What gives a business the edge? Metrics over narrative
The speakers agreed that the era of the shiny, unsubstantiated IM is over. Investors now rely heavily on data cubes to understand a business: customer segmentation, retention patterns and how the P&L converts into cash and growth.
For SaaS businesses, the rule of 40 remains a useful marker, but only as part of a wider picture. Investors are looking for retention, a reliable and evidenced sales engine, long-term customer value, predictable renewals and clear, consistent reporting.
Customer concentration (often assumed to be a red flag) was described as more contextual. High reliance on a small number of customers is not necessarily problematic if longevity is clear, revenue streams are well-structured and new customer acquisition is progressing.
The ability to articulate how today’s performance evolves into tomorrow’s trajectory, supported by data rather than simply narrative, increasingly shapes valuation outcomes.
Fail to prepare, prepare to fail
A recurring theme from the speakers was the importance of momentum. When a process slows or a narrative cannot be fully substantiated, confidence may drop and valuation often follows. Accurate forecasting, clean monthly reporting and clarity over cost allocation were all emphasised as essential.
CFOs were also encouraged to conduct a dry-run diligence exercise well before going to market. Early identification of operational or financial “skeletons” helps preserve value and prevents last-minute surprises – some of the factors most likely to derail a deal.
The reality of an exit
One of the most practical insights shared was how frequently CFOs underestimate the bandwidth required for an exit. Running the business while managing a transaction creates significant pressure, and the depth of diligence – where every material number is interrogated – take even seasoned leaders by surprise. This is precisely why many businesses have engaged Finatal to provide an interim CFO or exit-readiness support, ensuring the day-to-day operation remains stable while specialist resource manages the intensity of the transaction process.
Looking ahead
Despite market uncertainty, the speakers reinforced that investors are still paying for quality. The businesses most likely to command premium valuations are those able to demonstrate predictability, efficiency and growth through data rather than purely narrative. For CFOs preparing for an exit, the advice was clear: start early, get your house in order and make your metrics impossible to ignore.