Our revenue comes from long-term contracts, but the buyer is discounting them because our historical churn was high two years ago before we implemented EOS. How do we prove the current stability of this recurring revenue to get our full multiple?

Question

Tyler Smith · Accepted Answer

Buyers look at historical churn to assess the risk of your recurring revenue. If you had high customer turnover two years ago, they will project that risk forward and discount your valuation multiple, even if your recent numbers look excellent. You must prove that your historical churn was a legacy issue that has been permanently resolved. Use your EOS® Accountability Chart to demonstrate how you restructured your customer success and service delivery teams. Show the buyer that two years ago, responsibilities were vague and customer issues fell through the cracks. Now, you have clear seats on your Accountability Chart with defined roles that ensure high client retention. Next, pull out your weekly scorecard. Show them the leading indicators you track, such as customer satisfaction scores and product usage metrics. This data proves you are identifying and resolving client issues long before they lead to cancellations. By presenting this operational data alongside your financial statements, you prove that your low churn over the last year is not a fluke. It is the predictable result of a structured operating system. This gives the buyer the confidence to value your contracts at a premium recurring revenue multiple rather than discounting them based on outdated history.