### 1. Transaction Context, Strategic Rationale & Preliminary Valuation Scoping Matrix * ***Transaction Context:*** Exploratory evaluation of an $8.5M ARR Enterprise B2B SaaS platform at an implied 5.3x ARR multiple ($45M EV). * ***Strategic Fit Assessment:*** Synergistic expansion into complementary enterprise customer bases with strong gross margins (82%). * ***Valuation Sensitivity Bounds (Draft Scoping Model):*** | Multiple Scenario | Revenue Multiple | Implied Valuation | Key Assumption / Value Driver | | :--- | :---: | :---: | :--- | | Downside Case | 4.0x ARR | $34.0M | Churn in top-3 accounts; tech debt remediation needed | | Baseline Case | 5.3x ARR | $45.0M | Stable 115% NRR; organic pipeline converts as forecasted | | Upside Case | 6.5x ARR | $55.25M | Immediate cross-sell to buyer customer footprint | --- ### 2. Exploratory Financial & Commercial Due Diligence Questionnaire | Category | Investigation Topic | Preliminary Discovery Inquiry | Verification Artifact Requested | | :--- | :--- | :--- | :--- | | Commercial | Concentration Risk | What are the explicit renewal dates and contractual termination-for-convenience clauses for the 3 largest customers? | Signed Master Services Agreements (MSAs) & Order Forms | | Financial | Revenue Quality | What percentage of the reported $8.5M ARR represents non-recurring implementation or custom engineering fees? | Monthly revenue recognition schedule (ASC 606) | | Commercial | Churn Telemetry | What has been the logo churn rate versus dollar expansion rate across cohorts over the past 24 months? | Historical customer cohort retention ledger | --- ### 3. Operational, Cultural & Technology Integration Risk Register | Risk Identification | Severity Tier | Exploratory Finding / Signal | Proposed Preliminary Mitigation | | :--- | :---: | :--- | :--- | | Customer Concentration | Critical | Top 3 accounts generate 40% of total recurring revenue | Model purchase price holdback contingent on customer contract renewals | | Key-Person Engineering Risk | High | Core architecture knowledge centralized in single departing co-founder | Structure 24-month retention pool and technical documentation sprints | | Cloud Cost Optimization | Moderate | AWS hosting margins declining relative to query volume | Plan multi-tenant infrastructure refactoring review | --- ### 4. Administrative Due Diligence Workplan & Phase Checklist * ***Phase 1 (Days 1–15: Commercial & Data Room Scoping):*** Audit monthly cohort retention, map account concentration, verify top 10 customer contracts. * ***Phase 2 (Days 16–30: Technical & Security Scoping):*** Initiate third-party source code scan, review cloud architectural debt, audit SOC2 Type II compliance reports. * ***Phase 3 (Days 31–45: Organizational Integration Planning):*** Conduct key personnel interviews, align employee incentive retention agreements, model consolidated pro-forma operational expenditure.