The year that had to happen first

The decision as it arrived

The client was the CEO and largest shareholder of a software company that schedules field technicians for utilities and water systems. $31m of subscription revenue, profitable for four years.

He wanted to sell in 18 months and he had one worry. Two customers made up 38% of revenue, and his plan was to hire four salespeople and push into two adjacent markets, getting that number under 30 before he started the sale. His board had approved it. He called Ammentic because a director asked whether a buyer would credit new customers won that recently, and the question sat unanswered.

The Read

Ammara went into the records the company already had.

She read five years of renewals, and retention looked strong. Then she separated what customers pay from what they use, pulling the login and job records behind each account. Nine of the 20 largest were paying for seats that had gone quiet, some for over a year.

Six of those nine had renewed anyway. She traced who had signed, and on four the signature belonged to someone who joined after the software went in. Six came up for renewal again before his 18-month deadline.

The Pressure Test

The two operators had never disagreed on a deal before, and they disagreed on this one. Both had sold companies of this size.

The first said 18 months was too soon for the plan on the table. Four new salespeople in a market the company had not sold to before produce their first renewals in the same quarter a buyer is reading his numbers, and a buyer reads customers that new as unproven.

The second said the timing was not the problem. She had run the diligence on a company with the same gap between what customers paid and what they used, and the buyer found it in three weeks. Quiet accounts made the whole renewal record unreliable, so the buyer discounted every number in the deck, the sound ones included. Concentration is a fact a buyer prices calmly. A retention figure that turns out to be soft is one a buyer stops believing.

Ammara held them on the point where they split. One was arguing about what a buyer would credit. The other was arguing about what a buyer would trust, and only that one compounds. They put the risk to price at $6m, against a concentration problem worth less and visible in the first meeting.

The Action Brief

Wait, and change what the 18 months are for.

Fix usage before selling anything. Put people on the nine quiet accounts one at a time, and the renewals that follow do the work the sales plan was meant to do. Hire two salespeople rather than four, into the market the company already knows, so any new customer has a full renewal behind it before a buyer sees the file. Go to market when the top 20 renew clean, rather than on a date fixed in advance.

Two conditions. Report used seats beside paid seats every month starting now, so the record a buyer reads was built before anyone was selling. And tell the board the exit window is a cycle rather than a quarter, because a plan that slips reads worse than one that was longer from the start.

He had brought a concentration problem. A buyer would have spent three weeks on something else.

Where it landed

At the debrief he said seven of the nine accounts came back into use and two did not renew. Revenue dipped, and the board asked about it twice. He went to market 26 months out rather than 18, and in the second week of diligence the buyer asked for used seats beside paid seats.

His own record held the answer. It took two people who had been on the buying side to say what a buyer would do with it.