I often borrow mental models from software go-to-market strategy to better explain how SaaS M&A deals actually unfold. Today, I'm applying one of the most familiar: customer acquisition cost (CAC) — except this time, the "customer" is the M&A buyer.
No board would accept a SaaS GTM plan built solely on blended CAC. It's too simplistic. The best board discussions go deeper — they break down CAC by acquisition channel, segment, conversion rate, payback period, and pipeline velocity. And for good reason: if you don't understand the true cost of acquiring customers, you're not really in control of your growth.
But when it comes to planning an exit, that same level of analytical discipline often disappears. Companies think in terms of blended M&A CAC — the banker and legal fees — as if a clean process and good counsel are all it takes to create liquidity.
It's rarely the case especially for VC-backed companies.
To really understand what it takes to sell a company, we have to go beyond what the company spends on the process (blended CAC) and look at what it truly costs to get a deal done (fully loaded CAC).
This is where the concepts of Legibility and Liquidity, as framed by Yoni Rechtman of Slow Ventures, offer a useful lens for thinking about CAC in M&A.
Let's say you're trying to sell a B2B SaaS company:
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Legibility is about how easily buyers can understand your business and are willing to spend time and resources to evaluate it.
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Liquidity is about your willingness to accept what those buyers are actually offering. It's the discount — the gap between your expectations and what the market is willing to pay — that you may have to accept in order to close.
In most SaaS M&A situations, legibility and liquidity are tightly correlated. The more your company fits the standard profile of legibility, the more buyers are willing to evaluate the deal. That leads to more offers, more competition, and ultimately more pricing power.
The game is straightforward: become more legible, and liquidity will follow.
But if you raised VC money, it creates a distortion: valuation expectations get anchored to the post-money valuation — an implied value, not the company's intrinsic worth. This creates a gap between what investors hoped the company is worth and what it actually is.
The gap was supposed to close over time. The bet is rapid growth will make the company more legible to buyers and eventually justify the valuation. But when growth doesn't happen, the burden shifts: either you adjust your expectations, or the buyer has to stretch to see strategic value. That's where things get complicated.
It's like someone with junior experience asking you for a C-level salary — not because of his track record, but because he has a mortgage to cover.
In M&A, that mortgage takes the form of liquidation preferences, and the result is a very different kind of deal dynamic. Legibility and liquidity are no longer correlated, and outcomes depend on how much work you are willing to do to bridge the gap.
This is where the idea of fully loaded CAC comes in. The real transaction cost of an M&A deal is shaped by two variables:
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Legibility — the cost of getting buyers to engage and invest resources into evaluating your deal.
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Liquidity — the discount you may need to accept to actually close.
Together, they define the path — and friction — to liquidity.
On X-axis (horizontal), €10M ARR is a widely accepted proxy for maturity, credibility, and reduced risk. In M&A, it signals that a company is real, scalable, and worth taking seriously.
On Y-axis (vertical), 6x ARR serves as a market anchor because it's been the average revenue multiple for SaaS and Cloud companies over the long term, based on data from Bessemer Venture Partners since 2005.
Each quadrant of the legibility-liquidity matrix comes with its own hidden transaction costs — across three dimensions: search cost, evaluation cost, and discount to close.
Venture Broken (Illegible + Illiquid)
Your company has raised more than 3x its current ARR, and is still sub-scale — yet you're still expecting a premium. It's the worst of both worlds.
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Search Cost: Very high — requires deep buyer mapping, PR, outreach, and events just to get noticed.
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Evaluation Cost: Very high — buyers need extensive validation (pilots, integrations, co-selling) just to justify engaging — and even more to justify paying a premium.
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Discount to Close: Very high — buyers will likely offer well below market multiples, citing past overfunding and misaligned pricing as justification.
Too Small to Interest (Illegible + Liquid)
You've grown the company in a capital-efficient way, so expectations are grounded — but the business is still too small or too niche to trigger M&A interest from strategic buyers.
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Search Cost: Very high — like "Venture Broken," it takes targeted outreach, visibility work, and buyer education just to get attention.
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Evaluation Cost: High — buyers need strong external validation or strategic relevance to justify allocating time and resources.
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Discount to Close: Medium — buyers may engage, but offers will likely land below market multiples due to the size of the business.
The Stuck Generation (Legible + Illiquid)
Your company has scale and solid fundamentals — but valuation expectations are still anchored to past funding rounds, not current market conditions.
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Search Cost: Low to Medium — buyers will engage based on the business fundamentals, but many hesitate to go deep if they sense the valuation gap can't be bridged.
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Evaluation Cost: High — buyers must build a strategic case to justify a premium: synergies, market expansion, or integration upside must be clear and defensible.
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Discount to Close: High — offers typically land below seller expectations, even when positioned as "premium" relative to the state of the public and IPO markets.
The Sweet Spot (Legible + Liquid)
You have a high-quality company by the market's standards and have scaled it in a way that aligns with current valuation expectations.
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Search Cost: Low — buyers recognize the business, understand the model, and are naturally inclined to engage.
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Evaluation Cost: Low — strong metrics, clear strategic fit, and standardized benchmarks make underwriting fast and straightforward.
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Discount to Close: Low — expectations are aligned with the market, enabling competitive tension for a premium outcome.
Understanding where you stand on the legibility–liquidity matrix is more than a diagnostic — it's a strategic tool.
It enables founders and boards to confront not just whether they want to sell, but whether they're actually in a position to do so without incurring high transaction costs in the form of wasted time, discounted valuations, or failed processes.