+ cash -> shift to annual upfront payments: accelerate cash payment terms to increase earnings by removing monthly payment option for SaaS Annual contracts. ASC 606 will keep revenue on trend but cash will accelerate. Combine this with decreasing CapEx and FCF from Ops will look great. This is typically seen in yr 4 of 5 in a PE hold period before the PortCo is marketed for sale in yr 5.
This hurts an inexperienced acquirer, but makes the sellers narrative and trends very strong.
+ cash -> shift to annual upfront payments: accelerate cash payment terms to increase earnings by removing monthly payment option for SaaS Annual contracts. ASC 606 will keep revenue on trend but cash will accelerate. Combine this with decreasing CapEx and FCF from Ops will look great. This is typically seen in yr 4 of 5 in a PE hold period before the PortCo is marketed for sale in yr 5.
This hurts an inexperienced acquirer, but makes the sellers narrative and trends very strong.