The Work
Work that leaves a trail.
Investment decisions are validated by outcomes, not intentions. The following Sarron Ventures case studies document engagements where rigorous analysis altered the trajectory of capital deployment.
Details are anonymised to protect client confidentiality, but the methodology and impact are presented without exaggeration.
The Pricing Correction
A European private equity firm sought to acquire a B2B SaaS platform with reported ARR of €42M and claimed 120% net revenue retention. The seller’s valuation was anchored to a 12x ARR multiple, implying a €504M enterprise value. Our mandate was to validate the revenue quality and determine sustainable valuation boundaries.
What Sarron Ventures Tested
- Cohort-level revenue retention across three-year periods
- Contract tenure and renewal mechanics by customer segment
- CAC payback assumptions versus actual sales efficiency data
- Revenue concentration within top 20 customers
What Sarron Ventures Found
Reported NRR of 120% was accurate only for the newest cohorts, which represented less than 30% of the ARR base. Mature cohorts (24+ months) exhibited 85% gross retention with minimal expansion, indicating product-market fit erosion over time. Additionally, 38% of ARR was derived from contracts with annual renewal terms and high switching optionality, rather than the multi-year commitments implied in management presentations.
Customer acquisition costs had risen 63% year-on-year whilst payback periods extended from 14 to 22 months, signalling deteriorating sales efficiency. Technical diligence revealed architectural debt requiring €6M+ investment to support claimed scalability.
The Consequence
Our valuation range adjusted to 8–9x ARR after quality-adjusting the revenue base and incorporating retention headwinds. The client renegotiated entry terms at €358M enterprise value – a €146M reduction from the initial ask. The deal closed with downside protection mechanisms tied to retention performance.
The Operational Blind Spot
A family office evaluated the acquisition of a Swiss precision manufacturing business being divested from a larger industrial group. The asset generated €28M EBITDA on €140M revenue, with margins presented as stable and defensible. Our role was to validate operational health and identify post-separation risks.
What Sarron Ventures Tested
- Customer concentration and contract renewal exposure
- Manufacturing capacity utilisation and capex requirements
- Shared service dependencies with the parent organisation
- Supply chain vulnerabilities and input cost volatility
What Sarron Ventures Found
Operational interviews revealed that 52% of revenue derived from three multi-year contracts, two of which contained change-of-control clauses allowing renegotiation upon ownership transfer. Manufacturing capacity was running at 94%, leaving minimal headroom for volume growth without €12M in facility expansion, and of course, this was not reflected in seller projections.
Critically, the business relied on parent-provided IT infrastructure, HR systems and treasury functions under a transition services agreement priced at cost. Standalone replication would cost €3.2M annually – a direct margin impact not modelled in the CIM. Supply chain analysis identified single-source dependencies for two mission-critical components, with no contractual volume protections.
The Consequence
Our findings enabled the client to renegotiate the purchase price downward by €18M to reflect stranded costs and integration risks. Post-acquisition, the client proactively secured long-term supply agreements and invested in capacity expansion ahead of contract renewals, protecting margin integrity. Without the operational diligence, the investment thesis would have deteriorated within 18 months.