Will buyers count repeat customers as recurring revenue if we do not have long-term contracts?

Question

Tyler Smith · Accepted Answer

Repeat purchases can support a credible revenue story, but they are not equivalent to enforceable contractual commitments. Buyers will want to understand why customers return, how reliably they do so and whether that behavior is likely to continue under new ownership.

The relevant readiness test is revenue predictability and transferability, not the label used in a sales presentation. Even contracted revenue deserves scrutiny if customers can cancel easily or the relationship depends on the departing owner.

Separate your revenue into categories you can substantiate:
- Contracted revenue, with clear terms, renewal dates and cancellation rights.
- Repeat purchasing supported by customer history but not committed future orders.
- One-off or project revenue that must be replaced through new selling activity.

For each category, assemble evidence of retention, purchase frequency, customer losses and who manages the relationship. Show whether repeat business comes from a repeatable sales and service system or from your personal involvement. Also explain whether predictable revenue is spread across customers or rests on a small number of accounts.

Ask legal counsel to review material contracts for assignment and change-of-control provisions. A contract's existence alone does not establish that its benefits will continue unchanged after a sale.

My recommendation is to describe revenue conservatively and support it with customer-level evidence. If you lack contracts, demonstrate durable purchasing behavior rather than relabeling all repeat sales as recurring. Where uncertainty remains, prioritize improvements to retention, relationship coverage and sales repeatability before approaching buyers.