The New Mandate: Revenue Durability Over User Growth
The SaaS landscape has shifted and it’s especially true for Proptech. Where the market once rewarded rapid expansion, today’s financial and strategic acquirers reward efficiency, predictability, and the ability to retain customers through market cycles.
In 2025, customer retention is not just proof of product-market fit, it is a value driver that shapes your EV/Sales multiple and determines how buyers model future cash flows. For PropTech founders preparing for a sale, customer retention analysis is now one of the most heavily scrutinized components of a valuation model.
Durability is the new growth. And nothing signals durability like strong, defensible retention.
Why Customer Retention Has Become a Core Valuation Lever
Historically, PropTech and Real Estate technology companies have traded at EV/Sales multiples below horizontal SaaS, averaging 3.4x to 7.0x depending on growth, product type, and the reliability of revenue. But over the last 24 months, one factor has emerged as the key differentiator in valuation outcomes: retention quality.
“What proportion of this revenue base will reliably persist in the first 12 months following acquisition?”
Customer retention directly shapes valuation outcomes because it informs several core elements of the underwriting process:
- Future Cash Flow Reliability
Strong retention minimizes revenue decay and enhances the predictability of forward cash flows — a central driver in discounted cash flow analysis and long-term valuation modeling.
- Reduced Post-Close Risk
Acquirers assign higher multiples when renewal behavior can be underwritten with conviction. Low churn lowers operational risk and strengthens confidence in the post-close performance of the asset.
- Structural Stickiness and Switching Costs
Platforms embedded within operational workflows — from building management and tenant engagement to energy monitoring and ESG compliance — create high switching costs and materially reduce the likelihood of customer attrition.
In today’s PropTech market, retention is no longer a supporting metric. It is a signal of revenue durability and a strategic lever that directly influences valuation and negotiation dynamics.
Benchmarking Retention for Valuation: What the Data Shows
Our PropTech transaction benchmarking shows a strong correlation between retention performance, a low annual gross revenue churn, and valuation tiers.
| Annual Gross Revenue Churn | Typical EV/Sales (2025) | Buyer Interpretation |
| < 5 percent | 6.0x to 10.0x | Mission-critical platform with utility-like durability |
| 5 to 10 percent | 5.0x to 8.0x | High-quality SaaS with manageable volatility |
| 10 to 15 percent | 3.5x to 5.0x | Functional product but with renewal risk |
| > 15 percent | Below 3.5x | Discretionary or transactional use case |
Source: Objective IBV internal PropTech transaction benchmarking, 2024–2025.
Every 5 percent improvement in gross churn can increase valuation by 0.5 to 1.5, representing millions in enterprise value.
Beyond Churn: Measuring Retention Quality, Not Just Retention Rate
Sophisticated buyers look far past headline churn figures. At Objective Investment Banking & Valuation, our valuation models incorporate customer retention analysis that includes:
- Customer Segment Stability
Which users renew most consistently — property managers, institutional owners, operators, or service providers — and what risk concentrations exist.
- Contract Structure and Term
How much ARR is protected by multi-year agreements, embedded SLAs, auto-renewal language, or usage-based ramps.
- Workflow and Data Dependency
How deeply the platform integrates into daily operations. High-frequency, mission-critical use cases earn significant valuation premiums.
- Replacement Friction
How difficult it is for a customer to offboard, migrate, or retrain staff on a new system.
These factors roll into our Revenue Defensibility Score, which directly supports higher EV/Sales multiples during buyer negotiations.
The 2025 PropTech and Real Estate Technology M&A Environment: A Split Market
The PropTech M&A landscape today is defined by a clear divide:
Platforms With Strong Retention
- Energy management
- Building automation
- Real Estate specific CRMs
- Portfolio analytics
- Compliance and ESG reporting
- Resident/tenant engagement systems
- Real estate-specific CRMs
- Deal pipeline and brokerage management tools
- Marketing automation for real estate
These companies continue to trade at upper-tier or double-digit multiples.
Platforms With Weak Retention
Growth-stage PropTech companies with sub-80 percent retention are seeing multiple compression, regardless of user growth.
Strategics like CoStar, Yardi, and MRI remain active but disciplined. They reward retention quality over expansion metrics.
How a PropTech-Focused Investment Banker Uses Retention to Increase Valuation
In a churn-sensitive market, the right banking team does far more than position your financials — they articulate your revenue durability narrative.
At Objective IBV, we use retention analysis to elevate valuation by:
- Benchmarking Your Cohort Retention
Buyers want context. We show where you outperform peers.
- Highlighting Expansion-Adjusted NRR
NRR that incorporates upsells and usage expansion reframes your platform as self-growing.
- Translating Retention Data Into Predictable Growth
We reposition churn mitigation efforts as forward revenue signals, reducing perceived risk.
- Using Retention to Push Multiples Higher
Retention defensibility becomes a negotiation instrument, not just a disclosure item.
This transforms the conversation from “What is your churn?” to “What is your retention moat worth?”
Timing Your Sale: Retention Momentum Matters But It Shouldn’t Delay Strategic Conversations with Investment Bankers
Founders often ask:
“Is now the best time to sell my company?”
A more instructive question is:
“How is my retention trending: improving, stable, or facing pressure?”
While buyers do pay premiums for positive momentum, most PropTech and Real Estate Technology companies experience periods of fluctuation. What matters is not achieving perfect retention before going to market, but understanding the drivers behind your trends and presenting them within a coherent, data-supported narrative.
Our valuation models assess the inflection points where:
- retention begins to stabilize
- renewal velocity strengthens
- gross margins recover
- core customer cohorts demonstrate durability
Selling during a retention upswing can enhance valuation, but don’t waiting for ideal conditions to start the conversation. In practice, very few PropTech companies exhibit flawlessly linear retention trends. What differentiates strong outcomes is not the absolute churn number, it is the interpretation, segmentation, and strategic framing of customer behavior.
With the right positioning, even companies with mixed or evolving retention profiles can outperform expectations. That positioning involves:
- Reframing churn within the context of customer mix (e.g., shedding low-value segments while strengthening institutional relationships that supplement the acquirers’ portfolio).
- Highlighting underlying behavioral signals that point to long-term durability, even if recent metrics show variability.
- Demonstrating how product enhancements, workflow integrations, or contract changes are already influencing forward retention.
- Isolating stable cohorts whose renewal patterns materially de-risk the buyer’s underwriting model.
- Quantifying the operational levers that a scaled acquirer can pull to further reduce churn post-close.
When communicated effectively, this transforms buyer perception from viewing churn as a headline risk to understanding it as a manageable, explainable, and in many cases correctable aspect of the business.
In other words, nuanced positioning turns an imperfect retention profile into a strategic opportunity, enabling founders to engage the market proactively rather than waiting for metrics to reach theoretical peaks that may never materialize.
What Founders Should Do Before Approaching Buyers
- Audit churn at a granular level. Separate voluntary from involuntary churn and segment by customer type.
- Build a retention story. Quantify use-case stickiness, embeddedness, and contract renewals.
- Benchmark valuation. A banker can provide a confidential EV/Sales comparison across peer PropTech transactions.
- Prepare for diligence. Buyers will stress-test churn metrics during QofE (Quality of Earnings) and customer interviews.
When a founder understands churn behavior and explains it with confidence, valuation ceilings move upward.
Defining “Success” Beyond Multiples
At Objective, we define success not just as the highest EV/Sales multiple, but if the specific objectives of our client in the transaction was met.
For PropTech founders, that often means choosing acquirers who understand long-term platform value: the relationships, data, and integrations you’ve built over years.
We design transactions for superior outcomes that achieves your goal after task proceeds cash price and protects your legacy, employees, and product roadmap, ensuring that your platform continues to scale under the right ownership.
Final Takeaway: Retention Drives Valuation. Preparation Unlocks Premiums
If you are benchmarking your retention or preparing for a potential sale, understand this:
Customer retention is the most powerful valuation catalyst in PropTech today.
Founders who quantify, segment, and defend retention convert operational excellence into deal leverage — securing premium outcomes even in a disciplined M&A environment.
If you are exploring a sale or have received inbound inquiries, now is the right time to evaluate your churn-adjusted valuation.
Contact Objective’s PropTech Investment Banking Team to confidentially benchmark your retention performance against current market valuation multiples.
FAQ: Customer Retention, Valuation, and Selling a PropTech Company
Why does customer retention have such a significant impact on PropTech valuation?
Retention indicates how reliably revenue will persist after an acquisition. High retention reduces revenue decay, increases the present value of future cash flows, and lowers underwriting risk for acquirers. In PropTech, where platforms integrate deeply into building operations, tenant workflows, and ESG reporting, retention is the clearest indicator of revenue durability. Our internal PropTech transaction benchmarking shows that retention quality is directly correlated with EV/Sales multiples.
What level of churn is considered “good” in today’s PropTech market?
Based on Objective Investment Banking & Valuation’s 2024–2025 PropTech benchmarking:
- Under 5 percent annual gross churn aligns with premium multiples (6.0x to 10.0x).
- 5 to 10 percent is viewed as stable and attractive.
- 10 to 15 percent introduces valuation headwinds.
- Above 15 percent suggests discretionary usage and higher customer volatility.
Every 5 percent improvement in churn typically increases valuation by 0.5 to 1.5 turns.
What if my company’s retention isn’t ideal — should I still consider selling?
Maybe. Most PropTech companies do not have perfect churn profiles. What matters more is the narrative around your customer behavior, segmenting cohorts, contextualizing churn, highlighting defensible segments, and demonstrating operational improvements. With the right positioning, even companies with evolving retention metrics achieve strong outcomes. Objective IBV specializes in constructing these narratives to elevate buyer confidence.
How do buyers evaluate retention during due diligence?
Buyers conduct deep retention analysis, including:
- cohort-level churn
- voluntary vs. involuntary attrition
- customer concentration
- multi-year contract durability
- workflow and data dependency
- use-case embeddedness
- expansion revenue behavior
We prepare founders to address each of these components proactively, reducing perceived acquisition risk.
Is retention more important than growth rate in 2025?
In PropTech, yes, retention has overtaken topline growth as the primary determinant of valuation. The market has shifted from “grow at all costs” to “demonstrate durable, predictable revenue.” Growth still matters, but only when supported by strong cohort stability and renewal behavior.
What is ‘retention quality,’ and how does it affect valuation?
Retention quality refers not just to how many customers stay, but which customers stay and why. Our valuation framework assesses retention by:
- customer type (institutional, SMB, enterprise)
- mission-critical workflow integration
- switching costs
- contract structure and renewal protections
- dependency on data, automation, or compliance workflows
High retention quality commands premium EV/Sales multiples because buyers can underwrite predictable, low-volatility revenue.
How can founders improve their valuation before going to market?
Founders can increase valuation by:
- segmenting churn and identifying stable cohorts
- demonstrating product stickiness and workflow dependency
- quantifying switching costs
- highlighting multi-year contracts or SLAs
- showcasing expansion revenue and NRR trends
Objective IBV conducts a pre-market retention audit to identify valuation levers and refine the narrative presented to buyers.
Does timing the market matter when selling a PropTech company?
Market timing matters, but retention momentum matters more. Buyers reward companies that demonstrate stabilizing or improving renewal patterns. However, waiting for “perfect metrics” often delays opportunities unnecessarily. With the right positioning, even companies with mixed retention trends can capture strong valuation outcomes.
How does Objective IBV incorporate retention into valuation modeling?
Our PropTech-focused valuation models integrate:
- cohort-level retention analytics
- expansion-adjusted net revenue retention
- revenue defensibility scoring
- contract durability weighting
- customer lifetime value modeling
- scenario-driven revenue decay curves
These analyses feed directly into EV/Sales benchmarking, discounted cash flow modeling, and buyer positioning, ensuring retention becomes a value amplifier, not a liability.
Why should PropTech founders engage an investment banker for a churn-sensitive sale?
Retention is complex, nuanced, and often misunderstood by buyers. A sector-specialized banker:
- reframes churn in the context of defensible revenue
- highlights cohort stability and embedded workflows
- reduces buyer discounting
- positions the platform as mission-critical
- uses retention analytics to negotiate higher multiples
Objective IBV converts operational data into strategic narrative, turning retention from a metric into a valuation advantage.
Contact Objective’s ConTech SaaS M&A Team for a private valuation or market benchmarking discussion.
About The Author
Thomas Lin specializes in sell-side M&A advisory for founder-led, growth-stage SaaS and Technology businesses. With expertise in the LegalTech, GRC, Field Service Management, and PropTech sectors, Mr. Lin is skilled in guiding complex transactions for technology-driven companies. Before joining Objective, Mr. Lin spent nearly nine years at Vista Point Advisors, rising to Principal and closing 12+ transactions worth over $1.1 billion, including the $100M+ sale of FormSwift to Dropbox and the majority recapitalization of TravelNet Solutions by Blue Star Innovation Partners. Mr. Lin earned his Bachelor of Business Administration from UC Berkeley’s Haas School of Business and is a FINRA-registered securities representative.
Disclosure
This news release is for informational purposes only and does not constitute an offer, invitation or recommendation to buy, sell, subscribe for or issue any securities. While the information provided herein is believed to be accurate and reliable, Objective Capital Partners and BA Securities, LLC make no representations or warranties, expressed or implied, as to the accuracy or completeness of such information. All information contained herein is preliminary, limited and subject to completion, correction or amendment. It should not be construed as investment, legal, or tax advice and may not be reproduced or distributed to any person. Securities and investment banking services are offered through BA Securities, LLC Member FINRA, SIPC. Principals of Objective Capital are Registered Representatives of BA Securities. Objective Capital Partners and BA Securities are separate and unaffiliated entities.
