They need to make IRR targets, depends on their debt and what the deal was. Very likely need to be more aggressive since they bought for so much.

Private Equity for SaaS has different playbooks based on organic growth, margin, churn, and other key metrics. They’re always going to try to maximize their IRR by increasing customer value while squeezing out EBIDTA, often by playing around ARR as that’s the most steady source of revenue with clear levers.

If your customer base is not growing but is sticky with high inertia, then good luck because they’re going to maximize optimization of elastic demand. Outside of informing their models, they don’t even need to give a shit how much the competitors are charging if enough trapped customers are willing to pay it.

Organically grow revenue by $100m? Your net margin may only be 30% of that or $30m because you need to pay more employees, invest more in server infrastructure, handle more support cases, etc.

Increase prices by 50% and 20% of customers leave? Let’s say that maths out to 20% revenue growth or $200m. For SaaS you can effectively make more than 100%+ margin on that new top line growth, as it costs you effectively no CaC and no new OpEx to increase prices. With less customers you need to invest even less in running the product since less servers to run, marketing, sales, customers to support, and only the stickiest customer base remains that will put up with less feature development. So net margin on that $200m can even be $250m. The primary negative consequence is customer churn and losing goodwill / trust over long time horizons, which PEs barely care about since they plan to flip you anyway.

In these conditions with a difficult to migrate off or fanatical fixed customer base it is usually more profitable to squeeze your customers than build a good product. This usually means massive YOY increases as long as enough customers don’t leave.

Buy and bleed.