Run-rate revenue annualizes a shorter, recent period of results — typically the latest month multiplied by twelve, or the latest quarter multiplied by four — to estimate where a business is heading, rather than describing where its last completed fiscal year actually landed.
A run rate is arithmetic, not an accounting figure: it takes a single period and multiplies it out, with no test of whether that period’s pace is repeatable. That is precisely the gap a quality of earnings report is built to close — testing whether reported results are, in treadstonelaw.ca’s words, “representative of how the business actually performs going forward,” rather than the product of a single strong month a buyer has annualized without checking it.
On the financing side, BDC still expects an applicant to show the business is “generating revenue” and to supply “the documents needed for our analysis” — a lender underwriting an acquisition loan is not going to accept one month’s pace, annualized, as a substitute for the target’s actual trailing results.
A logistics-software business closed November at $410,000 in monthly recurring revenue after landing two large new contracts that month. Annualized, that is a $4.92 million run rate. But its trailing twelve months of actual revenue was only $3.1 million. A buyer pricing the deal off the $4.92 million figure without first checking whether the two new contracts are committed for a full year — rather than one-time onboarding fees that will not repeat — would be paying today for revenue that may never show up again.
See also: Trailing twelve months (TTM) · Quality of earnings report · Pro forma financial statements.
A 30-minute call is enough to tell you whether AI pays for itself in diligence, closing and portfolio reporting.
Nobody publishes Canadian transaction data, so every valuation in this country quotes an American benchmark. We are building the Canadian one — multiples, asking-to-sale spreads and days on market, by sector and by city. Leave an email and you will see it first.
No pitch, no listings. One email when the first report lands.
