Your portfolio company spends $2 million annually on AWS. That seems reasonable for a high-growth SaaS business doing $30M in revenue, right?
A 40% reduction in that AWS bill—$800,000 in annual savings—creates approximately $20 million in additional enterprise value at exit. Not $800,000. $20 million.
This isn’t financial engineering. It’s basic arithmetic that transforms how sophisticated investors think about cloud costs.
The Multiplier Effect That Changes Everything
High-growth SaaS companies trade at 24-25x gross profit multiples in today’s market. Some exceptional businesses command even higher multiples, but let’s use 25x as our baseline—a multiple we see regularly in middle-market software transactions.
When you reduce AWS spend by $800,000 annually, you’re not just cutting costs. You’re adding $800,000 to gross profit, assuming these are pure infrastructure costs with no offsetting revenue impact. That $800,000 multiplied by 25x equals $20 million in enterprise value.
This is why the most sophisticated PE investors now scrutinize cloud costs with the same intensity they apply to sales and marketing efficiency. In an environment where multiple expansion has stalled and interest rates have eliminated financial engineering as a value creation lever, operational improvements are the only game in town.
And cloud optimization is the fastest operational improvement available.
Why This Matters More in 2025 Than Ever Before
Three converging forces make cloud cost optimization uniquely valuable right now
1. Extended Hold Periods Are the New Normal
PE holding periods reached 6.7 years in 2024—the longest since 2005. With challenging IPO markets and selective strategic buyers, you’re holding assets longer than planned. Every dollar of EBITDA improvement compounds over these extended holds, making operational excellence more valuable than quick multiple arbitrage.
2. Multiple Compression Eliminated Easy Exits
The days of buying at 8x EBITDA and selling at 12x simply because markets moved are over. Today’s exits depend on demonstrable value creation. Strategic buyers identify operational inefficiencies during diligence, and cloud costs trending upward faster than revenue trigger red flags and valuation haircuts.
3. Record Dry Powder Demands Better Returns
With $2.1 trillion in dry powder and intense competition for quality assets, you need to extract more value from companies you already own. Cloud optimization delivers measurable EBITDA improvement in 90-180 days—faster than sales initiatives, procurement programs, or product roadmap changes.
The Speed Advantage
| Value Creation Initiative | Time to Results | Capital Required |
| Cloud Optimization | 90-180 days | $0 |
| Sales Force Optimization | 12-18 months | High |
| Procurement Initiative | 12-18 months | Medium |
| Product Roadmap Changes | 18-24 months | High |
The Real-World Impact: From Dollars to Value
Theory becomes powerful when you see the actual numbers. Here are three typical portfolio company scenarios:
| Scenario | Annual Revenue | AWS Spend | % of Revenue | Optimization Potential |
Annual Savings | Value Creation (25x) |
| A: Efficient Operator | $50M | $3M | 6% | 20% | $600K | $15M |
| B: Growth-Focused Scaler | $30M | $2.4M | 8% | 35% | $840K | $21M |
| C: Technical Debt Carrier | $20M | $2M | 10% | 50% | $1M | $25M |
💡 Key Insight: Scenario C—the company with the worst cloud efficiency—creates the most value through optimization. Technical debt isn't just a liability; it's a hidden value creation opportunity when you know how to fix it.
What Strategic Buyers Actually Look For
Most PE partners don’t realize that strategic acquirers now include cloud efficiency metrics in their standard diligence checklists. After reviewing dozens of buyer data room requests over the past 18 months, we consistently see these questions:
| Due Diligence Question | What Buyers Are Really Assessing |
| Cloud spend as % of revenue (24-month trend) | Margin trajectory and operational maturity |
| Cost per customer or per transaction | Unit economics and scalability |
| Commitment-based discount utilization | Financial sophistication and optimization discipline |
| Storage efficiency metrics | Technical debt and infrastructure hygiene |
| Infrastructure optimization roadmap | Forward-looking operational excellence |
Buyers aren’t just curious. They’re assigning value based on these metrics.
When your portfolio company shows cloud costs at 6% of revenue with a downward trend, buyers see operational excellence. When they see 12% of revenue with an upward trend, they see a margin compression problem that requires post-acquisition remediation—and they adjust their offer accordingly.
The quality of earnings adjustment for cloud inefficiency is real. We’ve seen buyers haircut EBITDA by $500K-$1M during confirmatory diligence when they discover significant cloud waste. At 25x, that’s $12.5M to $25M off the exit price.
The Speed Advantage: 90-180 Days vs. 12-18 Months
Traditional value creation initiatives—sales optimization, procurement, product rationalization—take 12-18 months to deliver results. Cloud optimization operates on a completely different timeline:
| Timeline | Focus Areas | Expected Impact |
| Month 1-2 | Infrastructure assessment, quick wins (idle resources, snapshot cleanup, storage tiering) | 5-15% savings |
| Month 3-4 | Commitment-based savings (Reserved Instances, Savings Plans, EDP) | 15-25% savings |
| Month 5-6 | Architecture optimization (rightsizing, Graviton migration, database efficiency) | 10-20% additional savings |
| Total Result | Comprehensive optimization program | 30-50% total reduction |
This speed matters enormously. If you’re planning an 18-month exit, you can demonstrate two full years of improved cloud efficiency trajectory by starting now. If you wait until 12 months before exit, you’ll miss the opportunity to show sustainable improvement—and buyers will assume the current inefficient state is permanent.
The Portfolio-Wide Opportunity
Now multiply this across your portfolio. If you manage 15 software companies, and each averages $2M in annual AWS spend:
| Portfolio-Wide Value Creation Potential |
| Total portfolio AWS spend: $30M annually |
| Average optimization potential: 35% (conservative) |
| Annual savings: $10.5M |
| Total enterprise value creation at 25x: $262.5M |
Based on 15 portfolio companies averaging $2M annual AWS spend
A quarter billion dollars in value creation from a cost category most PE partners review once during diligence and never examine again.
The most sophisticated PE firms—Vista Equity, Thoma Bravo, Blackstone—already treat cloud optimization as a standard value creation playbook item. They’re not guessing at savings; they’re systematically extracting 30-40% cost reductions across portfolios and capturing that value at exit.
The Physician Model: Why One-Time Audits Fail
Most PE firms treat cloud costs as a one-time audit: check the AWS bill during diligence, maybe optimize once, then move on. This approach fails because:
- Cloud infrastructure constantly changes. Engineers spin up new resources, workloads shift, usage patterns evolve. Last year’s optimization becomes this year’s waste without ongoing monitoring.
- Commitment-based savings require active management. Reserved Instances and Savings Plans need quarterly reviews as usage patterns change. Set-it-and-forget-it approaches leave 15-20% of potential savings on the table.
- New opportunities emerge continuously. AWS releases 1,500+ new features annually. Recent examples like Graviton4 processors, S3 Intelligent-Tiering, and Bedrock prompt caching each unlock significant new savings—but only if you’re tracking releases and implementing them.
The physician model works better: Regular health checks, proactive monitoring, early problem detection, and continuous optimization. Companies with ongoing FinOps relationships maintain 15% waste rates. Those without drift back to 35-40% waste within 18 months.
The Bottom Line for PE Partners
Cloud cost optimization is not an IT initiative. It’s a value creation strategy with the fastest payback and highest multiple of any operational improvement available.
When you’re paying 12-15x EBITDA to acquire companies and exiting at 10-12x in today’s compressed market, every operational improvement matters. Cloud optimization is unique because it:
- Delivers in 90-180 days (faster than any other value creation lever)
- Requires zero capital investment (pure EBITDA improvement)
- Compounds over extended hold periods (ongoing margin expansion)
- Improves exit attractiveness (buyers value operational excellence)
- Captures 24-25x multiples (gross profit impact, not cost reduction)
The new math is simple: every dollar saved in cloud costs is worth $25 at exit.
For PE firms managing software portfolios with combined AWS spend of $15M+ annually, there’s likely $100M+ in unrealized enterprise value sitting in inefficient cloud infrastructure. The question isn’t whether to optimize—it’s how to capture this value systematically across your portfolio.
How FastFinOps Helps PE Firms Capture This Value
FastFinOps specializes in helping private equity firms maximize enterprise value through strategic cloud cost optimization. We work with PE partners across three critical scenarios:
- Exit Preparation: We help prepare portfolio companies for exit from a cost optimization standpoint, demonstrating 18-24 months of sustained efficiency improvements that strategic buyers value. Our engagements ensure your companies showcase operational excellence rather than explain inefficiency during due diligence.
- Acquisition Due Diligence: We identify potential savings opportunities in target acquisitions before you close, quantifying the hidden value in cloud infrastructure and flagging technical debt that could impact valuations. Know exactly what you’re buying and where the immediate value creation opportunities exist.
- Portfolio-Wide Visibility: We provide comprehensive visibility into the state of cost optimization across your entire portfolio. Our portfolio dashboards benchmark companies against each other and industry standards, helping you identify outliers, prioritize interventions, and track optimization progress at the fund level.