Software & SaaS
Sell your software company
Software and SaaS companies are valued on recurring revenue, retention and the product’s place in customers’ daily work. Buyers pay for sticky customers and a product that keeps improving.
Request a Confidential ValuationCall (877) 367-0977- Typical buyers
- Strategic Software Companies, Private Equity & Growth Investors, Customers & Partners
- Common valuation basis
- Adjusted EBITDA for larger companies, SDE for owner-operated businesses
- What buyers study first
- Recurring revenue, retention and team depth
- Typical time to close
- Six to twelve months once marketed
Industry Overview
The market for software companies
Software and SaaS businesses sell subscriptions or licenses to customers who build the product into how they work. Recurring revenue, low churn and strong margins make established software companies attractive to strategic acquirers and investors.
Buyers review recurring revenue trends, retention and expansion, customer concentration, product roadmap, code quality and documentation, security practices and the team behind the product.
For owners of software companies with at least $1 million in revenue, preparation makes the difference. Businesses that can show clean financials, a capable team and customers who stay tend to draw competing offers. We help you get there, then run a confidential process that reaches strategic, investor and individual buyers.
The Buyer Pool
Who is buying software companies
Reaching several of these buyer groups at once is how a confidential process creates competition, and competition drives price and terms.
Strategic Software Companies
Firms adding products, customers or technology.
Private Equity & Growth Investors
Investors focused on recurring revenue.
Customers & Partners
Organizations securing a critical platform.
Technical Founders
Operators ready to run an established product.
What Moves Your Number
What drives value
Two businesses with identical revenue can be worth very different amounts. These are the factors buyers in this sector actually underwrite.
Request a Confidential Valuation- Recurring revenue growth and retention
- Low churn and expansion within accounts
- Diversified customers across industries
- Documented, maintainable code and architecture
- Security practices and data protection
- Product and engineering team depth
Due Diligence
How buyers evaluate software companies
Expect a serious buyer and their lender to look closely at each of these areas. Preparing them before you go to market shortens the process and protects your price.
Recurring Revenue
Subscriptions, contracts and retainers, with retention and expansion over time.
Clients
Revenue by client, industry mix and concentration.
Team
Roles, tenure, skills and who holds client and technical relationships.
Technology & IP
Systems, code, documentation, security practices and ownership of intellectual property.
Financials
Monthly results, margins, billing and add-backs with support.
Contracts
Client agreements, terms, assignability and renewal history.
Before You Go To Market
What quietly lowers your value
None of these are fatal, and every one is easier to address before a buyer finds it than after. That is the case for getting a valuation early rather than late.
- Product knowledge held only by the founder
- Heavy concentration in a few customers
- Technical debt or undocumented systems
- Rising churn
Preparing To Sell
A practical timeline
Most owners who sell well start preparing a year or two before they go to market.
Build the foundation
24 to 12 months out
Get a professional opinion of value. Grow recurring revenue and retention. Document systems and processes. Move client relationships to the team.
Prove it
12 to 6 months out
Clean up monthly financials and add-backs. Confirm ownership of code, content and IP. Review client contracts and assignability. Plan retention for key people.
Run a confidential process
Going to market
Prepare a detailed offering memorandum. Reach strategic and investor buyers. Share sensitive data in stages. Negotiate price, structure and transition.
Common Questions
Common questions from owners
What is my software company worth?
Buyers value it on documented earnings, then adjust for customer concentration, team depth, owner dependence, assets and market conditions. A confidential Opinion of Value gives you a realistic range based on those factors.
How are software companies valued?
Buyers focus on recurring revenue, retention, growth and margins, then adjust for concentration, technical debt and team depth.
What do buyers review in technical due diligence?
Code quality, architecture, security, documentation and intellectual property ownership. Preparing these in advance speeds the process.
How long does it take to sell?
Most well-prepared businesses take six to twelve months from going to market to closing, with preparation time beforehand.
Related Industries
Explore related industries
Client Reviews
Owners who have been where you are
Trevor was very attentive and consistent throughout the whole process and never gave up. When things got tough, he reassured us that was the process and it was all good in the end. We would highly recommend him and his team.
He didn’t waste any time starting on the task and was very detailed, confidential, experienced, very patient. I would recommend Trevor to anyone having large or small business.
Trevor was great to work with and did an excellent job guiding us through the sale of our business. As first-time sellers, the process was definitely stressful at times, but Trevor’s attentiveness and steady support made a huge difference.
Start Here
Know your number first
A confidential Opinion of Value tells you what your business is worth to a real buyer today and what would move that number. No cost, no obligation, and no one learns you asked.
Request a Confidential Valuation