Exit. Selling your SaaS

This piece belongs to the ongoing Founders Guide. I’m scribbling down everything I wish I’d had on my desk during year one of my own startups—today’s instalment: exits.

I still remember the first real acquisition message I got. 2 a.m., Slack ping, somebody I’d never met wrote: “What would it cost to take this off your hands?” No context, just that. For the next ten minutes I was already ordering coconut brandy in my head and Googling the weather on Necker Island (spoiler: warm). Reality hit the moment I tried sketching an actual deal. Turns out handing over something you’ve nursed for five-plus years is messier than the celebratory Instagram posts make it look.

Most founders are phenomenal at spinning up products. Selling those products? Different sport. You need the right metrics, the right humans across the table, and the ability to stay calm when everyone wants something from you. I’ve sat through enough late-night term-sheet karaoke to know how quickly the whole show can derail. (I should be upfront—this is based on my experience, not a 1,200-company meta-study.)

Below is the playbook I ended up using and tweaking. It won’t bullet-proof every exit, but it should save you from the most avoidable face-plants.

First question: who’s on the other side of the cheque?

Buyers you'll meet

If your SaaS prints real value, inboxes fill up fast. The trick is separating people who can wire money from people who just want to hop on Zoom because that’s easier than doing their actual job. Most inquiries land in the “thanks but no thanks” folder for me. (Could be different in your niche—just don’t be shocked when it isn’t.)

The time waster

You’ll spot them by how quickly they blurt out a number—usually something that wouldn’t buy a used MacBook. They’ve read half a blog post about “buying cash-flow assets” and think haggling is the same as due diligence. Politely decline, move on. I spent three weeks humouring one early on and still wince when I see the calendar invites.

The corporate flavour of this type is even sneakier: big-company employee collecting “market intelligence” for a slide deck. They’ll schedule, reschedule, then ghost. The minute someone dodges two calls in a row, I archive the thread. Life’s short.

Entirely possible you’ll handle them better than I do—just budget the time, because they will appear.

The spy

This one pretends to be a buyer but is really fishing for your CAC breakdown or churn cohorts. They disappear the moment the data room closes. Simple fix: slap a 1-10 % back-out fee into the NDA. Anyone serious shrugs and signs; the intel-hunters evaporate.

Quick reality check: even with a fee, someone might pay just to peek. Keep the truly crown-jewel docs (e.g., raw user SQL dumps) behind an extra gate until the purchase agreement is drafted.

The bureaucratic buyer

Large enterprise, LLM-sized checklist. Nothing wrong with them—some of my smoothest payouts came from this camp—but prepare for endless redlines and their legal team asking why you used “🤖” in the commit messages. If you have runway and patience, they often pay top dollar. If you’re already mentally on a beach, they’ll drive you nuts.

The ideal buyer 

You’ll know when you meet one: they talk in specifics, respect your time, and outline integration plans instead of throwing buzzwords. Last exit, I saw three of these out of 80 inbound pings. That ratio feels typical. Treasure them.

The curious case of brokers

Brokers promise two things: buyers on tap and paperwork you never have to touch. Sometimes that’s exactly what you need—especially if negotiations make you break out in hives. The fee, however, is real: 2-5 % base, occasionally another success kicker. A $1 m payout minus 100 k can sting.

Remember their incentive: volume. They get paid when the deal closes, not when you maximise upside. I had one nudge me toward a fast 3.5× multiple because “demand might cool.” I passed, waited, and signed at 6× six months later. (Could’ve gone the other way, of course—risk cuts both ways.)

If sales and cold outreach aren’t your strong suit, paying the tax may well be worth it. Just keep a clear trigger for when you’ll step in and say “no.”

Negotiating a deal

This is where the adrenaline spikes. Multiple variables, none fully under your control—macro, interest rates, your own churn unit economics. Some founders cope by hiring bankers; I cope by over-preparing a data room and sleeping badly. Pick your poison.

Have the bargaining power

The cliché “be willing to walk” happens to be true. First serious inbound on my analytics tool in 2021 asked for a price. I tossed out what felt like a moonshot—roughly 50 % above my own back-of-napkin valuation. They paused, then asked for diligence access. That confidence buys you room.

(Side note: isolating customer data per tenant from day one shaved two weeks off diligence. Didn’t plan it that way—just felt cleaner architecturally—but it turned into leverage. Worth considering if you’re still early-stage.)

Price smart

Big number needs a narrative. ARR growth, net revenue retention, CAC payback—those slide across the table eventually, so lead with them. What buyers don’t reward, in my experience, is immaculate “best-practices” infrastructure. I once spent weeks containerising every micro-service, imagining it would bump valuation. The acquirer re-deployed everything on their own bare-metal anyway.

If the code runs, the tests pass, and onboarding a new engineer doesn’t require deciphering your bash history, you’re probably fine. Perfectionism beyond that rarely moves multiples.

Valuation strategies 

Here are the frameworks I keep seeing. Some are useful; some feel like tarot cards. Apply salt accordingly.

Revenue multipliers

SaaS candy. 5-10 × ARR depending on growth rate, churn, TAM, and frankly the mood of the market. Example: 30 % YoY at $100 k MRR might fetch $6-7 m today. Double-check whether hanging on another four years could net you more. I mis-timed one exit in 2018 and would’ve cleared double a year later—but hindsight is cheap wisdom.

Seller's discretionary earnings

If your P&L only shows Heroku and coffee beans because you’re doing 15-hour dev shifts yourself, buyers will “normalise” the books by adding salaries back in. That’s SDE. It hurts ego and headline number, but it’s defendable math—so prep for it instead of fuming on the call.

Earnouts

I’ve accepted exactly one earnout clause. Never again. You end up employee-ish, no equity upside, entire payout contingent on targets someone else can sabotage. Enough said.

Industry trends

Comparable deals within the last six months anchor expectations, especially for non-technical buyers. Pull the data yourself so you’re not reacting to their cherry-picked comps.

Fine prints 

The big number is intoxicating, but small clauses decide if you keep the money, sanity, or both. Lawyer up early. A decent tech-M&A attorney costs less than a single percentage point of your exit and saves headaches later.

Cash vs stock 

Default to cash unless the buyer trades on NASDAQ and you’d happily hold their shares anyway. Private-company stock often equals a multi-year lockup with zero liquidity. I know founders who waited eight years to liquidate—and some still waiting.

Non-compete agreement 

Fair for them to guard against you cloning the product next week. Unfair to ban you from the entire market category. Negotiate scope and duration. Three years, specific vertical is common ground.

Know about indemnity

Indemnity shifts future legal fallout to whichever party shoulders risk best. Push to cap your liability at or below the purchase price. Above that and you might be signing away the house.

Letter of intent 

LOI is respect, not a contract. Treat it as a roadmap, not money in the bank. Until the purchase agreement is inked, you’re still single.

Preparing the business to hand over

Once numbers and clauses look solid, shift focus to making transition day boring. Boring is good.

Iron out taxes

Tax surprises can erase an entire multiple. Plan residency, corporate structure, and IP location months in advance. I’m not entirely sure my Swiss setup generalises, so grab a local specialist.

Spruce up the books

Clean P&L, tidy balance sheet, clear vendor list. Buyers will adjust numbers anyway, but starting neat frames the narrative.

Audit

Expect a technical audit too. Heavy reliance on a single cloud vendor—say, everything running on AWS Lambda plus a few Cloud9 instances—raises eyebrows. Acquirers discount for perceived lock-in risk and niche tooling their own engineers don’t use. Provide a migration outline; it de-risks the deal and protects valuation.

Also, factor in the ongoing DevOps burden. All-native serverless stacks look cheap on the invoice but someone still has to babysit alarms at 3 a.m. Buyers notice.

Handing over

Use escrow. Wire money lands, conditions verify, keys hand over. It’s dull, and that’s the point.

You have sold the business. Now what?

Notification pops: funds released. A decade of commits, bug reports, and weekend deploys no longer yours. Weird feeling—the mix of nostalgia and “that many zeros can’t be real.”

Emotional high

Take the victory lap. Buy the champagne, ring whoever tolerated your 2 a.m. stand-ups, maybe finally book that week offline. Celebrate before your brain invents new problems.

Emotional low

After the party, the vacuum. You hit the goal you’ve repeated for years—now what? Some founders crash, some feel nothing. Both are normal. Therapy helps; I started sessions before signing and recommend it.

Early retirement vs investment vs starting over

Three common paths: retire (not my style), angel invest, or spin up the next thing. If starting over feels scary because you might not top the last valuation, reframe it: round two is practice with a better tool-belt.

Here’s to new beginnings. 🍾