Getting Your SaaS Company Acquired: A Beginner’s Guide

The acquisition is one of the possible exit strategies for a SaaS founder. It can become a significant milestone and open opportunities for building other products, refocusing on life, or just taking a break. Approaching acquisition, however, is something that can look difficult and confusing. In this comprehensive beginner’s guide, we’ll cover the essential steps to successfully getting your SaaS company acquired. From finding the best acquirer to ensuring a smooth post-acquisition integration.

How to Sell My Company?

Selling a bootstrapped SaaS business is a process. It requires careful planning and execution. Here are some key steps to get started:

Assess Your Company's Value:

Given all the work and sleepless nights you’ve put into your product, it can seem invaluable. The key is to be objective and look at your company as an outsider. Consider factors such as revenue, customer base, growth potential, intellectual property, and team structure. This assessment will help you determine a realistic value for your company.

Prepare Documentation:

If you’ve been building your company with an exit in mind, chances are, your documentation is flawless. But even in this case, it’s good to go over the essential documents that showcase the value of your SaaS company. This includes financial statements, customer contracts, growth projections, intellectual property documentation, and any other relevant information that will demonstrate the potential of your business.

How to Find the Best SaaS Business Acquirer?

The best doesn’t always mean the one willing to pay the highest price. It’s also someone with prior knowledge of growing companies like yours, the financial ability to go forward, and an understanding of the company culture that you’ve been nurturing for years.

Consider the following steps to help find “the one”:

Find potential acquirers:

Look for companies that can benefit from your product, complement your offerings, or expand into new markets. Do thorough research to identify those who align with your company's vision and strategic goals.

Leverage your network:

Reach out to your industry connections, go to conferences, and actively search for potential acquirers through networking events. Don’t be afraid to ask questions. Find social media posts from founders about getting their company acquired and communicate with them about the experience. They will not disclose anything confidential but may help with basic preparation and share the challenges they’ve faced. And this is a good start, right?

How Much Can I Sell My Company For?

Determining the valuation of your own SaaS company is challenging. And the market state doesn’t really help. The inflated multiples of the COVID era are no longer valid. So, what can you do to understand its realistic value?

Consider the following factors:

Financial Metrics:

Look at your financial performance. While it may not be the deciding factor for the potential acquirer after all, it’s a good first step in your valuation. Consider your financial performance, including revenue, growth rate, profitability, and recurring revenue.

Make sure you have these metrics at the top of your mind even during the initial buyer call. You won’t be disclosing something too critical, but it’ll show that you’re serious and prepared for the process.

Market Comparisons:

This can be a bit misleading given that you’ll only be looking at the deal value without really having any internal information about the company’s metrics. But it can still give you a peek into the industry's valuation multiples. Given the recent drastic changes in valuations, we can only recommend looking into the most recent acquisitions.

How to Approach the Acquisition Process?

Once you’ve done your research and identified a few potential acquirers, it's essential to approach the acquisition process strategically:

Actively Engage with Acquirers:

This is all about building goodwill. Initiate discussions, build trustworthy relationships, communicate the value proposition, and just be honest from day one. It makes all the difference and gives your potential acquirers a sense of who you are and how they can make this process better and more streamlined.

Negotiate the Deal:

Going into this part of the sale can be overwhelming. When discussing the payment structure, transition period, employee retention, and intellectual property rights, it’s better to have someone in your court who can explain everything in plain English.

Work closely with legal and financial professionals to negotiate the terms of the acquisition. Ensure the deal aligns with your company's goals and maximizes its value. The trick here is to be honest and communicate your ideas, perceptions, and expectations openly. After all, you want to get what you deserve.

How to Do SaaS Due Diligence?

Due diligence is a critical step for both the acquirer and the seller to assess the feasibility and risks of the acquisition.  There are a lot of steps in this process: marketing, SEO, legal, tech, and financial details. But if you’ve been preparing for an exit, it might as well be way easier than you first expected.

Organize Documentation:

Prepare your “due diligence package”, including financial records, legal documents, contracts, customer information, and operational details. Make sure everything is easily accessible and well-organized for potential acquirers to review.

It’s as if you would want to go on a year-long sabbatical and get an outsider to take care of the company. What would they need to know so that when you’re back, the company is not only intact but thriving?

Respond Quickly:

Do not go under the radar once the process has started. If there are bumps in the road, you want to communicate quickly and provide accurate and transparent information. Collaborate with your team and external advisors to ensure a smooth and efficient due diligence process.

How to Ensure Smooth Post-Acquisition Integration?

There's a big chance you’re going to stay involved during the integration process. There are several steps to make it successful and realize the full potential of the acquisition.

Develop an Integration Plan:

Planning is, in general, something that makes an acquisition process way smoother. A detailed integration plan is not an exception. Identify key integration milestones, set up communication channels, and establish a timeline for integrating teams, systems, and processes.

Maintain Customer Focus:

Telling your team what’s going on and preparing them for a transition is important. But you should also communicate with your customers and address their concerns. Ensuring a positive customer experience throughout the transition may save you from losing customers.

Conclusion:

Selling your SaaS company through acquisition can be a rewarding and transformative experience. There are steps you can take to make it easier for yourself, the team, and your users. The key is to always stay true to your vision, communicate your value proposition and overall expectations, and approach the acquisition process strategically to ensure the best outcome and the smoothest post-acquisition integration.