4 things to do before and when selling your SaaS business

4 things you need to do before you decide to sell your SaaS business

Before you make the final decision to sell your sass business, you should pay attention to these four things.

Create a reliable system

For instance, you should work on writing down documented step-by-step procedures and processes so that prospective owners can easily understand how your business works. This will allow them to follow the documents you created and have a clear idea of how to take over the business.

Another thing you can do is to implement OKRs (Objectives and Key Results), which is a framework that helps you monitor your progress. This will allow you to see how your business approaches goal setting and how it achieves those goals. In this case, a tool you may want to use is OKR software for SaaS companies, as it can help you align your team, establish goals, and achieve fantastic results.

Understand who may buy the business

When selling a SaaS business, there are a couple of types of prospective buyers who may be interested:

• Private equity companies. They usually focus on private companies, invest money in them with their investor partners, and then resell the company for a good profit. If you decide to sell your business to a PE company and hold some equity in it, you may get a decent payout when your business is resold later on.
• Family offices. These offices work on managing the investments of wealthy people and usually buy a majority share in private companies they consider to be a good investment.
• Strategic buyers. Finally, these are the companies from the SaaS industry, and some of them may even be your competitors. They generally consider an acquisition to be a method of expanding their product offering and capturing a larger share of the market.

Get your finances in order

Rather, experienced investors are generally interested in how your business operates as a whole, the actual difference between your revenue and profit, the price of customer acquisition, average growth rate, churn rate, your tax situation, and many other things.

Well before selling your business, you should work on your finances by

• Reducing expenses. One of the processes that incur the biggest costs is customer acquisition, especially if you have a sales team. To cut down on these costs, implement FAQ tutorials, videos, knowledge bases, and other material that can support this process and make it easier for your to acquire new customers.
• Increasing revenue. Speaking of customer acquisition, it’s common knowledge that it generally costs much more than customer retention. With this in mind, use product upgrades to avoid subscription cancellations. Moreover, to ensure the sustainability and suitability of your business, work on evaluating its revenue model.

Work on business valuation

Finally, if you want to attract great offers, you should increase and optimize the value of your business before you put it on sale. You want to think about this as showing your business’s success and telling a story about how it performs now and how it will perform in the future.

Here are some of the main criteria you want to consider when evaluating your company:

• Profitability
• Revenue growth
• Customer base
• Management team
• Churn and retention

Taking the time to consider and value each of these carefully allows you to get a better understanding of your SaaS business so you can get attractive offers for it later on.

Conclusion

It’s not easy to decide when and how you should sell your SaaS business. Try to reflect on your reasons for doing it and if now is the best time to do it. In case you’re sure you want to do it now, these tips will help you get everything in order, which means you’ll be able to get more profit for your business.