Whether you’re moving on to new ventures or simply taking a break, you might have decided to sell your Software-as-a-Service business. However, doing so can be pretty challenging. The process involves many moving parts, so you can easily find the sale turning into a nightmare, especially if you are inexperienced and have no one to help you along the way.
Here are the top seven tactics to guide you in the right direction and help you sell your SaaS business hassle-free.
Prepare Ahead of Time
When planning to sell any SaaS businesses, preparations should start as early as possible, ideally one or two years ahead. This will help you boost your financial records, as well as improve the business structure and client base to enhance the company’s profitability and saleability.
Partner Up With a Professional
Selling the business yourself will help you save on the broker’s commission. However, going through the sales process alone will only bring more hassle, especially if you’ve never done it before. Conversely, partnering up with an experienced professional will help you avoid numerous issues. At the same time, they will ensure the sales process runs smoothly.
Moreover, a trained professional can answer all the questions you’ll undoubtedly face during the sale process. Plus, they are likely to have an established network in the field, so they can help you find buyers, assist in negotiations, and keep both parties informed.
Have Accurate Financial Information
Recurring revenue is what attracts the investor to a SaaS business. However, simply stating that your business and income are growing won’t entice the potential buyers to close the deal. Instead, they will want to learn more about the big picture and the actual profit percentage of the revenue.
Furthermore, they will be interested in specifics such as your average growth rate, churn rate, and how much it costs to acquire new customers, so be sure to have this information in hand.
Ensure the Business Is Easy to Run
If your business requires a lot of technical skills to run and manage, your pool of buyers will be quite limited as investors are typically after businesses that are easy to take over. So, take a step back from day-to-day operations to demonstrate the business’s autonomy.
It may also be helpful to provide the prospective buyer with a 12-18-month roadmap. Since no one knows your company better than you, your knowledge will be much appreciated. Additionally, a roadmap will help them understand the big picture and gain confidence in your company’s value.
Clean Up the Source Code
Even if your finances are in order, potential buyers won’t go through with the deal if your source code is cluttered, disorganized, or lacks documentation. At best, this will slow due diligence or require a longer transition period post-sale.
So, take time to ensure the code is clean and organized and that you have well-documented source code with annotations. It’s also a must to test and verify the code.
Optimize Your Customer Support
Customer support is very important for any SaaS business. Simple inquiries may not be a problem for buyers, as there are simple solutions like videos and FAQs pages to reduce such queries.
However, a high volume of complex questions will alert the buyer that your customer support isn’t optimized yet. You should evaluate and optimize your customer support before going to market. When doing so, consider the average response time, the resolution rate, and customer satisfaction.
Secure Your Intellectual Property
The buyer will want to ensure that the SaaS company’s IP belongs to you so you should be ready to provide proof of ownership. For example, if third-party contractors were working on the code, have them get you IP assignments that stipulate code ownership. The same goes for your in-house team. This step must be completed before going to market.
Ensure That Your Company Is Compliant
One of the last steps before completing the SaaS business sale will be to prove your company is secure and compliant. This involves industry-standard practices for encrypting user data and maintaining PCI compliance for credit card data. It may also include regulations specific to your industry-specific rules, such as HIPAA for healthcare SaaS businesses.
A SaaS business sale is a complex process, so you’ll have to prepare your company ahead of time to ensure that the process goes smoothly. This entails tying up loose ends and making it simple for the buyer to take over once the transaction is completed. Finally, hiring a professional advisor to assist you with selling is always a good idea.