Preparing for an M&A Exit: A Guide for SaaS Founders

Whether you are currently looking to sell your SaaS business or are years away from an exit, there are several things you can do now to get your “house” in order. In an interview discussing SaaS valuations, Ben Murray, Founder of The SaaS CFO, asked SEG Vice President Karam El-Harami about what SaaS executives should focus on in the short term to prepare for an exit down the road (watch the full interview here). Below we share some quick takeaways from the discussion:

1. Monitor your KPIs:

First, software executives and operators should implement systems that enable them ­to track key metrics closely.

As a start, work with third-party accounting firms to help clean financial data for historical periods and implement these systems going forward. Karam noted, “Historical financial trends are very important when evaluating a business, so having access to clean and reliable data is important for an M&A process.”

SaaS CEOs must understand their company’s performance to better understand market fit and competitive advantages.­ As you monitor internal performance, tracking the correct KPIs is key. Here are some helpful blogs as you evaluate which metrics to analyze:

2. Get your legal documents in order:

Typically, cleaning up the legal documents is pushed towards the very end of a process, although it is lengthy, tedious, and important.­­ Work with a legal team ­­on this ahead of time ­to avoid cleaning up documents or collecting signatures at the eleventh hour.

In a recent virtual coffee discussion, SEG Managing Partner Allen Cinzori and Eric Wechselblatt, Partner at Holland & Knight, discuss the top four things SaaS executives can do today to prepare for an exit from a legal perspective. They highlight four key areas to prepare for: employees, technology, customers and contracts, and taxes. Watch the full discussion to learn more about each topic.

3. Focus on your business:

Most importantly, focus on your company. It is critical in an M&A process to have strong performance. “Focus not only on growing the business, but also on product differentiation and competitive positioning,” Karam added.

 By focusing on these three simple items, any software executive or operator will be well prepared and have their “house” in order for an exit down the road. Watch the full video interview on SaaS valuations here. If you have any questions about SaaS valuations or preparing for an exit, please don’t hesitate to reach out.

Back to blog