Planning a SaaS Exit Strategy — 5 Details Every Founder Should Consider before Selling
If you’ve ever thought about selling your bootstrapped SaaS, you probably have a dream exit in mind. You’re probably seeing dollar signs, which is totally normal (and well-deserved), but a lot of Founders don’t take the time to map out the other details that will determine if an exit will check off their other boxes as well.
Before getting into the weeds of planning your exit strategy, there are two super important things to figure out that will influence every other decision you make during this process. First, why are you selling? This answer doesn’t need to be an elaborate one — it’s just your main reason or reasons for wanting to move on from your business. It could be as simple as wanting to focus more energy on a new product or recover from burnout, or as big as starting a family or moving. Maybe it’s a combination of a few things.
Once you know your “why,” you’ll be able to better plan out your “when” and “how.” When you sell, what do you want to do with your time? Think about this for both the long and short term. Some of our alumni Founders sold to SureSwift because they were making a new product, focusing on another existing product, wanted to do something totally new and have the cash to go for it, or just wanted to de-risk and take some time off. The beauty is — this part is totally up to you.
After nailing down those two things, you can start to consider the details of your dream exit.
- Your Preferred Transaction Structure
Regardless of how you get paid for your business, there will be some kind of transition period (more on that in a minute). The kind of transaction structure you prefer is hugely important when talking to buyers and determining who’s the best fit to take over your business. A clean cash exit will always be quicker and leave you with less responsibility, if any, when you close. But there are other structures, like an earnout, which might get you to a higher total value but cost you extra time and risk in the transition. To learn more about the different kinds of transactions, check out this cash vs. paper valuations video.
2. Your Ideal Closing Date
Another detail that can be determined by your timeline is your ideal closing date. If you’re hoping to be free and clear from your business by the end of the year, you’ll need to find a buyer who has the cash and resources to get you there.
3. Your Involvement in the Transition
This one is usually decided by you and the buyer. At SureSwift, we have a period of time after the sale where the Founder assists with transitioning the product over to our team. Other buyers will take over the business immediately, and some want Founders to stay involved long-term. Have an idea of what you want out of the exit so you can narrow down buyers to ones who are willing to get on the same page with you on this one.
4. Your Team’s Role in the Transition
If you have a team of employees and/or contractors, you’ll want to come up with a plan for how you’d like them to be taken care of during the transition of ownership. Having a strong team that knows your product can be really valuable to a buyer, so it’s always a good idea to be super transparent on both sides.
5. Your Financial Goals
You likely have an idea about the value of your SaaS, but a real valuation is what a Seller is willing to take and buyer to offer for a specific business. If you’re not set on a cash offer, earnouts (or similar) tied to the performance of the business after close might get you to a higher total value — but they might not. You have to decide if it’s worth the extra time on a transition and holding risk instead of cash. (At SureSwift, we usually prefer to give our bootstrappers a clean look at a cash exit at a fair price, but we’re open to other deal structures.)
Long story short, a dream exit is about more than the money (though, a life-changing amount of cash is never a bad thing). For more information and tips on how to strategically plan your SaaS exit to make sure it’s a dream exit, check out everything founders need to know about SaaS exit strategy.
