Software & SaaS

Software buyers value businesses on the quality and durability of recurring revenue more than on current earnings. Two companies with similar revenue can be valued very differently depending on retention, growth efficiency and how embedded the product is in the customer’s operations. A clear, defensible presentation of those metrics is the foundation of a well-run software process.

Building an ARR figure that survives diligence

Buyers will rebuild your ARR from contracts and invoices. Definitions matter: the treatment of multi-year prepayments, usage-based fees, implementation revenue and discounts can change the headline figure. We reconcile ARR to the general ledger, build a monthly bridge of new, expansion, contraction and churned revenue, and present cohort retention so buyers can see how customer value develops over time. When the numbers a buyer rebuilds match the numbers in the marketing materials, credibility carries through to the final price.

Areas of technical and commercial diligence

• Code ownership, open-source license usage and contractor IP assignments
• Security posture, SOC 2 or comparable attestations and incident history
• Hosting costs, architecture scalability and technical debt
• Revenue recognition, deferred revenue and capitalized development costs
• Sales efficiency by channel and the productivity of the sales team
• Customer contracts, renewal terms, price escalators and termination rights

Choosing between strategic and financial capital

Strategic acquirers may pay more for a strong product fit, but integration usually means the brand and team are absorbed into a larger organization. Software sponsors may offer a lower upfront price but a meaningful retained stake and a second liquidity event. Founders who want to keep building often find a recapitalization the better outcome. We run processes that test both groups in parallel so the choice is made on actual terms rather than assumptions.

Timing also matters. Buyers value visible momentum, so a process launched after two or three quarters of steady net new ARR and stable retention tends to be received better than one launched immediately after a strong single quarter. We help owners judge when the trailing metrics best represent the business.

Our sourcing platform tracks acquisitive software companies and sponsor portfolios by vertical and product category. That helps surface buyers who have made adjacent acquisitions and therefore have a specific reason to pay for your product and customer base.