Most SaaS founders who have built $10M+ ARR SaaS businesses usually leave big money on the table when they sell their companies, for these two important reasons:
1) Is the acquirer a good home for my precious business?
This is a big one. It’s not always all about the highest bidder in financial terms. When you have multiple potential buyers or offers, the other stuff is usually not equal.
Founders often forego $10M or more to sell to the right company most aligned with their culture, business models, customers, and leadership.
How important is the longer-term success of my product, team, partners and business compared to maximizing my short-term financial reward? Every founder who sells grapples with this question and decides one way or the other.
Selling a majority to private equity buyers means that founders are often still running the business for a while, so non-financial factors like control, involvement, culture, and financial approach affect their next few years and the remainder of their equity value. Can the founder really influence the long-term success of their business in the new system? Sometimes.
2) How much control and independence will the founder have?
This is also a big one. Bootstrapped and lightly funded practical founders fought hard for their freedom and paid a very high price for it.
It’s why they avoided venture capital investment in the first place—to do things their way without asking for permission.
It’s why most don’t take growth equity investments when they get to $5M-$10M+ ARR, even though they could. They don’t want to answer to a board and have MBAs recommending spreadsheet strategies that don’t make sense.
It’s why founders procrastinate private equity exits: to avoid losing control despite having all the responsibility for a few more years.
It’s also why 80+% of founders who sell their businesses to strategic buyers don’t stay with the new team for over 12 months.
We have worked hard to maintain control and fought for our freedom, so we’ll pay a big price to avoid losing it. It’s hard to imagine doing it any other way.
I have conversations with serious SaaS founders like this almost every day. It’s a real conversation, and big money is involved.
Freedom, independence, and control are more valuable to these SaaS founders than people see from the outside.
It’s usually why they were successful so far. It’s the golden goose.
