There are 20X More Successful SaaS Exits Under $50 Million Than We Can See

by | May 31, 2023

Back in 2019, after three years of talking to 1500 software founders and documenting ALL the software companies in Phoenix and Dallas on Gregslist, something became obvious to me that was previously hidden.

I could see that there were at least 20 times more software company exits for under $50 million than all the VC-funded billion-dollar exits.

Why wasn’t anyone talking about this in the tech media or on social media?

We just don’t hear about the “smaller” acquisitions that create life-changing wealth for software company founders, for three reasons:

  1. $25 million or $50 million for the sale of the company is small relative to the big companies in the news.
  2. You can only sell successfully for under $50 million if you didn’t take big VC funding. But no VC funding = no tech media coverage.
  3. Most of these smaller acquisitions have confidentiality agreements that prevent founders from revealing the actual sale amount. Ever.

But I wasn’t the only one who could see this was happening.

Chris Kern has been an M&A advisor for smaller software and tech companies with $500K-$10M in revenues for over 15 years.

I interviewed Chris on the Practical Founders Podcast this week to learn about what he sees on the front lines of the busy acquisition market for smaller SaaS companies.

Chris thinks there are 100X more tech acquisitions for under $50 million exits than those billion-dollar+ exits.

Chris is a SaaS M&A expert, so I asked him all the questions I hear from practical founders who are building valuable software companies.

Questions like these:

  • What drives SaaS acquisition valuation up or down?
  • What are the typical valuation ranges (in multiples of revenue) in today’s market in 2023?
  • Who is buying all these companies and why are they buying them?
  • What should founders be doing now to maximize their eventual exit?

We spent a lot of time talking about the many drivers of valuation that founders can manage and control.

These practical insights will be very useful to SaaS founders who are thinking about selling their software companies someday.

Check out this expert Q&A interview on the Practical Founders Podcast.

Thanks for educating and not selling, Chris!

#practicalfounders

Greg Head posted this on LinkedIn on May 31, 2023.

Check out the comments and join the discussion on LinkedIn.

Practical Funding

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