We know that the Software industry is dynamic and fast-paced, and obviously, many entrepreneurs who are leveraging their companies think of an operation to obtain liquidity.
Selling your software business can be profitable at any time, but a few variables make the timing even more opportune to maximize your earnings. We must analyze the behavior of the buyer and investor before the market, as it will directly affect the ideal timing, along with other factors such as: inflation, employment rates and consumer spending.
To be successful in your sale, it is ideal to understand the role that these elements play and be able to assess your position in the mergers and acquisitions market.
Some points you should consider when selling your Software company:
Personal and business output goals:
Before thinking about selling your software company, you need to analyze your personal and business goals, this will help you decide what the ideal time will be.
Will you, as a founder and active contributor to your company, continue to be involved in operations on a daily basis or do you have a goal of distancing yourself from the business? If that happens, do you have a succession plan?
Is your management team well positioned and want continued involvement in the business? And your shareholders? Do you want to restructure the cap table?
Well, these are some points you should take into account to be successful in your sale. Outline a solid exit and succession strategy in advance, this will help with the transition of employees and operators.
Analyze market timing:
We know the software industry is dynamic and driven by conditions
of the mergers and acquisitions market. Be aware of this, as it will affect your transition and determine if it is the right time to make the sale.
Even with the SaaS market going through difficulties, companies are seen as good opportunities.
Other factors that may influence your decision to sell:
There are several points to be analyzed when selling your software company and, therefore, depending on the circumstances, we can understand whether the best moment is now or if you should wait for the ideal moment.
Growth: Your company may be experiencing difficulties in its growth and, even if it has an opportunity to evolve, it may not have enough capital to grow at the desired pace or maximize its potential.
This momentum could give you the opportunity to undergo a recapitalization, add fuel to your expansion and provide liquidity with less risk.
Consolidation: Pay attention to market consolidation, especially that of competitors. This is a good indicator of the right time to sell. A consolidated company attracts potential buyers and investors, avoiding the risk of falling behind competitors with more capital.
The fast paced market: Some factors like regulatory changes or newly passed legislation can cause rapid changes in the market, creating demand for your offerings and heating up the mood for liquidity events.
Gaining scale: You’ve achieved solid annual recurring revenue and this attracts interest from many buyers and investors. In the eyes of the market, if you gained scale, it means you were successful, found a suitable product and reached a reliable customer base.
Font: SEG.
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