You’ve made the difficult decision to sell your SaaS business, but how are you going to place it on the market? How do you know where to sell a SaaS business?
That’s where a SaaS business broker can help you, especially if your company is too small to handle both managing day to day operations of the business as well as looking for a potential buyer. You may get overwhelmed by the complexity of the whole thing. Selecting a broker to sell your SaaS business may prove to be the best decision.
But, what will a broker do? How much might it cost? And, how do you ensure that you have selected a good one? Read on to find out.
Tips To Choose the Right Broker to Sell Your SaaS Business
When it comes to selling your SaaS business, you’ll need legal contracts that make all parties comfortable and keep everyone safe. You’ll also need proper valuations, a platform for negotiations, and some sort of escrow system to safely transfer the assets.
If you don’t know how to do all this or if it’s too much work for you, then using a broker might lessen a major pain point – only if you choose the right one!
Here are a few tips to help you pick the right SaaS business broker for your company:
Choose a Specialist
As with any other brokerage agencies, there are expert business brokers who focus on specific industries. It’s important to hire a broker who understands the SaaS industry inside out and has good connections within this field. After all, why would you engage someone who focuses on selling finance companies if you’re looking to sell your SaaS business?
Verify their knowledge
While many brokers may claim they have experience in the SaaS industry, you should do your homework and make sure this is true before making any commitment. Check out what they know about key industry players, important trends, insider terminology, or future industry forecasts, etc.
A broker who knows the field well will give you the confidence that you’re in good hands. However, a broker who has superficial or inaccurate knowledge should be avoided like the plague.
Consider the SaaS Broker's Reputation
While knowledge is an important part of the mix, you can’t deny the significance of a good track record. Find out what SaaS businesses the broker has sold before and what their successful sales ratio is running at.
A good broker should be happy to let you have such information but be careful of those who simply avoid talking about their past projects. A broker must be able to educate both parties and set clear expectations throughout the process.
Also, consider checking out their customer testimonials to see what their previous customers are saying about their services.
Consider their fees
Brokers usually charge a commission or success fee once your SaaS business is sold. The amount of commission is usually part of a contractual agreement between the broker and the seller. Yet, it’s almost always the business seller who pays.
Several brokers also charge a commission somewhere between 8% and 15%. This percentage is based on the final sale price and is often subject to a specified minimum commission fee. Many brokers also take their commission once a sale transaction has occurred.
At times, a broker might engage other arbitrators in the search to find a customer for your SaaS business. In such a situation, your broker might agree to split the commission they get with the relevant third-party.
Unless you explicitly agree to pay extra for the several sources working on your behalf, you wouldn’t normally be expected to disburse any more commission than what’s indicated in your brokerage contract.
Check their industry connections
A business broker should not only have a thorough knowledge of the SaaS industry, but they must also validate that they understand your requirements and have the right connections to make a sale.
Before you agree to use their services, you should know how they intend to market your SaaS business. What access do they have to the marketplace?
You should also know whether they just plan to list your business and cross their fingers, whether they have pre-qualified customers waiting, or if they have sources they can approach proactively.
Also, estimate the scope of their overall marketing effort. Will they spend money marketing your business, or just list it on a website hoping for a sale to happen?
Often, the size of the brokerage and their network of associates can be a good indicator of your chances for a successful sale.
Focus on their character
When choosing a SaaS business broker, don’t forget their personal qualities too. Your broker needs to be somebody you can get along with. So, choose somebody who is like-minded and is on the same page with you. But make sure they’ll be upfront with you even when it’s something you perhaps don’t really want to hear.
This brings us to another important personality trait: Trustworthiness. You will be totally dependent on your broker to communicate and negotiate with prospective purchasers on your behalf. So, it’s important that you choose someone who you can trust completely. After all, any awkward breaches of trust could possibly damage your business interests.
If you’re new at selling a business, it never hurts to ask a lot of questions. A good broker will answer all of your questions patiently. They’ll help you prepare as much as you can to make your business sellable.
Ready To Sell Your SaaS Business?
Take all the time you need when choosing a broker to sell your SaaS business. Getting it right will increase your likelihood of selling at the right price while getting it wrong might mean a deal that leaves money on the table – or even no deal at all!
Choosing a good brokerage should give you more peace of mind when working through a deal. If you need a reliable SaaS broker for your business, we’re just a call away. With years of experience in handling high-value sales deals under our belts, our evaluation and vetting resources are unmatched in today’s market.
As every business transaction is unique, we have an expert team that truly knows the digital space and is ready to put your SaaS business in front of the right audience of buyers.