For many SaaS founders, the challenge isn’t just deciding whether to sell and when to do so, but mainly how to run a process that reflects the strength of the business and protects what they’ve built.
In software, value depends on more than financials. Buyers will also evaluate retention, product maturity, team structure, and founder dependency. These factors influence the price, who shows up at the table, and the offers.
At L40°, we’ve guided founder-led SaaS exits across varied outcomes, each tailored to the founder’s goals. We know how to run a focused process, create leverage, and keep founders in control from start to close.
This guide breaks down the sell-side M&A process into the typical stages we have seen founders go through. It covers the key questions before outreach, what buyers are looking for, and the work needed to move from interest to signed agreement.
Is this the right time to sell, or should I keep building?
Many processes begin when this question emerges. Sometimes it’s prompted by an unexpected inbound from a buyer. Other times, it’s a conversation with a peer, a shift in market dynamics, strong financial results, or simply a change in personal priorities or new ambitions. However it begins, it’s the moment where founders start to weigh what’s next.
What matters most at this point is clarity. Why sell? Why now? Is it about risk, liquidity, market timing, or the simple fact that you’ve taken the business as far as you want to?
Rushing through this phase often leads to misaligned expectations. Founders who haven’t defined what a successful outcome looks like tend to default to price. That leaves them exposed when tradeoffs emerge on control, team roles, or long-term structure.
A clean process starts with a clear rationale.
A clear, founder-defined rationale for selling. You’ve articulated why you're exploring a sale, what success looks like beyond valuation, and whether you're ready, emotionally and strategically, to begin engaging buyers or advisors.
What would selling actually mean for me, my team, and the business?
Once the idea of selling becomes real, the focus shifts to feasibility. Founders begin to ask: What could the company be worth? What kind of buyers might show interest? What would the process require? And what would I do next?
This is often when founders start talking to advisors and investors to test the waters. Those conversations often start at a high level and quickly turn to how buyers would actually value the company in today’s SaaS market. Though founders are used to thinking in terms of Annual Recurring Revenue (ARR) and growth rate, buyers dig further. They look at customer concentration, retention dynamics, how revenue expands over time, and whether the team can scale without you.
Another shorthand metric to benchmark SaaS performance is the Rule of 40, the sum of your growth rate and profit margin. While it’s not a rigid cutoff, companies that are compliant with it tend to attract stronger interest, especially from financially disciplined buyers like private equity.
You’ve started to form a grounded view of how buyers will evaluate the business, how a sale might unfold, and whether it’s the right time to move forward. If the answer is yes, preparation begins.
If a buyer called tomorrow, would we be ready to engage?
After evaluating the path forward, the founder needs to make a call: go solo or bring in an advisor. This is the point where intent becomes action. If a sale is on the table, the company needs to be prepared financially, operationally, and strategically.
That begins with looking at the business the way a buyer would. Are the finances clean? Are contracts current and assignable? Is your IP properly documented? Even strong companies can lose momentum in diligence if the underlying structure isn’t clear.
It’s also the time to align with any key decision-makers. If you have co-founders, board members, or investors involved, their goals and expectations need to be surfaced early. Questions around timing, valuation, and control should be addressed now, before external momentum begins to build.
This is typically when founders decide to formalize a partnership with L40°. Our role starts before any outreach. We define and stress-test the positioning, flag areas of risk, and help design a process that meets your goals. If early buyer interest exists, we assess whether it’s credible and actionable. We begin structuring a targeted strategy to bring the company to market in a way that preserves control and drives competitive interest.
You’ve aligned with the key decision-makers, addressed financial and legal readiness, and made a strategic call on whether to run a structured process and who should lead it. The business is now ready for external preparation.
Have you built a narrative and model that will hold up under scrutiny and drive competition?
This is where the real work begins. The founder has made the decision, the advisory team is in place, and now the business must be positioned to meet the market.
At this stage, the focus shifts from internal readiness to external strategy. Step one is cleaning up the information that has been prepared internally and building the materials that buyers will use to understand the business. That typically includes a short-form teaser, a full Confidential Information Memorandum (CIM), and a financial model that clearly supports the story you’re telling.
Advisors help translate the materials into a story, a language buyers understand and respond to. What’s driving growth? Why is the business defensible? Where is it headed, and why does it matter now? These questions are critical to positioning the company in a competitive field of deals.
Alongside that work, the buyer list takes shape. A good list balances strategic fit, execution certainty, and confidentiality risk.
Once materials are finalized and targets are vetted, the process moves into sequencing. Timing matters. Who gets contacted first? How do we stagger NDAs and materials? When to move from teaser to CIM, and from CIM to live conversations? Each step is designed to control flow, maintain focus, and protect leverage.
This is also where the process structure gets formalized. At L40°, we draft and manage the process letter, which outlines key milestones such as when indications of interest are due. Having this clarity on deadlines is a signal to buyers that the process is organized and competitive.
Outreach begins with the anonymized teaser, focused, and structured to gauge interest while preserving confidentiality. From there, serious buyers engage under NDA and begin evaluating the full story.
The company is now positioned for the market. Materials are complete, the buyer strategy is defined, and outreach is launched in a way that’s structured, confidential, and designed to create leverage.
Who’s seriously interested and why?
With materials finalized and outreach underway, buyers begin to engage. This is the first time they’re seeing the full story, under NDA, and forming a real view of the company. Some are already familiar with your space, while others are seeing the opportunity for the first time. Either way, this is where interest turns into intent or doesn’t.
In the initial conversations, buyers want to test the strength of the story, the quality of the team, and whether the deal fits their investment thesis or strategic roadmap. With the help of advisors, founders start learning who’s serious, what each group values most, and how their structure and expectations compare.
These early signals matter. Some buyers move quickly and decisively. Others ask thoughtful questions but don’t advance. A few may overpromise but lack conviction when real diligence begins. Part of L40° or any advisor’s job is to help filter intent, pressure-test offers, and keep competitive dynamics in play without losing control of the process.
Serious buyers are engaged under NDA. You’ve established early alignment, surfaced key deal drivers, and are positioned to move into LOI discussions with clarity and competitive momentum.
Can this deal close and on terms the founder is willing to accept?
Once Letters of Intent (LOIs) are in, a lead offer is usually selected, and the company typically enters exclusivity. This is where diligence begins, and the deal gets tested on paper and in practice.
Buyers expect full access to financials, contracts, tax records, IP, and operational details. In SaaS, technical diligence is also common. A clean, well-structured data room keeps momentum up; gaps or delays can erode trust.
This is also when terms may have to be adjusted. Working capital, escrow, earnouts, and reps & warranties could get negotiated. Red flags like unclear IP, legal issues, or inconsistent financials can change the structure or price.
Internal teams may support specific requests, such as product and integration meetings. At L40°, we manage diligence flow, protect timeline discipline, and connect with legal and tax specialists as needed to defend founder interests.
Diligence is complete, final terms are locked, and both sides are aligned. The deal is now ready to move into documentation and closing.
What happens after the handshake?
The integration stage is about alignment. What happens to the team? How will customers be supported? Which systems stay in place, and which ones fold into the buyer’s infrastructure? Questions like these shape the real-world impact of a deal for employees, for clients, and for the product itself.
If you’re staying involved, which is common to ensure a smooth transition, your post-close role should be clearly defined. That could mean continuing as CEO, shifting into an advisory position, or supporting select parts of the business during a transition. If you’re stepping away, the handoff needs to be structured and complete. In both cases, clarity avoids friction later.
Internally, continuity matters. Founders often underestimate how much reassurance employees and customers will need once the deal is public. Planning ahead helps preserve trust and minimize disruption.
This is also the time to define what success looks like after close. That means setting measurable post-integration outcomes, whether that’s revenue retention, team stability, or product milestones. Buyers expect alignment here, and so should you.
A shared integration plan is in place. Both sides understand how systems, teams, and responsibilities will transition post-close and what success looks like once the deal is done.
The documents are signed. Ownership is transferred.
This is the wire transfer moment, the end of months of diligence, positioning, and negotiation.
Behind the milestone are critical final steps. Escrow release terms are confirmed, closing mechanics are executed, and funds are wired. Internally, communication planning becomes urgent: aligning with teams, informing the board, and updating customers with clarity and confidence.
This is also when your tax strategy must be finalized. Liquidity planning, wealth structuring, and cash management deserve immediate attention. What you do in the first 30 days can shape your financial footing for years to come.
Lastly, define what success means at the point of closure. Some milestones are met. Others are still ahead: in integration, legacy, or your next venture.
The deal is officially closed. Funds are received. Communications are aligned. Post-close financial planning and execution begin.
What comes next for you, and for the business?
After the deal closes, your role begins to shift. As mentioned, many founders will stay on during a transition period, continuing as CEO or stepping into an advisory or consulting role. Others will take the opportunity to fully step away, whether to rest, explore new ventures, or support other teams as an investor or board member.
Whatever your path, details are usually set before closing. Potential earnouts and deferred payments are tied to specific milestones. Advisory roles come with time-bound expectations. These terms should be fully understood before signing, since post-close clarity often determines how smooth the transition will be.
There are also longer-term considerations. Non-compete clauses and investor agreements may shape what you can build next and where. Some founders choose to stay visible in the ecosystem, while others prefer a quieter shift in focus.
This is also when financial planning becomes critical. Liquidity creates options, but it also comes with tax exposure, estate planning considerations, and capital allocation decisions that deserve focused attention. Managing wealth with the same discipline used to build the business is essential.
Ultimately, this phase is about moving forward with intention and defining success on your own terms.
The transaction has closed. You have clarity on your post-sale role, your financial roadmap is underway, and you are positioned to move into your next chapter with purpose.
Whether you are responding to buyer interest or preparing to run a structured process from the sell side, the way you manage a sale directly shapes valuation, deal terms, and long-term outcomes.
At L40°, we help SaaS founders navigate that journey with focus, discretion, and clarity. From early exploration through closing and beyond, we bring execution strength and founder alignment to every stage of the process. If you are starting to think about what comes next, we are ready to help. Contact us.
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