The Best Software Business Brokers to Help You Sell Your Business for Maximum Value

| February 2023

Are you looking to sell or buy a software business? The modern software industry — from cloud IT service providers and mobile app developers, to AI and cybersecurity firms — is ripe for M&A activity in 2023 despite global economic challenges:

  • According to Gartner’s research quoted by CompTIA, 2023 global IT spending will likely reach $4.6 trillion in 2023, representing a 5.1% jump over 2022.

  • The EY 2022 CEO Outlook Survey (Technology Edition) showed 72% of tech CEOs planned to pursue M&A within the following 12 months, compared to 59% of respondents across all other industries combined.

This is good news whether you’ve built a thriving software business and are looking for a profitable exit, or you’re looking to buy a business that will weather the current economic storms.

It’s important to approach the process in an informed way, however. Be sure to work with a software business broker who deeply knows the industry and can efficiently walk you through the process with your best financial interests at heart.

Why A Software Business Broker Is Helpful For Sellers

The software industry is a volatile one when it comes to valuations and long-term profitability. What makes a firm desirable for a few months or years won’t necessarily work in the more distant future, given the pace of technological innovation.

An experienced software business broker will be keenly aware of this. They can help you determine the worth of your business and navigate a few critical pitfalls along the way to selling your business in this industry.

Specifically, a good broker will bring the following to the table:

Up-To-Date Knowledge Of The Best Valuation Methods

Two valuation formulas often employed by brokers are EBITDA and SDE.

EBITDA is an acronym for “earnings before interest, taxes, depreciation, and amortization.” The formula adds back key expenses to your total business income. SDE refers to “seller’s discretionary earnings,” and it adds back personal costs that have some benefit to the business owner.

Whole-number multiples are combined with the EBITDA or SDE figures to arrive at a range of values for a software company. The multiple might be as small as 2, or as high as 10 or greater for SaaS (Software as a Service) business models with high recurring revenue and growth potential.

Also, aside from these formulas, the characteristics that make software companies vary greatly, depending on the type of business. A gaming company might be bolstered by brand awareness, and a software development firm’s value can go up based on how efficiently it can design high-leverage, business-critical solutions for its clients.

A great broker will be up to date on the most relevant value-driving factors for your particular business — and will help ensure you don’t sell your company for less than it’s worth.

Protection From Buyer Strongarm Tactics

With a broker working on your behalf, you won’t be pressured to give in to demands from buyers who cast themselves as your best and only option for a sale.

You’ll know more about your options, what bare minimum offer you should accept, and when to walk away from any given prospect.

Confidential Access To Qualified Buyers

When you’re looking to sell, you don’t want it leaked to the public. A great broker will prevent this from happening, protecting you in the process.

At the same time, they’ll discreetly tap into their private network of ethical business owners who are looking to make a financial or strategic software company acquisition, whom you’ll be introduced to once you’re ready.

Helpful Advice Through The Due Diligence Process

Due diligence can be overwhelming for a seller. A competent broker can help you take full stock of your software company’s financial, legal, and operational health while walking you through every facet of the process and ensuring nothing is missing in the end.

This will only put you in a stronger position to move forward in negotiations with a buyer.

Advantages Of A Software Business Broker For Buyers

Buyers of software businesses can be greatly assisted by brokers as well.

In a Deloitte M&A survey, buyers expressed disappointment in the expected value of their acquisitions despite a robust deal environment — with only 7% of corporate development teams feeling that a recent deal surpassed expectations.

A competent software business broker can help avert this kind of frustration for buyers by offering these benefits:

Identifying The Best Opportunities Across The Deal Landscape

The best software company brokers will be able to spot strategic opportunities for buyers as they arise. This could mean buying a company as-is, but it sometimes means working with the target firm to cement a market penetration strategy, based on the existing and proven strengths of the target business.

By finding such avenues, a broker can help their client make a much more favorable deal than what they might have found on their own.

Forging Stronger Rapport Between Company Teams

A buyer might offer a deal they believe is attractive, but truly isn't. This could cause the seller to walk, and cause the buyer to miss out on a profitable opportunity. Often the culprit is poor communication and coordination.

A good software business broker can spot problems like these before they sink good deals, and start to bring together the leadership teams on both sides to forge a better relationship from the start.

This can yield both a mutually-satisfying deal and higher profits down the line.

Safeguarding Investment Initiatives And Overall Strategy

Because any word getting out about a buyer’s activities could hurt their competitive advantage, a skilled broker will work to prevent this from happening.

They will keep an eye out for the best prospective targets, as they quietly send out feelers to industry professionals and hunt for a deal that’s in a seller’s best strategic interest.

What To Look For In A Software Business Broker

Both buyers and sellers need a broker they can trust: one who knows the ever-changing software industry in depth, and who is a seasoned matchmaker.

Here are some other traits a software business broker should have, from either side’s perspective:

  • Integrity. A professional broker will keep their clients’ activities confidential at all times.

  • Breadth and depth of industry expertise. A good broker’s network is both wide in terms of the number of business owners they’re in touch with — as well as deep in terms of their specific area of expertise.

  • Objectivity. A great broker will stay objective and unattached to the process, ensuring the most strategic or profitable outcome for their client.

A broker who checks these boxes can offer a much smoother, more streamlined experience whether you're selling or buying a business in the dynamic, competitive software market.

How Raincatcher Can Help

If you’re looking to buy or sell a software business, look no further than Raincatcher.

Our brokers have specific expertise across a diverse range of software business models, and they know what makes a company valuable and profitable.

For clients looking to sell, Raincatcher’s brokers can find the most qualified buyers and conduct the process efficiently, leading to a lucrative sale. For buyers, our professionals know how to identify the best opportunities for growth and profits over time.


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