Most founders find out what their company is worth during an exit process. A letter of intent (LOI) gets sent over, and you’ll see the buyers’ valuation ranges. Some way low. Some in a reasonable range. Usually, not on the high side of expectations. But how do you know what valuation range to expect? Valuation […]
Due Diligence
The Software Founder’s Guide to Growth Equity Deal Structure
When a growth equity or private equity firm sends you an LOI, the first number you look at is the valuation. That’s normal. But valuation is only the price. It is not the structure. The structure determines: You do not need to read these agreements like an attorney. But you need to understand what certain […]
Understanding Contracted Annual Recurring Revenue: A Comprehensive Guide
Contracted Annual Recurring Revenue (CARR) was an obscure metric in the SaaS world years ago. Today, it’s become a hot and controversial SaaS metric when discussing company growth and SaaS valuations. CARR is a forward-looking SaaS revenue metric that estimates the maximum revenue size of a SaaS company. CARR combines two important aspects of revenue: […]
How to Analyze a SaaS Company for Sale
Who doesn’t like to browse SaaS companies for sale? Some listings provide no data while others give us just enough information to analyze the performance of the company. Given enough information in the listing, we can extract double the amount of data, metrics, and insight from the publicly available data in the listing. In the […]
How to Prepare for Preliminary SaaS Due Diligence
You’ve decided that it’s time to take on investment or sell your SaaS company. Or maybe that cold email from a private equity associate finally has you thinking about the next steps for your business. What’s next? Preliminary SaaS due diligence. Depending on your role and what side of the table you’ve been on, the […]
How to Prepare for M&A Management Presentations
Management Presentations in M&A Due Diligence The banker said to block my calendar for management presentations. Excuse me, what are management presentations? And for two weeks? Yes, and this is only the halfway point. The real “fun” in due diligence comes after the management presentations. However, before we get too far, let’s break down what […]