How to Buy a SaaS Business: A Step-by-Step Guide

Buying a SaaS business can be faster than building one, but only if you buy the right one at a price the numbers support. Most of the risk sits in steps first-time buyers rush: deciding what they want before they look, checking the revenue before they fall for the product, and planning the handover before they sign. Here is the order that works.

1. Set your criteria before you look

Write down what you will and will not buy: deal size, the kind of customer it serves, how much of your own time it can take, and whether you can run the technology or need it to run without you. Deal size changes what you are buying:

• $50K to $500K: usually a micro SaaS, often founder-run with a simple stack and a niche market, and usually priced on profit.
• $500K to $2M: an established product, often with a small team, priced on profit or recurring revenue depending on growth and retention.
• $2M and up: teams, processes and a broader customer base, where revenue and EBITDA multiples become more common.

2. Understand how the price is built

Every asking price is a multiple of something. Smaller businesses are usually priced on seller's discretionary earnings (SDE), larger and faster-growing ones on annual recurring revenue (ARR). Know which one the seller used and why. Our guide to SDE versus ARR multiples explains the difference, and the valuation calculator gives you a range to compare an asking price against.

3. Find deals

Deals come from marketplaces, brokers and direct outreach to founders. Expect to see many listings for each one worth a closer look. A listing usually starts as an anonymous summary, with the business name and full figures released after you sign a non-disclosure agreement.

4. Read the numbers before the pitch

Before the first call, check what you can: revenue trend, churn, customer concentration and how much of the work depends on the owner. Our guide to what makes a SaaS business sellable lists the metrics sellers are told to prepare, which makes it a useful list of what to ask for.

5. Make an offer subject to diligence

A letter of intent sets the price, the structure and the conditions, and gives you time to verify. Decide here how much is cash at close and how much is paid later through a seller note or an earnout. Our guide to SaaS acquisition financing covers the options.

6. Run due diligence

Verify revenue from the payment processor and bank statements, not only from spreadsheets. Review the code, the hosting and every third-party service the product depends on. Read the customer contracts. The free SaaS due diligence checklist has 48 items across six categories to work through before you sign.

7. Close and take over

Use a licensed escrow service so the money and the assets change hands together. List everything that has to transfer: the domain, the code repository, hosting and payment accounts, customer contracts and any trademarks. Agree how long the seller stays on to help, and in what form, before closing rather than after.

Check the return before you commit

Run the deal you are weighing through the acquisition returns calculator: price, debt, growth, hold period and exit multiple, all your own assumptions. Then join the SaaSClose deal alerts and tell us your criteria. The marketplace is opening in stages, and we will email you when listings that match go live.