Selling a Tech Company: A Guide for Founders Ready to Exit
Introduction: Why Exit Timing Matters When Selling A Tech Company
Selling a tech company is a major milestone—and a complex process that requires more than just strong financials or a great product. Whether you’ve built a SaaS platform, a development agency, or a hybrid hardware/software business, understanding how to sell a tech company the right way can maximize your valuation, attract the right buyers, and lead to a smoother, more rewarding exit.
This guide walks you through how to prepare, what buyers look for, valuation drivers by business model, and how a seasoned M&A advisor can elevate your results
Navigate Your Exit with Confidence 🚀
Introducing the Exit Navigator
Whether you're 12 months or 12 weeks from exit, our Exit Navigator gives you a step-by-step roadmap to prepare, position, and sell your tech company at maximum value. Built for founders in the $2M–$20M revenue range, this free download includes:
A deal-readiness checklist
Tips for reducing diligence friction
Red-flag risk items buyers spot quickly
Valuation drivers by business model
A 6-phase roadmap from prep to post-close
Make your exit a strategy—not a scramble.
Book your free assessment call HERE or download our Million Dollar Exit Guide for free below 👇
How to Prepare for a Successful Tech Exit
Start early—ideally 6–18 months before you plan to sell. Preparation directly impacts valuation and deal terms.
1. Organize Financials and Metrics
Clean, GAAP-aligned financial statements
Breakdown of recurring vs. non-recurring revenue
Metrics: MRR/ARR, churn, CAC:LTV ratio, margins
Department-level reporting (e.g., sales, R&D)
2. Secure Your IP and Codebase
Ensure IP ownership is clear (founders, employees, contractors)
Minimize technical debt and document your architecture
Clean up licensing, open-source usage, and dependencies
3. De-Risk Operations
Delegate key functions away from the founder
Implement SOPs and systematize delivery
Formalize contracts and customer agreements
4. Optimize Your Revenue Model
Recurring revenue drives value. Consider shifting to retainers, subscriptions, or license-based pricing if you haven’t already.
Valuation Benchmarks by Tech Business Model
Different tech models fetch different multiples—and come with unique strengths and risks. Below is a summary of what buyers typically look for and what can hurt valuation in each case:
Want to know the Gold Standards buyers are looking for? Download our Business Exit Guide HERE.
What Buyers Are Looking For
Tech buyers—whether PE firms, strategics, or search funds—typically want:
Auditable financials with healthy growth
Proven demand and clear ICP
Repeatable customer acquisition and delivery processes
Scalable systems and minimal founder dependence
Clean IP with no legal encumbrances
Bonus: a business that doesn’t need the founder to survive will always command a higher multiple.
The Power of an M&A Advisor in Tech Deals
A specialized M&A advisor does far more than find a buyer. They help you:
Position your business for maximum value
Create competitive tension through outbound processes
Manage due diligence, including legal, financial, and tech review
Negotiate favorable structure—earn-outs, cash at close, rollover equity
Keep deals on track while you stay focused on growth
At Breakwater M&A, our aligned-fee model means we succeed only when you do. We serve as your expert guide, not just your broker.
Avoid These First-Time Seller Pitfalls
Many founders make avoidable mistakes that cost them millions:
Waiting too long to prep
Accepting the first unsolicited offer
Letting emotions drive negotiation
Underestimating how intense diligence will be
Overlooking deal structure in favor of top-line price
Final Thoughts: Own Your Exit
Selling your tech company could be the biggest financial event of your life. Doing it right takes planning, clarity, and expert guidance. Whether you're ready to exit now or just starting to plan, Breakwater M&A can help you maximize value and minimize stress.
👉 Let’s talk about your business and how to prepare for a high-impact exit.
Schedule a confidential call with our team HERE.
FAQs About Selling With Breakwater
How Do M&A Fees Work?
At Breakwater M&A, success fees typically range from 3% to 10%, depending on the size of your business—the larger the business, the lower the percentage. We also charge a modest upfront or monthly fee, which is credited against the success fee when the deal closes. This upfront investment ensures mutual commitment, as we dedicate hundreds of hours to each engagement.
How Is a Business Valued?
Business valuations are typically based on a multiple of the company’s profit. However, calculating that profit goes beyond simple taxable income. We use financial adjustments and industry benchmarks to ensure you understand your true valuation—even if you're not ready to sell today.
What Is EBITDA and Why Is It Important?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a standard metric used to measure a business’s profitability and forms the foundation of most M&A valuations. Accurate EBITDA calculation is crucial when planning an exit or attracting buyers.
What Is the Typical Timeline to Sell a Business?
The process of selling a business generally takes 6 to 8 months, though more complex deals can stretch beyond 12 months. Timing can vary based on industry, deal size, buyer pool, and how prepared your business is at the outset.
Why Should I Hire an M&A Advisor Instead of Selling on My Own?
While it’s possible to sell your business independently, M&A advisors bring structure, buyer access, negotiation leverage, and experience that often results in higher valuations and smoother deals. Even if buyers are approaching you directly, professional representation ensures you don’t leave value on the table.
How Do I Prepare My Business for Sale?
Strong preparation is the foundation of a successful exit. This includes having clean financials, updated contracts, and reducing any operational dependency on the owner. A well-prepared business is not only more attractive to buyers but also commands higher value.
What Industries Does Breakwater M&A Specialize In?
While industry-agnostic, we specialize in helping service-based and software businesses with $1M–$20M in revenue and strong profitability. These are typically founder-led businesses with clean operations and growth potential.
Can You Provide Detailed Case Studies of Similar Businesses?
Yes, we have a library of both public and private case studies. These highlight real-world examples of how we’ve helped businesses navigate successful exits. We’re happy to share examples tailored to your industry or deal size.
What Is Your Experience and Professional Background in M&A?
Since 2019, Breakwater has closed over 50 transactions representing more than $150 million in total deal value. Our team brings a mix of entrepreneurial and investment banking experience, giving us insight from both sides of the table.
How Do You Determine Business Valuation?
Valuation is primarily based on cash flow and profitability, with industry trends and business model playing important roles. Every business is different, and our team customizes valuation models to reflect your specific situation.
How Do You Identify and Approach Potential Buyers?
We use a proprietary buyer database along with advanced tools to identify and vet strategic, financial, and institutional buyers. We also research your competitive landscape to uncover high-value buyers who may not be actively in the market—but are a perfect fit.
What Is a Business Exit Strategy?
An exit strategy is a structured plan for transitioning ownership while maximizing value. We work with business owners to develop a strategy that aligns with personal and financial goals—whether that's retirement, a new venture, or something else.
What Are Common Mistakes When Selling a Business?
Common missteps include inadequate preparation, emotional decision-making, poor valuation assumptions, and revealing too much too soon to buyers. Our process is designed to avoid these pitfalls and keep deals on track.
How Do I Know If It's the Right Time to Sell My Business?
The “right time” is different for every founder. It’s often driven by personal readiness—retirement, burnout, or a shift in priorities—as well as market timing. We help you weigh those factors objectively and make an informed decision.
Does Breakwater M&A Provide Resources for First-Time Sellers?
Yes, we specialize in working with first-time sellers. We provide educational resources, step-by-step guidance, and a clear roadmap so you’re never in the dark throughout the M&A journey.
Related Reads:
How to Find the Right M&A Advisor
A step-by-step guide to choosing the right advisor to maximize value, reduce stress, and avoid costly mistakes.
How to Sell a Business with $500K in EBITDA or More
Learn how buyers assess profitability—and how to position your $5M+ revenue business for premium valuation.
The Million Dollar Exit Guide - Part 1
In this 6 part series, learn how to build your own million dollar exit with actionable steps you can take in planning the exit of your business (it’s never too early to exit plan).
📥 Want the Full Guide?
Get access to The Complete Million Dollar Business Exit Guide (includes our Exit Checklist)—downloadable with one click and packed with tools, checklists, and insights.
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