Software Sales Tips by Matt Wolach

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Scale Your SaaS

How to Achieve Your Dream Exit – with Christine McDannell

EPISODE SUMMARY

Getting a dream exit is the ultimate end game for many software founders. There are multiple reasons behind each exit, but the goal for all is the same. How do you ensure that you get your money’s worth when you finally put your SaaS, which you worked so hard for, up for sale?

In this episode of Scale Your SaaS, The Magnolia Firm Founder Christine McDannell talks about the right mindset and courses of action to take when exiting your business with host and B2B SaaS Sales Coach Matt Wolach. She also shares a lot of juicy insight about exiting the industry and how to extract the most value out of the sale. Get ready to ride off into the sunset with a winning exit!

PODCAST-AT-A-GLANCE

Podcast: Scale Your SaaS with Matt Wolach

Episode: Episode No. 264, “How to Achieve Your Dream Exit – with Christine McDannell”

Host: Matt Wolach, a B2B SaaS sales coach, Entrepreneur, and Investor

Guest: Christine McDannell, Founder, Business Intermediary & Broker at The Magnolia Firm

TOP TIPS FROM THIS EPISODE

Focus on Building an Amazing Product

The biggest concern of many entrepreneurs is figuring out the numbers to aim for when selling their software businesses. But a company’s valuation is not necessarily what it will sell for. After all, the worth of a company is what the buyer is willing to pay for and not what the owner thinks it should be sold for.

Of course, that does not mean that you should undersell. But this kind of thinking is the same as caring more for the outcome than focusing on the process. If you concentrate on refining your products and providing the best service, the profits will follow, which will mean a higher value for your software business.

Document Your Process and Keep it Simple

A solid process is necessary for all software companies, whether the owner exits it or not. It is the reason behind the continued success of a company. It is highly recommended that a CEO write it down as a standard operating procedure to make onboarding and training more efficient.

Another benefit to having a company manual is that it will be beneficial when exiting and may even shorten the transfer process. Everything is already in it, so the new owners will just have to refer to it. McDannell adds that it would be better if the guide were so simple that a 10-year-old would be able to follow it.

Plan Your Exit Early

They say that failing to plan is planning to fail. While you can most definitely outsource planning or even the entire process of exiting your software company, it will still be a much better ordeal for everyone involved if you plan for it earlier before you even decide if you want to sell.

Regardless of whether it is for business or not, delaying a task and doing it right before a deadline can be a recipe for disaster. Sometimes it works out, but there would usually be gaps which means you will not get the most value out of the transaction when you exit. Planning your exit would mean knowing what milestones to hit to ensure you are on track.

Work Yourself Out of the Company

The most crucial step business owners can take when exiting is ensuring the business can function well without them. Exiting a business does not mean leaving the company when the buyer signs the dotted line. Training is still necessary for the takeover to be successful.

Some SaaS founders find themselves in a position where they must remain in their company for one or two more years. But if you set up the right processes and systems, you can truly step out of your role less than three months after the sale. It’s also best to set this up before you even decide to exit for a smooth transition. 

Sell at the Start of the Burnout

There is no definitive right or wrong time when it comes to selling your SaaS. McDannell even jokes that sometimes she wishes she has a crystal ball to be able to answer when is the best time to sell a company. She states, however, that a good indicator of when it is time to exit is right when you are beginning to get burnt out.

McDannell explains that you want to be still enthusiastic with your business when you are selling it because buyers would feel that. For those that will sell now, McDannell attests that there is a lot of demand in the market. She also mentions that some founders who chose to wait sold at the exact purchase price because demand lowered.

EPISODE HIGHLIGHTS

The Exit Industry is Currently Thriving

Despite the ongoing recession, many buyers are still flocking to markets to buy software businesses for sale. In hindsight, most would think people will be more conservative with their spending. But the companies for sale have stable cash flows, which means it gives buyers financial security.

Most Buyers are New to Entrepreneurship

The pandemic gave many of us a chance to reflect on our life and work on other things that also matter. As a result, some people can no longer see themselves working a nine-to-five job as they want more flexibility. This is why many buyers in the exit market are first-time business owners.

Young Founders Tend to Exit After Five Years 

Young business owners see themselves running the company for less than twenty years. In fact, they usually exit after five years. They’re either a visionary who wants to build the next great company from scratch or simply want to take on new endeavors that are not necessarily business-related.

TOP QUOTES

Christine McDannell

[06:30] “What your company is worth is what somebody’s willing to pay for it.”

[07:54] “I never ever want to bully or pressure a seller into taking a lower price, or taking them to market and then pushing them down on price.”

[11:08] “I’m passionate– even more passionate about helping somebody that’s getting into entrepreneurship for the first time.”

Matt Wolach

[09:43] “You need to have the right process, right formulas in place, the right playbook, so you can bring somebody in. They can take over, they can walk through that exact same thing– and sell just as well as you.”

[14:10] “They’re willing to pay more… you’re gonna have more buyers, if you have it set up. And it looks so good. It looks great. You’ve got the process lined out and looks like someone could just take over and make it happen.”

LEARN MORE

To learn more about The Magnolia Firm, visit: 

https://themagnoliafirm.co/

You can also find Christine McDannell  on LinkedIn at: https://www.linkedin.com/in/christinemcdannell/

For more about how host Matt Wolach helps software companies achieve maximum growth, visit https://mattwolach.com/