B2B SaaS M&A FAQ

Private Equity dominates with roughly 70% of deals, strategics account for about 20%, and other buyers (family offices, search funds) make up the remaining 10%. This surprises many founders who assume strategics are the primary buyer.

No. While strategics can sometimes pay more due to larger balance sheets and synergies, they’re often incentivized to pay as little as possible. Corporate development teams get rewarded for being “disciplined acquirers.” A strategic buyer who thinks you’re desperate for an exit may actually lowball you compared to PE buyers.

Strategic deals are personality-driven. They happen because someone inside—an SVP, GM, or rising executive—wants them to happen. If that internal champion gets fired, promoted, leaves, or loses political capital, your deal can evaporate overnight. Strategic deals are never more than 50/50 to close, even the day before closing.

Tuck-in buyers are PE firms acquiring you to bolt onto an existing portfolio company. Platform buyers are acquiring you as a standalone foundation they’ll build around with future acquisitions. Tuck-ins move faster and often pay strategic premiums for the right fit. Platform deals may offer more rollover equity and longer-term involvement for founders.

Tuck-ins are “deal-strategic”—they buy with strategic logic but without corporate bureaucracy. They have deal teams, governance processes, and capital earmarked for exactly this type of acquisition. When the fit is strong and synergies are clear, they can move fast and pay up without getting tangled in internal politics.

It varies by fund size. Smaller funds (<$300M AUM) may consider $2–5M ARR. Mid-sized funds ($300M–$1B AUM) typically want $10–20M ARR+. Larger funds (>$1B AUM) generally won’t look below $50M ARR unless growth is exceptional. Growth rate matters as much as scale—a $5M company growing 70% might qualify where a $20M company growing 5% won’t.

Value buyers include turnaround specialists (who fix broken companies), cigar-butt buyers (who acquire for 1–2x ARR and run lean for cash flow), and buyers looking for “steals” (below-market deals). There’s nothing inherently wrong with these buyers if timing and goals align, but if you’re growing well, you shouldn’t be priced like a distressed asset. If you are, something’s wrong with your process.

Search funds (ETA buyers) typically have small capital pools and investors who understand service businesses, not SaaS metrics. They’re usually uncomfortable with high-multiple, high-growth assets and propose deal structures (heavy seller financing, aggressive earnouts) that don’t make sense for SaaS. They can’t match the valuation, speed, or sophistication of experienced PE or strategic buyers.

Everyone says they’re “founder-friendly.” Strategics, PE funds, value buyers, and opportunistic holdcos all use the same language. What matters isn’t what they say—it’s which game they’re actually playing. A 3x offer from a value buyer may sound fine until you realize another buyer type would have paid 6x. Focus on understanding buyer motivations, not their marketing.

The biggest mistake is running an informal, one-buyer-at-a-time process. The sub-$20M ARR M&A market is opaque and unstructured. If you only talk to value buyers, you’ll start to believe their version of “market.” Run a disciplined process that tests the full buyer landscape—strategics, tuck-ins, platform buyers—to surface the true market clearing price.

Buyers aren’t generic. Each type sees your business through a different lens with different constraints, incentives, and politics. Your job—or your banker’s—is to understand not just what your company is worth, but who it’s worth that much to. That’s the real art of SaaS M&A: mapping the landscape and running a process that surfaces the right buyers.

Corporate development (corp dev) is the team inside a large company responsible for finding and executing acquisitions. They evaluate hundreds of targets per year but close very few. Importantly, corp dev teams are incentivized to pay as little as possible—their bonuses and reputations depend on being seen as “disciplined acquirers,” not generous ones. When a corp dev team reaches out, remember: they are professional buyers negotiating against you, a likely first-time seller.

Rollover equity means reinvesting a portion of your sale proceeds—typically 10–40%—into the acquiring entity’s equity rather than taking all cash at closing. It’s most common in Private Equity deals, especially platform acquisitions, where the buyer wants you to have “skin in the game” and share in future upside. If the PE firm later sells the combined entity at a higher multiple, your rollover stake can be worth significantly more than the cash you gave up—but it’s not guaranteed.

Multiple expansion is when a buyer acquires your company at one valuation multiple (say 5x ARR) and later sells the combined entity at a higher multiple (say 8x ARR). The difference is pure value creation without growing the underlying business. PE firms love tuck-in acquisitions partly because combining your niche product with their larger platform can justify a higher exit multiple for the whole entity. This “1+1=3” effect is one reason tuck-in buyers sometimes outbid strategics.

Don’t signal eagerness. When you ask to be acquired or appear too willing to exit, you anchor yourself as a low-price target. Corp dev teams will assume you’re looking for a way out and adjust their offer downward. Instead, acknowledge interest politely but don’t engage in a one-buyer-at-a-time conversation. Get an experienced M&A advisor who can test the broader market and create competitive tension. An unsolicited offer is a data point, not a baseline for your company’s value.

It depends on the deal type. In platform acquisitions, founders often stay on as CEO, lead future tuck-in acquisitions, and participate meaningfully in the PE firm’s eventual exit—making it potentially career-expanding rather than a “sell out.” In tuck-in deals, the transition period is usually shorter, and your role may be absorbed into the existing platform’s leadership. In either case, the specifics—title, authority, earn-out conditions, and time commitment—are negotiated as part of the deal and should be addressed explicitly in the LOI.

Constellation Software (CSI) is a Canadian public company that has built a multi-billion-dollar empire by acquiring thousands of small vertical SaaS businesses at modest multiples—typically 1–2x ARR—and holding them indefinitely. They’re the archetypal “cigar-butt” buyer in SaaS: disciplined, long-term focused, and rational, but they don’t pay premium prices and won’t chase your deal if there’s competitive tension. If Constellation or one of its operating groups (Volaris, Harris, etc.) approaches you, know that their offer likely reflects the bottom of your valuation range, not the market clearing price.