Who Buys B2B SaaS Companies Between $2–20M ARR?

If you want to maximize the outcome when you sell your B2B SaaS company, the single most important thing to understand is who your potential buyers actually are and why they buy.

Most founders will sell a business only once in their lives (actually, most founders will never sell a business). Buyers, on the other hand, do it for a living. They know exactly what they're looking for, how to frame it, and how to get it at the lowest possible price. If you don't understand what motivates them and what box they're trying to tick when they look at your business you're already at a disadvantage.

Broadly speaking, the buyer universe for B2B SaaS companies in the $2–20 million ARR range can be divided into three main groups:

• Strategic Buyers – large companies, usually in your space, who acquire for synergies, speed, or strategic positioning.
• Private Equity Buyers (PE) – financial sponsors who buy to generate returns for their investors through growth, operational leverage, and multiple expansion.
• Other Buyers – a catch-all for family offices, search funds, and smaller "micro-PE" or holdco buyers.

In this size range, the split in terms of deal volume looks roughly like this:

That 70% number often surprises founders. It shouldn't. In the last decade+, Private Equity has quietly become the dominant buyer of small- and mid-sized SaaS businesses. Their playbooks are repeatable, their capital is abundant, and their deal teams are constantly searching for new assets.

But before we dive into PE, let's start with the group that every founder thinks they want to be bought by — the Strategics.

Strategic Buyers

Strategic buyers are exactly what they sound like: companies who see a clear strategic fit between your business and theirs. They might want your technology, your customer base, your team, your IP, or your position in a niche market they care about. Often, it's all of the above.

These are typically larger companies — either public or well-capitalized private ones — that operate in the same or adjacent space. They buy because it's faster, easier, or cheaper than building the same thing internally.

A classic example: a large marketing automation platform buying a vertical-specific email tool, or a big CRM player acquiring a workflow product in a segment they don't yet serve. They could build it themselves, but that would take two years and fifty engineers. Buying you gets them there next quarter.

The Personality Factor

Here's the first thing to know about strategic acquisitions: they're personality-driven.

Deals at big companies don't just "make sense on paper" — they happen because someone inside wants them to happen. Usually, it's someone like an SVP of Product, a GM of a division, or a rising executive who believes your acquisition will help them hit their own targets (or get promoted).

Strategic acquisitions live and die by internal politics. If your champion loses political capital or suddenly needs to defend their budget, your deal is one of the first casualties.

The Price Myth

Founders also tend to assume that strategics pay the highest prices no matter what. Sometimes they do — but often they don't.

There are two misconceptions here:

• "They can pay more, so they will."
• "Strategic interest automatically means a great offer."

Let's start with the first. Yes, strategics often can pay more — they have larger balance sheets and maybe public-company stock as currency. But that doesn't mean they will.

Corporate development teams (the people whose job it is to buy companies) are incentivized to pay as little as possible. Their bonuses, reputation, and internal narratives depend on being seen as "disciplined acquirers," not overpaying empire-builders.

That leads directly to the second misconception, assuming that strategics will always pay a high price. Many founders make the mistake of being too eager when a strategic comes knocking — building relationships too early, being overly transparent about their plans, or (worst of all) asking to be acquired.

When you do that, you anchor yourself as a low-price target. Corp Dev will assume you're looking for an exit and adjust their offer accordingly. The result: instead of the "synergy premium" you imagined, you get a lowball offer justified by vague talk of "integration costs" and "alignment risk."

The Ego Problem

Here's another dynamic that trips founders up: ego and internal narrative.

Imagine a VP at a large SaaS company convinced the board to approve your acquisition for, say, $25 million. They told everyone it was a great deal because "the founders are looking for a soft landing — maybe more like an acquihire."

If you later push hard for a $50 million valuation, that VP may simply kill the deal rather than admit they misjudged the situation. The internal optics of "we got played" matter more than the actual financial logic.

That's why strategic deals often die at the one-yard line — not because of you, but because someone inside the acquirer doesn't want to look foolish.

Private Equity Buyers

If Strategics are driven by personalities, Private Equity (PE) buyers are driven by playbooks.

They're professional buyers — methodical, process-oriented, and repeat players. Unlike Strategics, who might do one or two acquisitions a year, the average mid-market PE fund will evaluate hundreds of potential deals and close several annually. For founders selling in the $2–20M ARR range, PE is by far the most common type of buyer you'll encounter.

Broadly, PE acquirers in this range fall into three groups:

• Tuck-In Buyers – funds buying you to bolt onto an existing portfolio company.
• Platform Buyers – funds buying you as a standalone foundation to build upon.
• Value Buyers – funds (or holdcos) buying for price efficiency, cash flow, or "fixer-upper" opportunities.

Let's take these in turn.

Tuck-In Buyers

Tuck-Ins are typically larger PE firms that already own a significant software platform. They're looking for complementary products, customer segments, or geographies to bolt onto that existing portfolio company they already own (the "platform") often to accelerate growth or deepen market dominance.

If you think of Strategics as "corporate buyers looking for synergy," a Tuck-In buyer is the Private Equity version of that same idea — but without the bureaucracy.

They're what I call deal-strategic: they buy with clear logic around synergy, but they also have deal teams, governance processes, and capital earmarked for exactly this kind of transaction.

Why They Buy

Tuck-Ins typically target companies that:

• Address a niche or vertical the platform doesn't yet cover.
• Offer a feature set or technology that's complementary and immediately cross-sellable.
• Have a loyal customer base with strong retention metrics.

They're often surprisingly price-insensitive when the strategic logic is strong. If your product will drop neatly into an existing go-to-market motion and unlock new upsell potential, a Tuck-In buyer may happily pay a "strategic premium" — even above what most founders assume PE would ever pay.

Deal Dynamics

Tuck-In buyers move fast. Unlike Strategics, who need a dozen internal approvals and PowerPoint decks before they can even make an offer, these teams have acquisition baked into their DNA.

They already know what good looks like — and they've likely done this ten or twenty times before. That experience makes them decisive, disciplined, and often much easier to close with.

Example

Imagine a PE firm that owns a horizontal marketing automation platform doing $50M ARR. They identify your company — a $6M ARR niche SaaS that dominates a specific vertical, say real estate brokerages — as the perfect complement. By tucking you in, they get immediate vertical depth, cross-sell potential, and a new growth narrative for their eventual exit.

Your company plugs directly into their platform, and the combined entity might trade at a higher multiple on exit. That multiple expansion effect (more on that below) often justifies paying up front.

Platform Buyers

Platform Buyers are the funds looking to acquire a company large enough and growing fast enough to stand alone as a new "platform investment." Over time, that platform will likely become the anchor for future tuck-ins.

What Makes a Platform?

There are two main ingredients:

• Scale — enough ARR to justify attention from investment committees.
• Growth — enough momentum to support the "buy-and-build" story PE investors love.

Every fund has its own thresholds for what qualifies as a platform. It doesn't always correlate with Fund (AUM) size, but a reasonable rule of thumb:

• Smaller funds (<$300M AUM): may go as low as $3–5M ARR.
• Mid-sized funds ($300M–$1B AUM): typically want $10–20M ARR+.
• Larger funds (>$1B AUM): generally won't look seriously below $50M ARR unless growth is exceptional.

Growth matters almost as much as scale. It's extremely rare for a PE fund to invest in a company with flat or modest growth as a platform, no matter its ARR.

To be blunt: a $20M ARR company growing 5% per year won't be a platform. A $5M company growing 70% might.

Why They Buy

Platform Buyers are looking for companies with:

• Strong product-market fit and low churn.
• A stable team that can scale with new capital.
• Clean financials and repeatable go-to-market motion.
• Clear adjacencies — other small SaaS targets that could be added later.

In a way, they're buying the engine they'll use for future deals. Your company becomes the beachhead: the operational core, the culture, and often the brand they'll use to expand into a larger ecosystem.

Founder Experience

Platform acquisitions often come with a different founder experience. You may stay on as CEO post-close, lead subsequent acquisitions, or participate meaningfully in the next exit.

In that sense, these deals can be career-expanding. Instead of "selling out," you're effectively partnering with a PE fund to scale a much larger enterprise.

That's also why the rollover equity component (covered in the next chapter) tends to be higher — and potentially more valuable — in platform deals.

Value Buyers

Not all PE buyers are looking for growth and are willing to pay up for it. Some specialize in finding underperforming, misunderstood, or just plain cheap assets. These are the Value Buyers, and while their checkbooks are just as real, their offers tend to be much smaller.

There are three main flavors that come into play in B2B SaaS M&A:

• Turnarounds
• Cigar-Butts
• Steals

Let's unpack each.

Value Buyer: Turnarounds

Turnaround specialists buy struggling or stalled companies and rebuild them.

They're typically led by operators who are good at identifying what's broken — whether that's sales execution, product focus, or team structure — and fixing it. Note that they can be quite picky buyers - they're not looking to acquire any struggling business - they usually want to find a business that is struggling in a specific way that they have experience fixing.

If your growth has plateaued or you're breakeven but not profitable, these buyers may see an opportunity to impose discipline, cut costs, or radically change sales motion. Often, they're willing to do the thing you probably know you should do, but don't want to.

It's rarely the most lucrative exit, but it can be the fastest way out for a founder who's burned out or facing capital constraints.

Value Buyer: Cigar-Butts

The term "cigar butt" comes from value investing — finding a discarded cigar with one good puff left in it.

In SaaS, these are buyers who acquire low-growth, low-profitability companies for 1–2X ARR (sometimes less), run them lean, and treat them as steady cash-flow plays.

The biggest name in this category is Constellation Software, which has built an empire buying thousands of small vertical SaaS businesses at modest multiples and holding them indefinitely.

Cigar-butt buyers are rational, disciplined, and long-term focused. But they don't pay much and they won't chase your deal if there's competitive tension.

Value Buyer: Steals

Finally, there's the "Steal" category — and unfortunately, it's larger than most founders realize.

These are buyers who make their returns not by improving the company, but by buying it below market value. Which, let's be fair, is a lot easier than fixing business fundamentals!

It's surprisingly easy for this to happen. The sub–$20M ARR M&A market is opaque, unstructured, and full of mismatched expectations. Many founders run informal, one-buyer-at-a-time processes and never really test the market.

If you only speak to a handful of value buyers, you'll start to believe their version of "market." And if your investors or advisors aren't experienced in SaaS M&A, you may not know that actually your business is probably worth 6x instead of 3x ARR.

That's where founders get taken. And it happens a lot.

When you see firms that send hundreds of cold emails a month or run "permanent capital" holdcos, that's often what they're doing — fishing for steals.

The Takeaway on Value Buyers

There's nothing inherently wrong with selling to one — if the fit, timing, and your personal goals align. But you should know what game you're playing.

If you've built a healthy SaaS business and you're still growing, you shouldn't be priced like a cigar butt. And if you are, something's gone wrong in your process or your buyer pool.

Other Buyers

Outside of Strategics and Private Equity, there really aren't that many other serious acquirers of B2B SaaS companies between $2 million and $20 million in ARR.

But there are a few niche categories that show up often enough to be worth mentioning — Family Offices and Search Funds

Family Offices

Family offices manage the wealth of a single high-net-worth family, often one that built its fortune in a particular industry.

Occasionally, if your product happens to touch that industry, they'll see your company as an attractive way to re-enter a market they know well, but with a modern SaaS angle.

A family that made its wealth in logistics, for instance, might buy a $5 million ARR freight-management SaaS to stay close to the space without having to run trucks anymore.

The challenge is that family offices are inconsistent. Some are sophisticated quasi-PE investors with dedicated investment teams. Others are effectively two cousins and a spreadsheet. They often move slowly, can be indecisive, and don't always have the operational infrastructure to close deals efficiently.

When they do transact, however, the experience can be pleasant: less financial engineering, more long-term orientation, and less pressure for an immediate exit.

Still, family offices are the exception, not the rule. In the SaaS world, they account for a tiny fraction of transactions - maybe a handful of deals a year in this size bracket.

Search Funds (a.k.a. ETA Buyers)

Then there are Search Funds, also known as ETA (Entrepreneurship-Through-Acquisition) funds.

These are typically small pools of capital raised by an individual (often an MBA grad or ex-consultant) whose goal is to buy a business, step in as CEO, and run it for the long haul.

It's a great model for main-street businesses like HVAC contractors or pest-control companies. For SaaS? Less so.

Most search fund investors are traditional small-business backers who understand service businesses, not subscription metrics. They tend to be uncomfortable with high-multiple, high-growth assets and often propose deal structures that make little sense in SaaS — things like heavy seller financing or aggressive earnouts.

So while search funds show up in nearly every process they almost never win competitive deals. They simply can't match the valuation, speed, or sophistication of experienced PE or strategic acquirers.

If you get an LOI from a search fund, take it seriously enough to read it, but view it as a data point, not a baseline for market value. And if you do take an offer, make sure that your banker talks to the investors behind the searcher to make sure they're as enthusiastic about acquiring a SaaS business as the searcher is.

The Founder Takeaway

If there's one thing to remember from this chapter, it's this:

The market for B2B SaaS businesses between $2 million and $20 million ARR is deep — but wildly uneven.

You'll encounter a spectrum of buyers, from disciplined strategics and institutional PE to opportunistic holdcos looking for a steal. They all use the same words ("we're founder-friendly," "we create long-term value," "we back great teams") but they're playing very different games.

Understanding which game you're in changes everything:

• It determines how high your valuation can realistically go.
• It shapes what deal structures will be on the table.
• It influences how likely the deal is to close — and on what timeline.

The differences look academic until you're living them. A strategic deal may sound glamorous — big name, big brand — but it's fragile and political. A tuck-in might pay just as well and close twice as fast. A platform buyer could offer both cash and a second-bite upside through rollover equity.

And then there are the value buyers, quietly buying good companies cheap because founders didn't know who else to call.

This understanding isn't just intellectual. It's money in your pocket.

The opacity of this market is exactly why so many founders undersell. Without context, a 3x offer from a value buyer sounds fine — until you realize another buyer in a different bucket would have paid 6x.

The Bottom Line

Buyers aren't generic. Each type sees your business through a different lens, with its own constraints, incentives, and politics. Your job — or your banker's — is to map that landscape, get in front of the right subset, and run a disciplined process that surfaces the true market clearing price. That's the real art of SaaS M&A at this level: understanding not just what your company is worth, but who it's worth that much to.