Software
A 25-year-old union management software company, sold to the right buyer at 5x SDE
A hybrid SaaS and services business with volatile reported profitability. Institutional positioning and a competitive process moved the lead buyer from an initial 2 to 3x SDE offer to 5x guaranteed.
Deal breakdown
- Business type
- Union management software, SaaS and time-and-materials hybrid
- Location
- Northeast U.S.
- Years in operation
- 25 or more
- Annual revenue
- Multiple millions
- Individuals served
- More than 1.5 million
- Ownership structure
- LLC
- From engagement to close
- 203 days
The challenge
The owners were ready to exit, but not to just anyone. After decades of fielding interest from large competitors they were committed to protecting what they had built: a loyal customer base representing millions of union members, and a team that had grown alongside them. The path to market was not straightforward. Profitability had been volatile, weighed down by significant R&D investment and large custom development projects that obscured the true earning power. Only about 30% of the business had converted to a recurring SaaS model; the rest ran on hourly developer and support contracts. To a casual buyer reading an accounting export, the business looked like a question mark.
Key pain points
- No prior valuation and no exit planning
- A volatile profitability history masking true earnings
- A hybrid revenue model requiring explanation rather than a spreadsheet
- No existing framework for presenting customer retention or stickiness
- Seller priorities around employee and customer continuity, which narrowed who the right buyer could be
Phase one
Preparation
We started with more than five years of financial data, not to recast the numbers but to understand the story underneath them, and to answer every question a sophisticated buyer would ask before they could draw their own conclusion.
- Isolated the core profitability drivers across five-plus years, stripping out the noise of R&D cycles and custom project variability
- Quantified what the business already knew anecdotally: retention above 95%, with multiple accounts spanning more than a decade of continuous service
- Built the CIM, teaser, and financial package to institutional standards, so they would hold up in conversations with public companies and private equity at scale
- Reframed the hybrid model as a value creation opportunity rather than a liability: at roughly 30% SaaS penetration, an acquirer able to convert the rest stood to capture meaningful multiple expansion
- Documented the platform’s downstream reach, since the unions served translate into millions of workers whose pay, benefits, and representation depend on the software running correctly
Phase two
Targeted marketing and buyer outreach
Three buyer profiles: large strategic competitors and public companies, private equity with vertical software or labor-sector experience, and individual operators and family holding companies with relevant technology portfolios.
- An institutional-grade teaser and CIM built for sophisticated buyer expectations
- An NDA-gated process controlling information flow to serious parties only
- Multiple rounds of buyer conversations handled before any management meeting, so the sellers stayed focused on the business while we screened for cultural and strategic fit
- More than 20 buyer conversations spanning public companies, private equity, direct competitors, and individual operators
- Management meetings with a qualified subset, and multiple letters of intent creating genuine competitive tension
Phase three
Negotiation and closing
The mandate was clear: price mattered, but so did fit. The sellers had been approached by large competitors for years and had consistently said no. Finding a buyer who would protect employees and honor customer relationships was not negotiable.
- Moved the lead buyer from an initial 2 to 3x SDE offer to a guaranteed 5x SDE
- An earnout tied to revenue performance, positioned to deliver a further 1 to 2x within 12 months
- A paid transition period at two to three times the previous CEO salary
- A buyer aligned with the sellers on employee and customer continuity
The outcome
- For the sellers
- A full exit at the high end of the valuation range, with a buyer chosen to protect the outcome for employees and customers.
- What the process added
- The lead buyer moved from 2 to 3x SDE to 5x guaranteed. The sellers noted that the professionalism of the materials made a material difference when sitting across the table from billion-dollar acquirers.
These figures describe this engagement. They are not a benchmark, a range to expect, or a promise about any other business. What a company sells for depends on that company.
More on how we work in software, or how a sale runs end to end.
Start with the number.
A confidential valuation of your business, at no cost. No obligation, and no pressure about timing.