What Are SaaS Companies?

Software as a Service (SaaS) companies create and deliver software through the cloud. Unlike traditional software businesses, SaaS companies provide continuous access to their tools via subscription models. Subscribers use these platforms for anything from project management to marketing automation to customer relationship management.

A hallmark of SaaS businesses is their scalability. Tools that serve 10 customers can often easily serve 1,000 or 100,000 with relatively minimal increases in costs. This scalability makes them highly appealing in the tech ecosystem, especially for entrepreneurs and investors looking for a stable yet potentially high-growth revenue model.

Why Are SaaS Companies for Sale?

At any given moment, there are SaaS companies up for sale—some thriving, others struggling. But why sell a business with arguably limitless upside potential?

The reasons vary. Founders may have reached their growth ceiling or lack the expertise to take the company to the next stage. Burnout is real—especially in tech startups. Other times, sellers see an opportunity to “cash out” while the valuation is favorable or before competition heats up further.

Then there’s the reality that the founders of SaaS companies are rarely irreplaceable geniuses. The product—the tech itself—often does most of the heavy lifting. In some cases, it just needs a new steward to unlock its potential.

What Buyers Need to Know

Buying a SaaS company isn’t like picking up a charming neighborhood café. The factors to evaluate are different. Here’s what to look for:

Recurring Revenue

The beauty of SaaS lies in its recurring revenue. Check the monthly recurring revenue (MRR) or annual recurring revenue (ARR) stats. Stable or growing numbers mean predictability and potentially long-term growth.

Customer Churn

Churn rate matters. If too many customers are leaving each month, that’s either a product issue or a market problem. You’ll need to investigate whether the exit is due to lack of engagement, poor onboarding, or better competitors.

Operational Structure

Is this a one-person operation where the founder is handling sales, coding, and customer success? Or is there a team in place? The answer could change the level of effort required from you post-acquisition.

Tech Stack and Maintenance

A SaaS company’s tech stack is central to its value. Outdated, custom-built tools designed by a now-departed developer could spell headaches. On the other hand, well-documented, scalable systems lower the operational risk significantly.

Where to Find SaaS Businesses for Sale

For those looking to buy, there are marketplaces specifically designed for SaaS acquisitions. Platforms like MicroAcquire, Empire Flippers, and Flippa are popular with both buyers and sellers. They serve as the first step for many transitioning SaaS founders and would-be owners.

Alternatively, private deals can happen through networking. Founders often connect directly with acquirers through LinkedIn or industry meetups. These off-market deals sometimes offer lower competition but require more personal due diligence.

Not Every SaaS Company Is a Success Story

While SaaS companies are attractive, not every deal will be a home run. Some companies exist as a product of trends or fads—solutions people needed last year but don’t anymore. Others are saturated, battling a sea of competing platforms offering virtually identical functionality.

And then there’s user adoption. Stellar tech with poor marketing is like a violin left unplayed. Marketing doesn’t have to be complicated, but without clear customer acquisition channels, even the best software might gather digital dust.