Buying a software business is a critical project as it is a complex business that needs good technical knowledge as well as an understanding of the practical business applications. A software company is asset light so you normally pay mostly goodwill especially when a software company is very successful and highly profitable. The longer the customer contracts the higher the valuation a buyer will pay. We see higher multiples being paid for the new SAAS modules as the customer contacts are normally stronger and more stable as in traditional companies. As a medium sized software company you have to grow to be able to compete against the larger players in the industry. Focus on some niche industries can be a smart way to go. Growing via acquisitions and hence buying software companies in countries where you are not active yet can be a good strategy. However, due to the diversity of the industry you have to have a large network of contacts to be able to buy the right software company in the market.
Let us help you with buying an software company
Firstly, it is important to describe exactly what type of software company you want to buy. We need to know which size, location and type of software activity you are after. We also need to understand how you will integrate the technical platform of the seller. After this it is important to get in contact with the right targets. We can help you here as we have a large network of software business owners that are open for a sale. Further, we can help you find the specific target that fits your company needs best.
What matters most when buying a software company is to make sure you are talking to a software company that has the right profile and is suited for you. It makes sense to invest a bit more time upfront to get in touch with a larger array of companies. In this way you are sure to find the company with the best fit. The plans of the business owner of a software company are crucial as this person has build the company to where it is now. Further, we suggest to check the valuation expectations of a seller early on in the process to ensure these are around market levels. You should definitely get legal and tax advice during the process of a software business purchase as the contracts (SPA and or LOI) are a crucial part of the transaction and these should be well drafted.
The software segment is a part of the ICT industry with special attention from the CFIE team. For buying an ICT company our scope goes across all of Europe. Our local M&A advisors on the ground have contacts with several ICT business owners which are open for a sale. If you have serious plans for acquiring a company in ICT or software please visit the section ICT companies for sale. Maybe there are already companies for sale in our directory that fit your requirements. We can also make an anonymous buy side profile for you free of charge and you will be informed if suited opportunities come up.
The team of Corporate Finance in Europe has large experience in software and has a team on the ground to help with business sales and purchases in software. Our people have decades of software experience themselves and are able to help with buying and selling software companies.
Feel free to contact us for information about buying a business in software. We know your industry and speak your language. We know the business owners that are considering selling a business and the ones that are already actively on the market open for a sale. The advisors of CFIE are here to help you to get the deal done when purchasing a software company.