Selling a Cybersecurity Business

A cybersecurity services firm is usually valued on how durable the managed service revenue is and how transferable delivery looks without the founder. Buyers tend to pay more when MDR or MSSP revenue is under contract, gross margin is clear after tool costs, and the SOC runs on documented process. For a starting point, use Rejigg’s free valuation calculator, then pressure-test it against your revenue mix and customer concentration.

Add-backs are expenses you ran through the business that a buyer will not need after the sale, so they get added back to profit for valuation. In cybersecurity, common examples are an owner salary above market, one-time legal spend from a client dispute, or a non-recurring tool proof-of-concept. Buyers usually disagree with add-backs that will continue, like paying below market for senior on-call coverage. Rejigg’s QuickBooks import and data room make it easier to document add-backs with receipts and context.

Often yes, if the revenue is steady and a lender believes the business will survive a handoff. Contracted managed services, clean financials, and a realistic transition plan usually help. Lenders get cautious when revenue is mostly one-time projects, customer concentration is high, or delivery depends on one key engineer with admin access to everything. You can model payments and down payment scenarios with Rejigg’s SBA loan calculator before negotiating price and seller financing.

No. Brokers typically charge 5–10% of the sale price for a process you can run yourself with the right structure and tools. Rejigg gives you pre-vetted buyers, digital NDAs, direct messaging, a secure data room, and offer tracking, so you can run a clean process without a middleman. Start with the prepare-to-sell guide, then list once your diligence materials are organized.

Many deals close within a few months from the first serious call, but cybersecurity timelines can stretch when you have clearance approvals, heavily negotiated MSAs, or vendor contracts that are hard to assign. Faster processes usually come from having a ready data room, a clean recurring-versus-project revenue breakdown, and a credible Day 1 SOC coverage plan. Rejigg keeps diligence materials, buyer conversations, and next steps in one secure workspace so momentum doesn’t get lost.

An LOI is a short document that lays out the main deal terms before deep diligence, including price, how you get paid, the timeline, and key conditions. In cybersecurity, buyers often add conditions tied to customer contract review, vendor agreement assignment, incident disclosures, and key employee retention. Push for LOI language that matches how your SOC and vendor stack actually work, so you do less renegotiating later. Rejigg’s negotiation guide covers what to lock down early.

Working capital is the cash the business needs to cover day-to-day timing gaps, like payroll and vendor bills before customers pay invoices. In an MSSP, it depends a lot on billing terms, annual prepayments, and when tool vendors draft payments. Buyers often expect a “normal” level of working capital to stay in the business at close so service does not wobble. A practical approach is to calculate a baseline from the last 12 months and agree on it in the LOI, with support in Rejigg’s data room.

Buyers will discount your value if they think margins rely on fragile partner tiers or discounts that can vanish after a change of control. You can reduce that discount by showing what pricing is locked in contractually, how you’ve handled vendor increases in the past, and whether tooling costs are separated cleanly from service fees. If customer contracts allow you to pass through vendor price changes, pull those clauses and highlight them. Rejigg’s data room is a clean place to store vendor agreements and partner program terms under NDA.

An earnout pays part of the price later if the business hits targets, usually revenue or profit. In cybersecurity, earnouts can get messy because results swing with incident volume, tooling migrations, and integration decisions that the buyer controls. If you consider one, get specific about what revenue counts, how pass-through tools are treated, and what happens if the buyer changes pricing or delivery. Rejigg’s offer comparison dashboard helps you line up earnout terms side-by-side instead of guessing.

Start with what you actually get at closing, then compare the risk in the rest of the structure. Look at seller financing requirements, how earnouts are measured, what has to happen for holdbacks to get released, and how long you’re expected to stay involved. In cybersecurity, also weigh who is most credible on Day 1 tool admin control, SOC continuity, and key staff retention. Rejigg’s deal tracking and offer comparison view puts terms next to each other so details don’t get lost across calls and email.

Most buyers want financial statements, a clear revenue breakdown (managed services, projects, pass-through), customer contracts with renewal terms, vendor agreements for your security stack, and an org chart that shows who owns detection engineering, incident response, and platform admin. Expect requests for incident history timelines, examples of SOC reporting you share with clients, and any requirements tied to cleared or regulated work. Rejigg includes a secure built-in data room so you can control access by buyer and by stage instead of emailing attachments.

A non-compete limits your ability to start or join a competing firm for a set time period. In cybersecurity, buyers often care more about client solicitation and employee poaching than about you working “somewhere in the same city,” since work is often remote. What’s reasonable depends on what you sold, what your role is after close, and how client relationships are structured. Get the scope written clearly so you avoid a vague dispute later. Rejigg’s deal negotiation guide covers the trade-offs.

Yes, but buyers will treat month-to-month as higher churn risk and often ask for protection in the structure, like holdbacks, seller financing, or an earnout. You can still build confidence with long customer tenure, evidence clients renew after QBRs (Quarterly Business Reviews), and sticky integrations like managed endpoint and identity monitoring. If you try to push annual terms right before a sale, do it carefully so it does not feel forced to customers. Rejigg can help you present tenure and renewal patterns clearly in your listing and data room.

Most sellers share anonymized customer details early, then disclose names only once a buyer is serious and under NDA. In cybersecurity, you also need to avoid sharing anything that exposes client environments, log data, detection logic, or access methods during marketing. Rejigg supports this with pre-vetted buyers, digital NDAs before sensitive materials are unlocked, and staged access inside the data room so you control exactly what each buyer can see and when.

Expect buyers to probe whether the SOC works in real life, not just on paper. They usually dig into on-call coverage, who approves containment actions, what your contracts promise during an incident, whether vendor agreements and admin access transfer cleanly, and what your incident history looks like. They will also test whether clients trust the company or one person. Sellers who do well come with specific numbers, named owners, and documents ready to share. Rejigg keeps those materials organized and easy to permission under NDA.

Taxes depend on how the deal is structured, such as selling the company itself versus selling the assets, and how the purchase price gets allocated. Cybersecurity firms often have value tied up in customer contracts, configured tooling, and goodwill, which can affect the allocation discussion. A tax advisor should model outcomes early so you understand what you keep after tax, not just the headline price. Rejigg helps on the process side by keeping offers, deal structures, and key terms organized while you and your advisors evaluate scenarios.

Seller financing means you get part of the price over time, like you’re lending money to the buyer. In cybersecurity, it shows up more when revenue is month-to-month, customer concentration is high, or the buyer wants proof the SOC and tool access will stay stable after close. If you agree to it, negotiate the interest rate, repayment schedule, and what happens in a default. Rejigg’s offer comparison tools help you see the real risk-adjusted value of financing-heavy offers, not just the top-line number.

Most buyers want you around long enough to reassure customers and stabilize operations through at least the first real incident after close. For an MSSP or MDR provider, a good transition plan covers escalation coverage, tool admin handoff, customer communication ownership, and recurring reporting like QBRs. A clear plan often improves buyer confidence and can protect price. Rejigg’s transition planning guide helps you map the first 30–90 days.