Selling a Software Development Business

Most software development agencies price off a multiple of seller’s discretionary earnings, which is the profit a working owner takes home after adding back one-time and owner-specific expenses. The multiple usually swings based on project margin proof, customer concentration, renewal history on support retainers, and whether delivery depends on one or two senior people. Start with the free valuation calculator, then pressure-test how much revenue would survive a founder step-back.

Common add-backs in a dev shop include one-time software or hardware purchases, non-recurring legal fees, and recruiting costs tied to a specific hire. Owners sometimes add back above-market owner pay, but buyers usually ask what it costs to replace you with a delivery leader or sales lead. If an add-back is really “we don’t invest in PM, QA, or security,” buyers often treat it as a future cost, not extra profit.

No. Brokers typically charge 5–10% of the sale price for a process you can run yourself with the right tools and buyer access. Rejigg gives you pre-vetted buyers, digital NDAs, direct messaging, deal tracking, and a secure data room. It’s free for sellers because buyers pay. For the step-by-step, start with the Owner’s Guide to preparing for a sale.

Often, yes. SBA lenders usually want stable cash flow, clean books, and a business that still runs if the owner stops being the closer and the lead architect. They will look closely at client contracts, renewal patterns on retainers, and team stability because they are underwriting repayment risk. You can model likely payments with the SBA loan calculator and work backward into a realistic price and terms.

A straightforward dev shop sale often takes a few months from listing to close, and longer when you need cleanup around IP assignments, client consent clauses, or financial categorization. The slowest parts are usually diligence proof points like project margin support, signed contractor paperwork, and contract summaries. Rejigg helps by letting you build a buyer-ready data room early and share it in stages. See the steps in Due Diligence and Closing.

Buyers usually ask for profit and loss statements and balance sheets, plus enough detail to understand delivery costs and owner add-backs. In software services, they commonly want payroll by role, contractor spend, and revenue by client and by work type, such as fixed-bid, time-and-materials, and retainers. If your books are in QuickBooks, Rejigg’s QuickBooks integration can import and organize it into a structured data room without rebuilding everything in spreadsheets.

An earnout means part of the purchase price is paid later if the business hits specific targets, often tied to revenue retention or profit over 12–24 months. In dev shops, earnouts show up when the buyer is nervous about client churn after the founder steps back or about fixed-bid projects that could go over budget. If you accept one, get clear on the math, timing, and what control the buyer has over staffing and pricing. Rejigg’s deal comparison view helps you line up earnout terms side-by-side.

A working capital adjustment is a closing true-up so the business transfers with a normal level of short-term assets and liabilities, like invoices you are owed and bills you still need to pay. In dev shops, the debate often centers on accounts receivable timing, prepaid retainers, and contractor payables. If you bill by milestones or take deposits, talk through how those cash flows will be treated so closing does not surprise you. The best time to push for clarity is during deal negotiation.

Many small software services deals end up as asset sales because buyers want to reduce exposure to old liabilities, but the best structure depends on your entity, contracts, and taxes. In dev shops, the practical question is whether client agreements, cloud accounts, and subscriptions can be transferred cleanly. Talk with a CPA and attorney early so structure does not become a last-week fight. You can run the buyer process yourself on Rejigg either way.

Most buyers expect financial statements, client contract summaries, statements of work, a client list with revenue history, and payroll and contractor summaries. For dev shops, also include signed IP assignment agreements, a repo inventory, a plain-English delivery and release walkthrough, and security and access documentation that prevents Day 1 delays. Rejigg includes a built-in secure data room so you can share items in stages and track buyer access without sending attachments.

Buyers often ask for non-compete and non-solicitation agreements because relationships and talent drive the value in a dev shop. What’s reasonable depends on your niche and geography, and it should match what the buyer is actually paying for. If you plan to keep consulting, join another agency, or build a product, negotiate clear carve-outs so you do not block your next chapter by accident. Use the negotiation guide to surface these early.

When a client contract requires consent to transfer the agreement to a new owner, buyers want a plan for when and how you approach that client. Many sellers wait until after signing a letter of intent so there is a real buyer and a clear story. Timing matters because one delayed consent can push a closing. Rejigg helps you stay confidential longer with buyer vetting, NDAs, and staged disclosure until you are ready for those conversations.

Most buyers want the team to stay because the team is what keeps projects shipping and retainers renewing. The real questions are comp alignment, career paths, and who becomes the day-to-day leader once you step back. If you have key engineers or a key delivery lead, expect the buyer to discuss retention bonuses, title changes, or clearer growth tracks. The transitioning guide covers a clean communication sequence for the team.

Taxes depend on the deal structure, your entity type, and how the price is allocated across things like goodwill versus specific assets. In services businesses, a lot of value is usually goodwill, but allocation is negotiated and can change what you take home. Earnouts and seller financing can also shift when you recognize income. Bring in a CPA early so you can model outcomes before you accept terms, then use Rejigg’s offer comparison to focus on after-tax proceeds, not just headline price.

Enterprise value is the headline value of the business, but your proceeds can change after debt payoff, working capital adjustments, fees, and any earnout or seller financing. In dev shops, surprises often come from accounts receivable timing, prepaid retainers, and how in-flight projects are treated at close. When you compare offers, line up cash at close, contingent payments, and timing side-by-side. Rejigg’s deal tracking view makes this easier to see in one place.

You usually do not need a heavyweight technical audit to list, but you do need to be ready for a buyer’s technical review. A short walkthrough of deploys, incident handling, access control, and environment separation answers most questions. If you know there is meaningful technical debt, document it and estimate what it takes to fix because buyers price unknowns aggressively. Keep that narrative in your Rejigg data room so every serious buyer gets the same story.

Confidentiality comes from controlling who sees what and when, and avoiding forwarded-email diligence. Limit early outreach to vetted buyers, require NDAs before sharing sensitive details, and stage disclosure so client names and contracts only show up once the buyer is real. Rejigg supports this with buyer vetting, digital NDAs, and a permissioned data room. For a step-by-step process, start at finding your dream buyer.