Each due diligence plan must be tailored to the specific circumstances of the target company. If a one-size-fits-all approach is employed, the acquirer runs a significant risk of doing too little (and exposing themselves to otherwise avoidable risk factors) or doing too much (and incurring more due diligence expenses than necessary).– Orlando Trott
Unprepared for SaaS due diligence? If it’s your first time facing it, due diligence can be scary, stressful and just plain overwhelming. Thankfully, you’re not the first person to go through it and you won’t be the last!
If you’re new to SaaS due diligence, these 5 articles will get you started!
Starting things off is The SaaS CFO himself, Ben Murray. For the frantic internet traveler looking for guidance on SaaS due diligence, Murray has put together the perfect introductory piece. Short yet insightful. Detailed and accessible. Your SaaS due diligence starts here!
It’s important to have processes and technology in place to manage your business as you scale which in turn will help you in due diligence.– Ben Murray
Midaxo‘s Tom Allen combines powerful data and helpful graphics into this powerful crash course in SaaS due diligence. Intended as a glossary of sorts, this thorough overview exceeds expectations with its attention to detail. With its casually conversational format, the estimated 6-minute read time flies by before you know it. But the information within remains!
One of the main factors that makes SaaS unique is the level of knowledge required to maintain the application.– Tom Allen
Thomas Smale of FE International builds atop the foundation laid in the articles above. Smale dives into the way SaaS businesses are evaluated and explains how this can affect and inform your due diligence process. Not good enough? This article includes a free downloadable SaaS Due Diligence Checklist as well!
With a SaaS business, it is essential to evaluate churn, the source code, intellectual property and the customer support history.– Thomas Smale
In the first of two pieces by our own Justin Talerico, proper preparation for SaaS due diligence is discussed in detail. Though touched on in Murray’s article above, Justin’s take on the matter expounds on the subject even more. If you’re unprepared for due diligence, you won’t be after reading this!
The more buttoned up you are, the fewer anomalous reps and warranties will be in your contract, and the less stressed you will be to negotiate them out or sign off on them.– Justin Talerico
The second of these two pieces sees Justin reflecting on his first encounter with due diligence at ion interactive. Intended as a cautionary tale of sorts, Justin’s article does a brilliant job of preparing founders for the challenges ahead with advice from some who has lived it. Justin’s greatest piece of advice? Remain calm!
Like childbirth, diligence is both exhausting and miraculous.– Justin Talerico
Thanks so much for joining us for another SaaS roundup. We hope to see you here again next Monday!