Selling your SaaS to Micro Private Equity

Micro SaaS Acquisitions—What Founders Should Know

We never sold to PE—but it was on the table.

We experienced a variety of deal structures proposed to us by a handful of these types of acquirers—in the end, we pursued a strategic acquisition.

I had to learn all of this on the job—like most founders—so I’ve written it up to help others wondering how it all works.

In M&A, no two deals are the same.

Everything’s negotiable and everyone's experience is somewhat unique.

What you want from life and work will shape the kind of exit you pursue. Without diving too deep into that here—there are no bad options, only bad deals.

The rise of micro SaaS acquirers has created a new genre in M&A.

These companies buy small, profitable SaaS businesses with the intention to grow them modestly, retain for cash flow or eventually sell for a gain.

They probably won’t raise further VC; their ambitions are often more measured and the way they finance these deals reflect that. As does the valuation multiple.

Let’s dive in.

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What is Micro Private Equity?

Most of us have heard of Micro SaaS, but what is Micro Private Equity?

These are companies—often individuals or small teams—acquiring businesses doing less than $5M ARR, usually with simple cap tables, profitable and run lean.

They’re not chasing billion-dollar outcomes—they’re focused on steady cash flow, operational simplicity and solid net growth with clear levers.

Examples include Tiny and SaaS Group.

Cool concept, you may have seen them pop up on your LinkedIn feed.

Let’s say you’ve built a lean SaaS business, reached meaningful revenue and are starting to wonder what a viable exit looks like.

This post is for founders who’ve built something real, raised little (or nothing), and aren’t chasing the next big round or an IPO—just focused on financial freedom.

Their Model: Two Playbooks

Most of these buyers fall into one of two camps:

1. Cashflow First

This group isn’t chasing unicorns—they’re buying SaaS as cashflow engines.

• Low-risk, capital-efficient plays.

• Optimise existing customers, pricing and ops.

• Likely to keep the business for the long haul.

• Seller notes and earn-outs common to de-risk the deal.

Think: SaaS as a digital rental property.

2. Grow & Flip

These acquirers are still playing the return game—but on a smaller scale.

• Aiming for a $25M–$50M exit in 3–5 years.

• Will invest in growth levers: team, sales, GTM.

• More likely to consolidate similar tools (roll-ups).

• Could target a strategic acquirer down the line.

Think: Micro version of traditional VC playbooks.

Deal Structure

Payout

Buyers will most likely be significantly more financially literate than you.

That is their job after all.

There’s no shortage of creative ways buyers can structure a deal—but here are the most common financial instruments (fun term) these guys use:

1. Seller Notes (Glorified IOUs)

The seller note presents next to no risk on the buy side.

Often, a significant portion of the proposed deal is structured as a seller note—paid out either over time from the company’s cash flow or during a future liquidity event, typically sitting at the top of the preference stack.

Oh yeah… seller notes are unsecured and often accrue little to no interest.

Not an option you should jump at—unless you’re desperate.

2. Revenue Royalties

Revenue royalties are another common structure—and on the surface, they sound a bit more founder-friendly.

Instead of equity or traditional debt, the buyer agrees to pay you a fixed percentage of future revenue until a certain cap is hit (whatever you’ve agreed).

Sometimes royalties don’t kick-in until revenue crosses a set threshold.

All of this is designed to de-risk the buyer and justify whatever number they flash in front of the seller—the shiny headline figure we all get drawn to.

If growth stalls or revenue dips, your payout slows… or stops.

You (the founder) can get creative with the payout logic to mitigate risk too.

3. Equity Rollover

This one’s pretty straightforward so I won’t linger.

In some deals, the buyer may ask (or allow) the founder to retain a minority stake in the business post-acquisition.

4. Cash

In an ideal world, the deal would be pure cash and all upfront.

Every transaction requires a foundation of trust—trust now, trust later. Expecting full cash upfront is naive unless you’re prepared to take a meaty valuation cut.

Valuing a business is obviously hard AF, but risk and certainty are absolutely factors that will affect the final outcome—and what you choose to walk away with.

Expect a lower upfront % unless the asset is exceptional.

I’ve seen everything from 0% to 100% cash—paid upfront, in stages, or over time.

Again, nothing’s off the table.

Backend Financing

It may not impact you directly, but understanding how micro PE firms operate gives useful context for their point of view.

I’ll keep this section concise because it’s a little dry.

1. Personal Capital

Some buyers fund acquisitions directly from their own savings or profits from previous ventures. This will contribute toward the cash component of a deal.

2. Seller-Backed Financing

We’ve touched on this already—seller notes, revenue royalties and equity rollovers.

If the buyer takes a loan against your future payout, it’s a low-risk move for them, with you carrying most of the risk.

3. Partnering with Operators

Buyers often bring in operators (usually as CEOs), who may also invest beyond their equity allocation—sometimes as part of a syndicate deal.

4. Debt Finance

Buyers may use bank loans if the SaaS has predictable MRR, low churn, and clean books. It's rare, since banks are conservative—but possible.

Risk sits with the buyer and repayment often comes from the company’s cash flow.

The reality: it’s almost always a mix of everything.

Valuations: What to Expect

When it comes to valuations in micro PE, manage your expectations.

Our experience was a little different, but from what I gather, revenue multiples typically fall in the 3–5x ARR range. Growth is always important, but profitability is key—without it, the model falls over.

A lot of micro PE firms will pitch you on how quickly they can close—“within 90 days” is a common line. Be cautious—speed isn’t everything.

Take your time—don’t sacrifice a good outcome for the sake of speed. This path isn’t for everyone, and it certainly wasn’t the right one for us.

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TL;DR – What Founders Should Know

• Revenue multiples are typically lower than strategic acquisitions.

• It's a growing segment of M&A—and likely will keep expanding.

• Deal structures, payout terms and backend financing can be complex.

• Often made possible through seller-backed financing.

• Not always founder-friendly—go in with eyes wide open.