Founder exit guide
Founder exit guide
Overview
Aggregators buy software businesses to hold rather than to sell on. They move quickly, pay mostly in cash, integrate lightly and rarely lean on earn outs. That makes them a different kind of buyer, with their own strengths and their own catches.
A software aggregator, sometimes called a consolidator or a serial acquirer, builds a portfolio of small and mid sized software businesses and keeps them. The model depends on buying at sensible prices, leaving each business to run itself under its existing team, and compounding the cash it generates into the next acquisition. Several operate in the UK and across Europe, from listed groups to privately funded platforms, and most are active in exactly the £1M to £10M ARR bracket where founder owned businesses sit.
For a founder, the attraction is simplicity. The process is short, the price is usually paid in full on completion, and the business is not folded into something else. The trade off is price. An aggregator is buying cash flow for the long term, not a strategic fit or a three year flip, and its offer reflects that. It will often be below what a trade buyer with a reason to pay up, or a private equity fund in a competitive process, would offer.
This guide covers how aggregators think, what they look for, how they value, how the process runs and what to check before you accept an offer that looks clean.
How aggregators buy
Aggregators are consistent. Once you understand the model, the offer is rarely a surprise.
A group that acquires software businesses and holds them indefinitely, usually decentralised, with each business keeping its name, its team and its customers. Capital comes from the cash the portfolio generates, from a listed parent or from a long term fund. There is no planned exit, which is the single biggest difference from private equity.
Vertical market software with sticky customers, high gross and net retention, modest concentration, a management team that will stay, and a business that runs without heroics. Growth matters less than durability. A business growing at ten percent a year with ninety five percent retention is often a better fit than one growing at forty percent and burning cash.
Usually a multiple of recurring revenue or of EBITDA (earnings before interest, tax, depreciation and amortisation), set by the cash return the group needs rather than by what a competitor might pay. Offers tend to be disciplined and rarely move far in negotiation. The counterweight is certainty: what is offered is usually what is paid.
Aggregators have done this many times and have a standard process, a standard set of diligence questions and often a standard form of sale agreement. From first meeting to completion can be two to four months. Diligence is thorough on the numbers and light on strategy, because the plan is to keep doing what the business already does.
The founder is usually asked to stay for a period, with a successor developed from inside the business, and then to step back. Reporting goes to the group monthly, capital decisions need approval, and the business is expected to hit a cash target. Beyond that, most aggregators leave the business alone, which founders either love or find oddly quiet.
The gap between the aggregator's offer and what a competitive process might produce. Whether the price is genuinely all cash or includes deferred elements. Who the successor is expected to be, and on what timetable. And whether the group's own funding is secure, because a buyer that lives on a credit line can have a bad year too.
Situations
An aggregator offers certainty and continuity. The question is what you give up in price to get them.The trade at the heart of most aggregator deals.
FAQ
A group that buys small and mid sized software businesses to hold rather than to sell on, usually leaving each one to run under its existing team and name. Capital comes from the cash the portfolio generates, a listed parent or a long term fund. Several are active in the UK and across Europe in the £1M to £10M ARR range.
Often, because they are buying long term cash flow rather than strategic fit or a three to five year return, and their offers are disciplined. In exchange they offer speed, a mostly cash price and continuity for the business. Whether the gap is worth it depends on what a competitive process would actually produce for your business.
Less than other buyers. Most prefer a clean price paid on completion, sometimes with a modest deferred element. Where an earn out is proposed, the same rules apply as with any buyer: get the metric, the protections and the acceleration terms in writing before heads of terms are signed.
Usually very little changes on day one. The business keeps its name, its people and its customers, reports monthly to the group, and is expected to hit a cash target. The founder is normally asked to stay for a period and to develop a successor from within.
Two to four months from first meeting is common, because the buyer has a standard process, standard diligence questions and often a standard sale agreement. That speed is real, but it also means the founder should have the exit readiness work done before the first conversation rather than during it.
Yes. Corinium Advisory helps founders understand what an aggregator offer is worth against the alternatives, prepare the business for a fast diligence process, and decide whether to run a wider process or accept a certain price. It is independent and paid by the founder. Corinium Capital, its parent, is itself a long term acquirer of software businesses, and any potential interest is disclosed at the first conversation.
Read next
The main guide: thinking, preparing and executing a sale, partial liquidity, growth equity or succession, with independent, founder paid help at each stage.
Selling a software businessThe two kinds of buyer pay for different things, structure the deal differently and want different things from you afterwards. Knowing which you are talking to changes how you prepare and what you should ask for.
Selling a Software Business to Private Equity vs TradeExit readiness means having the evidence a buyer will ask for before they ask for it. This checklist covers the six areas every buyer of a UK software business tests, and what good looks like in each.
SaaS Exit Readiness Checklist for UK FoundersContact