How to Sell a No Code Software (A Definitive Guide)
November 3, 2022
No-code software has taken the world by storm, allowing non-technical entrepreneurs to break into the SaaS industry and shake things up.
Reduced dependency on code has lowered the barriers to entry into app development and has dramatically sped up production time, earning favor with citizen developers and professional programmers alike.
With benefits like these, it’s no surprise that Gartner predicts no-code and low-code will be responsible for over 70% of application development by 2025.
As the no-code movement continues to gain traction, an important question has arisen. “How do I sell my no-code software business?”
If this question has been playing on your mind, you’ve come to the right place. In this article, we’ll outline the various steps you need to take to make a triumphant exit from your no-code business.
What Is a No-Code or Low-Code Software?
Before we dive into how to sell no-code software, it’s important to clarify what no-code software actually is.
As the name suggests, no-code software refers to apps and websites that have been built and maintained without the creator having to type a single line of code. This is done via no-code development platforms like Bubble that use visual, drag-and-drop elements to help users build functional apps.
Low-code platforms operate on a similar premise, using visual elements to speed up application development while also allowing users to personalize and scale their creations using custom code.
The exit steps outlined in this article apply to both low-code and no-code businesses.
Why Should You Sell Your No-Code Software?
As the no-code industry continues to gain momentum, some people may question why you would want to sell your no-code business.
Having helped many entrepreneurs navigate their exits, we’ve learned that there are often two main motivations for selling: personal reasons and business reasons.
Personal Reasons
As exciting as growing a business can be, other things in life often take priority over your business.
Many entrepreneurs decide to sell because they want to buy a house, pay for their children’s college tuition, or retire early. Other sellers are looking to gain more freedom to spend time with their growing families or travel the world.
Some sellers have simply lost their passion and interest in their software, or have maxed out their capacity to grow the business any further.
By exiting your business, you could earn a hefty sum of money that can help you pursue your personal goals and live your life on your terms.
Business Reasons
Entrepreneurs are typically not the sort of people who rest on their laurels and let opportunities pass them by.
Selling your software gives you financial leverage that you can use as growth capital to start a new business, or to fund the acquisition of a bigger, better business.
Self-funding your new business with the proceeds of your exit means you don’t have to apply for loans or take on unwanted investors. This gives you a solid foundation from which to build your new business.
Is There a Market for No-Code Businesses?
There’s no denying that there is a lot of money to be made buying and selling SaaS businesses.
Intuit acquired MailChimp for $12 billion, Square bought Afterpay for $29 billion, and in perhaps the most-talked-about SaaS acquisition of the year, Elon Musk acquired Twitter for a whopping $44 billion.
But you don’t have to be a tech industry bigwig to take advantage of this thriving market.
Building and selling no-code applications can give you the upper hand over other SaaS sellers. Whereas buyers of traditional SaaS businesses need to have programming experience or the funds to hire professional developers, your no-code software can be marketed to a much wider pool of non-technical buyers.
We’ve seen buyers’ hunger for no-code and low-code software firsthand on our marketplace, with a recent seller walking away with a $1390,000 all-cash exit after listing their low-code business on our marketplace.
With the global low-code development platform market forecast to grow to $94.75 billion by 2028, there is no shortage of demand for no-code and low-code businesses.
Determining the Value of Your Business
Before you can sell your software, you’ll need to determine how much it’s worth.
Of all the online businesses, SaaS businesses are among the hardest to value. After all, there’s a wide variety of apps, websites, and software that make up the SaaS business model.
Different marketplaces, aggregators, and brokers have their own methods of assessing your software’s value. Despite these different approaches, most valuation techniques have the same starting point.
Smaller businesses ($1 million or less) are valued using Seller Discretionary Earnings (SDE), while larger businesses are valued using Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).
SDE and EBITDA are used to calculate your business’s net profit. Once we’ve worked that out, we usually apply the following valuation formula:
[6-12 Months’ Average Net Profit] x Multiple (Typically 20–60+)
As you can see, the average multiple for SaaS businesses varies significantly. As previously mentioned, most SaaS businesses don’t fit into a pre-cast mold. Each business is unique, with its own set of strengths and weaknesses. This means that similar businesses or competitors may receive vastly different multiples compared to your business.
There are a number of factors that we take into consideration when determining the multiple. These factors include:
- Business age
- Growth rate
- Traffic diversity
- Social media followers
- Email list subscribers
- Level of owner involvement
- Churn
- LTV
- CAC
- MRR vs ARR
Here at Empire Flippers, we favor a monthly multiple over an annual multiple, as it gives us a clearer picture of any seasonality and fluctuations your business may experience throughout the year.
The good news is you don’t have to use these formulas to find out how much your no-code software is worth. You can simply use our free valuation tool or schedule a call with one of our business analysts to receive a personalized valuation.
Preparing Your No-Code Software for Sale
In an ideal world, you should prepare an exit strategy long before you decide to sell your business.
Getting your ducks in a row before you put your business on the market will ensure you have the bandwidth to focus on the sale instead of worrying about menial tasks and paperwork.
While advanced preparation isn’t always possible, here are a few things that you should aim to tick off your selling checklist before you hang up that “for sale” sign.
Gather Vital Data About Your Business
Interested buyers will want to examine a few key areas of your business before deciding to go ahead with the acquisition.
First on their list will be examining your business’s finances. The easiest way to do this is by preparing a Profit and Loss (P&L) statement. Your P&L outlines your monthly net profit and expenses, helping buyers get a better sense of your business’s performance. Along with your P&L, you should also prepare a breakdown of your monthly recurring revenue (MRR) or your annual recurring revenue (ARR).
Next, you should track important customer metrics, such as churn rate, customer acquisition cost (CAC), customer lifetime value (LTV), and average revenue per user (ARPU).
Lastly, buyers will want to examine how your business generates traffic to get a better understanding of your audience. The best way to gather this data is by installing Google Analytics or Clicky.
Potential buyers will examine your traffic sources and SEO strategies to identify unexplored or underutilized opportunities that they can take advantage of if they decide to buy your software.
Create SOPs to Document Your Processes
Standard Operating Procedures, or SOPs, are documents that provide detailed breakdowns on how to complete the essential tasks needed to maintain your no-code application.
SOPs are an attractive asset to include in the sale of your business. They give the buyer an idea of how much time and effort is required to run the business, and they also highlight the skills and expertise needed to complete each task.
If the buyer lacks the time or knowledge to take over certain activities themselves, the SOPs can be used to train new employees or contractors.
Finding a Buyer for Your No-Code Software
Once you’re happy with your valuation and have cleaned up your operations and paperwork, it’s time to find a buyer for your business.
Many SaaS founders dream of selling their software to big players like Google, Facebook, or Hubspot, but in reality attracting the attention of these industry giants is extremely difficult. In most cases, if a large company is interested in your software, they will approach you with an offer, not the other way around.
Another common strategy is to try and sell your software to your competitors. There are pros and cons to this approach.
You know that your software is in good hands as your competitors have proven their ability to scale a business similar to yours. In some cases, you may already know your competitors personally, having attended the same industry events and conferences. This makes outreach and negotiations that much easier.
The risk of reaching out to your competitors and sharing your sensitive business information with them is that they may back out of the deal and use your ideas and strategies for their own gain.
Instead of personally tracking down potential buyers through a private sale, why not let high-quality, vetted buyers come to you?
The benefit of selling through a full-service brokerage like Empire Flippers is that you gain access to our large pool of buyers. Each new business listed on our marketplace is advertised to our email list of over 250,000 high-net-worth individuals who are actively looking for online businesses to purchase.
A larger pool of interested buyers increases the chance of competition, which could drive up the sale price of your business.
You will also gain access to our expert sales advisors who will guide you through the sales process, hold your hand through negotiations, and help you assess the merits of the offers you receive.
Dealing With Buyers: Negotiations and Due Diligence
Finding the right no-code business to buy is not an easy decision for buyers. They’ve got a lot of money on the line, so potential buyers will want to cross their t’s and dot their i’s before committing to the purchase.
Due Diligence
Due diligence is the process of researching a business to ensure that all the data that has been presented to the buyer is accurate and that the business suits the buyer’s needs.
This is where the financial documents, performance metrics, and traffic analytics you prepared earlier will come in handy.
This phase of the sale process can attract tire kickers and window shoppers who are keen to view more information about your business but don’t have any intention of actually buying the business.
As a private seller, the best way to protect yourself from time-wasters is to verify buyers by asking for proof of identity and proof of funds before allowing them to access your business information.
Asking interested buyers to sign a Non-Disclosure agreement (NDA), or a Non-Compete agreement will also help to scare off buyers with malicious intent, although drafting legal documents like these for international buyers can be extremely difficult.
Negotiating the Terms of the Sale
As tough as it may be, you need to leave your emotions at the door when negotiating with buyers. It’s understandable that you have a strong emotional attachment to your business, but you can’t let that cloud your judgment so close to the finish line.
The best way to avoid making emotional decisions is to have a clear idea of what you are and are not willing to compromise on.
Keep in mind that the faster you want to sell your business, the more flexible you will need to be during negotiations.
The first aspect of the deal that buyers will try to negotiate is the asking price. Make a decision ahead of time about the lowest price you are willing to negotiate down to so that you don’t fall prey to lowball offers.
Another option a buyer may suggest is an earnout. In its simplest form, an earnout is an alternative to an all-cash deal, where the buyer pays a percentage of the asking price upfront and pays off the remaining amount over a negotiated period of time.
Some earnouts also include performance bonuses, where the seller receives additional payments or interest if the business reaches certain performance milestones during the course of the earnout.
If you do choose this path, we’d advise hiring an attorney and an escrow service provider to ensure that both you and the buyer are protected for the duration of the earnout.
Transferring Your Business to the Buyer
Even if you’ve legally signed ownership of your business to the buyer, the business isn’t truly theirs until you’ve transferred the various assets into their control.
This can be a tricky process. It’s vital that you read the terms and conditions for each service, platform, and product you use to ensure that your assets are handed over without a hitch.
The most important asset for SaaS businesses is often their payment processor. While most payment processor platforms are easy to transfer, PayPal is known to present problems when changing account ownership. To avoid this particular hurdle, try to switch payment processors before you sell the business.
Another benefit of selling through Empire Flippers is that we handle the migration of assets for you. Our migrations specialists are experts at what they do, so your assets will be transferred to the new owner accurately and efficiently.
Demystifying the Sale of Your No-Code Software
As you can see, there are a lot of moving parts to the sale process. But that doesn’t mean that selling your no-code software needs to be a stressful and fraught experience.
We have teams of experts ready to jump in and guide you through each phase of your exit. All you have to do is register an account on our site, and submit your business for sale.
Then, you’re free to sit back and plan your next entrepreneurial adventure while we handle the logistics of finding the right buyer for your software.
