Is Software a Good Fit for a Self-Funded, SBA-Backed Deal?

October 16, 2025

by a searcher from The University of Michigan - Stephen M. Ross School of Business in New York, NY, USA

Hi all - I'm currently running a self-funded search out of New York. I’ve spent most of my career around vertical SaaS and tech-enabled services, but I’m rethinking whether software is the right fit for a self-funded, SBA-backed acquisition given the higher multiples and operational complexity if you don't have a technical background. Curious how others have handled those challenges - especially higher multiples and key-man risk (especially when the business is really just a few developers)? Would love to hear experiences or lessons learned from other self-funders who’ve bought / passed on software deals or even just considered going down that path.

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Reply by an investor
from Pennsylvania State University in Hazleton, PA, USA

I’ve bought a bunch of digital assets over the years, including several SaaS products, and I’ve definitely wrestled with this question. I think software can be a good fit for a self-funded or SBA-backed deal, but it really depends on the type of business and how hands-on you plan to be. On multiples: Yeah, SaaS multiples are higher. No way around that. The trick is finding mispriced stuff.. products with solid fundamentals but weak marketing, poor ops, or an owner who’s just tired/already moved on to something new. On key-man risk: This is a big one. A lot of small SaaS products are “one dev and a dream.” Before you close, make sure you understand the codebase and the infrastructure. I always get a dev to audit it. Try to keep the founder around for a few months post-close, and get everything documented early. After that, I like to bring in a fractional developer or small agency for maintenance. You don’t need to be technical yourself. You just need to treat the codebase like any other system in your business.. something to be inspected, protected, and delegated. On operations: Owning SaaS doesn’t mean you need to code. It means you need to manage people and systems. Most self-funded buyers who succeed in software focus on retention, customer experience, and marketing. As long as you’ve got a dependable tech resource, it’s very doable. My take: Software can absolutely work for a self-funded deal, but it’s not something you buy and forget about. Stick to simple, stable products with predictable MRR and low churn. Avoid anything where one developer is the entire business.

Reply by a searcher
from New York University in Newport Beach, CA, USA

I’d be cautious about subscale software businesses in this context. Most of these companies either have true PMF or they don’t. And if they do, it’s hard to see why the seller would exit through an SBA-type process. This isn’t your typical “retiring boomer” situation. A founder with real traction would likely either keep passively cashflowing it, scale it further, or sell for a premium multiple to capture the upside

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