Software companies are bought on the durability of their revenue and the state of what produced it. Two files decide the outcome: the revenue file, which has to reconcile to the billing system and the bank, and the technical file, which has to survive somebody else's engineers reading it.
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The revenue file
Recurring revenue with its growth, gross and net retention, cohort behavior, contract length, concentration and the cost of acquiring a customer against what that customer is worth. Exported from the billing system, reconciled to the bank, and consistent across every document you produce. Buyers rebuild these numbers themselves and any discrepancy costs trust rather than just the difference.
The technical file
An architecture summary, dependency and license inventory, security history and current practices, deployment and monitoring, known technical debt stated plainly, and an honest account of who understands what. Disclosing debt early is far cheaper than having it found: a buyer who discovers an undocumented single point of failure will price the discovery, not the defect.
Reducing key person risk
If one developer is the only person who can deploy or debug the system, the buyer is purchasing a hostage situation. Documentation, a second person who can operate the system, and a written runbook cost months and change the price. So does making sure the intellectual property is actually owned by the company, with assignments from every contractor who ever touched it.
Other questions people ask
Who buys software companies?
Strategic acquirers buying customers or a feature, software focused funds buying recurring revenue, and individual buyers at the smaller end through specialist marketplaces.
Do I need a technical adviser?
For anything with institutional buyers, having your own technical diligence done first is worth it. It finds what theirs will find, while you still have time to fix it.
What is the most common deal breaker?
Intellectual property that is not cleanly owned, usually because a contractor never signed an assignment. It is easy to fix early and very hard to fix under exclusivity.