Legacy code doesn’t have to be a valuation drag—if you frame it correctly. Private-equity groups and strategic acquirers don’t discount simply because code is old; they discount because risk is unknown and upside is un-quantified.
In my work as a SaaS & service-company business broker, I’ve seen 20-year-old platforms trade at 6× EBITDA—sometimes higher than shiny, cloud-native rivals. The difference? Sellers who turned “technical debt” into a fully cost modernization roadmap.
Three Lessons Owners of $2 M–$20 M SaaS Firms Should Know
- Scope the risk before buyers do. A lightweight static code scan plus a fractional-CTO review costs pennies compared to a last-minute LOI haircut.
- Translate every refactor item into dollars. A $1 M remedial budget that unlocks $4 M ARR lift is an investment, not a penalty.
- Create buyer tension. When both financial and strategic buyers are at the table, the narrative shifts from “discount for debt” to “fund the roadmap and win the deal.”
Mini-Case: Turning VB6 into Cash
Last year we marketed a two-decade-old vertical ERP written in VB6. Five strategic buyers walked away after a cursory code peek. Instead of panicking, we commissioned a 30-hour architectural audit, priced the .NET rewrite at $1.2 M, and repackaged the debt as a 12-month growth catalyst. Three PE funds re-entered, bidding against each other. The deal closed at 6.3× EBITDA with 93 % cash at close—proof that clarity beats perfection.
Your 30-Day Pre-Sale Sprint
- Days 1-7: Run a static-analysis scan, pull an SBOM, and catalogue open-source licenses.
- Days 8-15: Engage a seasoned architect for a red-yellow-green assessment; dollarize each yellow/red item.
- Days 16-21: Draft a modernization Gantt—showing parallel feature velocity, not a development freeze.
- Days 22-30: Insert the roadmap into your CIM, line up reference customers, and open discrete conversations with both financial and strategic buyer lists.
Why Some Buyers Secretly Like Technical Debt
Financial buyers with cheap capital view legacy refactors the same way home flippers view a 1970s kitchen: a predictable, budgetable upgrade that boosts resale value. If you hand them a bullet-proof work-back schedule—complete with sprint counts, staffing assumptions, and risk buffers—they can plug the numbers into their models and still hit a 20 % IRR. What spooks them is the black box, not the age of the code. That means you, the seller, must own the narrative. In other words, transparency converts fear into appetite and bids rise accordingly. Guaranteed.
Want the full playbook—including escrow-release tactics and sample cap-ex worksheets? Read the detailed guide here → How to sell legacy-code SaaS for a premium.
David Jacobs helps software founders exit for life-changing numbers without retainers or drama. He has closed deals up to $30 M and maintains a 100 % sell-through rate on profitable listings.
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