Your Walk-Away Number: What You Actually Pocket Selling Your SaaS
You sold your SaaS for ten million dollars. Congratulations. You did not get ten million dollars.
Founders quote the headline price. The cheque is much smaller. Broker fees, escrow holdbacks, earnouts contingent on post-close performance, federal capital gains, the Net Investment Income Tax, state income tax. For most SaaS founders the walk-away number is 40 to 60 percent of the headline number. Run yours below.
SMB SaaS at $1-10M ARR typically trades 3-6x. Mid-market with growth + retention: 6-10x. Best-in-class hypergrowth: 10x+.
Bootstrapped solo founders: often 80-100%. Funded founders post-Series A: typically 30-60% after employee pool dilution.
Empire Flippers and SMB brokers: 8-15% on sub-$5M, tapering down. Investment banks for $20M+: 1-3%. Direct sale: 0% broker, but you pay it in lower price.
Strategic acquirers often 50-70% cash. PE buyouts can be 30-60% cash with rollover equity. Marketplace brokers (Empire Flippers) push for 80-100% cash on SMB deals.
Typically released 12-24 months post-close, less any indemnity claims. Buyers want 10-20%, sellers push for 5-10%.
A few states still treat capital gains as ordinary income. Most are 4-7%. CA tops out at 13.3%. NY 10.9%. MA 9%. State residency at closing matters.
Three worked exits
Three real-world scenarios at $2M, $5M, and $10M ARR. Same calculator, different founder situations. The headline price is the public number on the press release. The walk-away number is the cash that funds the next chapter.
$2M ARR exit
Bootstrapped solo founder, $2M ARR growing 40 percent. SMB broker marketplace deal. 95 percent ownership, no co-founder dilution. Federal LTCG plus 5 percent state (e.g. North Carolina). Walks away with $6.18M of $9M headline.
$5M ARR exit
Funded founder, Series A done, $5M ARR growing 60 percent, 130 percent NRR. C-corp held 6 years so QSBS applies to first $10M. Federal blended rate ~12 percent given QSBS. California resident at 13.3 percent state. 65 percent ownership after dilution. Walks away with $14M of $30M headline (of which $19.5M is founder share before fees and tax).
$10M ARR exit
Series B-funded, $10M ARR growing 80 percent, 125 percent NRR. PE buyout with rollover equity component. Founder is at 45 percent post-Series B. Florida resident, no state tax. Walks away with $25.36M of $80M headline (of which $36M is founder share before fees and tax). PE structure means earnout is contingent on hitting growth targets through 2028.
Where the money goes (and why each input matters)
Multiple
The multiple is what the buyer is willing to pay per dollar of recurring revenue. For SMB SaaS at $1 to $10M ARR with reasonable growth, that is typically 3 to 6 times. Mid-market with strong retention and Rule of 40 above 40 trades 6 to 10 times. Best-in-class hypergrowth above 10 times. Every 0.5x improvement in your multiple on a $5M ARR business is $2.5M of headline value. Two of those moves and you have shifted your walk-away by north of two million dollars.
The largest multiple-moves come from growth rate first, NRR second, gross margin third. See the five factors that move SaaS multiples for the detailed mechanics.
Founder ownership
The single biggest variable that founders underestimate. A bootstrapped solo founder owns 80 to 100 percent of the business. A founder who raised a $2M seed and a $10M Series A has typically given up 35 to 50 percent of the company between investors and the employee option pool. At Series B the founder is often at 25 to 40 percent. Your walk-away number scales linearly with this number. The same $30M deal puts $25M in the bank for a bootstrapper and $10M for a Series B founder.
Broker fee
Empire Flippers and SMB marketplaces typically charge 10 to 15 percent on transactions below $5M, sliding down at higher sizes. FE International, Quiet Light, and other boutique brokers cover $1M to $10M ARR with similar fee structures. Mid-market investment banks for $20M+ deals charge 1 to 4 percent. Direct sale to a strategic buyer has zero broker fee but typically realises 20 to 40 percent lower headline price because there is no auction tension. The fee almost always pays for itself through better price, but the savings concentrate at certain deal sizes.
Cash at close vs escrow vs earnout
Cash at close is the wire that hits your account on day one. Escrow is a portion held in a third-party account for 12 to 24 months to cover indemnity claims, then released. Earnout is a portion paid over 1 to 3 years contingent on hitting post-close performance targets. The split varies massively by buyer type. SMB marketplace deals typically push for 80 to 100 percent cash at close, which is one of Empire Flippers' structural advantages over private-market deals at the same size. Strategic acquirers run 50 to 70 percent cash. PE buyouts can be as low as 30 percent cash with rollover equity making up the rest.
Escrow almost always releases in full or close to it, so most founders treat that money as 90 percent certain. Earnouts are different. Industry research suggests 35 to 50 percent of earnouts pay out at less than 75 percent of their target, often because the acquirer makes integration decisions that hurt your ability to hit the milestones. A bird-in-hand discount of 15 to 25 percent on the headline price is often worth taking for higher cash at close.
Federal tax: the QSBS question
Federal long-term capital gains is 20 percent plus the 3.8 percent Net Investment Income Tax, total 23.8 percent. For most founders that is the rate that applies.
The exception is Qualified Small Business Stock (QSBS, Section 1202). If your stock is in a domestic C-corporation, was acquired at original issuance, and was held for at least five years before the sale, and the company's gross assets were below $50M when the stock was issued, you can exclude federal tax on the first $10M of gain or 10 times your basis (whichever is greater). For a founder with $1,000 of basis and $15M of gain, that is potentially $10M of gain at zero percent federal. State treatment varies. California does not conform to QSBS and taxes the gain anyway at 13.3 percent.
If you might qualify for QSBS, the planning is worth getting right. The five-year clock is hard. The C-corp requirement is hard. Talk to a tax attorney 18 to 24 months before your target close date.
Asset sale vs stock sale
Buyers prefer asset sales. They get to step up the basis of the assets they buy and depreciate them, plus they leave your historical liabilities behind. Sellers prefer stock sales. Cleaner exit, full capital gains treatment on the equity sold, and QSBS becomes possible.
Asset sales of an LLC or S-corp generally flow through to the founder as capital gains, but the allocation of purchase price across the asset categories matters. Goodwill and going-concern value are capital gains. Inventory, receivables, and certain other categories can be ordinary income. The buyer drives the allocation in their interest. A 5 percent ordinary-income component on a $5M deal can mean an extra $50,000 to $100,000 of tax. Worth negotiating the allocation explicitly.
State tax
State capital gains rates range from zero to 13.3 percent. The states with no income tax (and therefore no state tax on capital gains) are: Florida, Texas, Nevada, Washington, Wyoming, South Dakota, Tennessee, Alaska, New Hampshire. New Hampshire taxes interest and dividends but not capital gains.
Residency at closing matters. Some founders relocate to a no-tax state 12 to 18 months before close to establish residency and avoid the state tax. The bar for establishing residency varies by state. California in particular pursues former residents aggressively if they suspect the move was tax-motivated. Driver's licence, voter registration, home, time present, family location, and business operations all factor in. A clean move requires actual life-relocation, not a paper address. Top state rates for SaaS-founder common states:
Worth doing before you list
Six things that move walk-away numbers more than founders realise:
- Lock in your QSBS clock. If your C-corp stock is at year 3 or 4 of holding, do not sell until year 5. The difference on a $10M gain is $2.38M federal tax owed vs $0.
- Fix customer concentration before diligence. Buyers discount heavily for top-customer revenue above 20 percent. A 15 percent customer concentration cleanup before listing can lift multiple by 0.5 to 1.0x.
- Approach Rule of 40. Even a 5-point improvement in Rule of 40 (e.g. trimming burn from -30 percent to -25 percent EBITDA) can shift multiple by 0.5x. On $5M ARR that is $2.5M of headline value.
- Run a competitive process. Bilateral negotiations with a single buyer typically realise 70 to 80 percent of competitive-auction price. The 10 to 15 percent broker fee almost always pays for itself.
- Push for cash at close. Earnouts pay out below 75 percent of target half the time. Lower headline price with higher cash certainty often beats higher headline with earnout risk.
- Get tax counsel 12-18 months out. QSBS planning, F-reorganisation, installment-sale elections, state residency, charitable trusts. Some of these have lead times measured in years.
The full prep playbook is in Preparing Your SaaS for Sale. Choosing the broker right is in SaaS Broker Shootout.
Methodology
The calculator uses the simplified model: enterprise value equals ARR multiplied by multiple. Founder share equals enterprise value multiplied by ownership percent. Broker fee comes off proportionally. The remainder is split into cash at close, escrow, and earnout per your inputs. Federal tax is applied at 23.8 percent for non-QSBS stock and asset sales, 0 percent for QSBS stock (assuming full $10M / 10x basis exclusion applies). State tax applies on top of federal at the rate you specify.
Real outcomes diverge from the model in several places. Asset-sale purchase-price allocation creates ordinary-income components on goodwill that the simple LTCG rate misses. Rollover equity in PE buyouts defers tax on the rolled portion. Installment sales spread tax over multiple years and can reduce effective rate. F-reorganisations can preserve QSBS through a corporate restructure. Charitable remainder trusts can defer or eliminate capital gains entirely. The calculator is a planning sanity check, not a substitute for tax counsel.
Federal capital gains rates: long-term capital gains 20 percent (top bracket), Net Investment Income Tax 3.8 percent, combined 23.8 percent. QSBS exclusion under Section 1202 of the Internal Revenue Code. State rates as published by each state revenue department as of 2026.