The M&A Process: From First Conversation to Close

The M&A Process: From First Conversation to Close

Selling a SaaS or tech-enabled business is one of the biggest milestones in a founder’s journey. It can also be one of the most stressful. The stakes are high, the process is complicated, and the number of players involved can be overwhelming.

I’ve been part of more than 600 transactions, from small tuck-ins to $100B deals. Across all of them, one pattern holds: the companies that do best are the ones that understand the process, prepare early, and minimize surprises.

This page is a step-by-step guide to what happens in a typical M&A transaction, with a focus on the part buyers rarely talk about up front but care deeply about once diligence begins - your technology.

1. Early Conversations and Preparation

Most people think the process starts when a banker runs a process or a PE firm knocks on the door. In reality, the process starts months - sometimes years - before you actually go to market.

This stage is all about preparation. Sellers that get ahead of issues here make everything downstream smoother.

  • Clarify your goals. Are you looking for a full exit, a majority recap, or a growth investment? Different goals attract different types of buyers.
  • Get your house in order. Clean up financials, contracts, HR records, and especially intellectual property documentation. Investors want to know who really owns the code.
  • Identify and fix obvious red flags. This is where a “sell-side diligence” can be invaluable. Catching messy infrastructure, unresolved security issues, or uncontrolled technical debt before a buyer does can save you millions.

On the technology side, this is the time to document. Architecture diagrams, security policies, SDLC processes, incident response records - all of this shows maturity. If you don’t have them, create them now.

The companies that struggle later are the ones that thought “we’ll pull it together when someone asks.” Buyers will ask, and if you scramble, they’ll assume there are problems you’re hiding.

2. Outreach and Indications of Interest

Once you’re prepared, advisors or bankers begin outreach. This is where potential buyers get their first look at your business. They’ll use teaser materials, management calls, and high-level financials to decide whether they’re interested.

The result is an Indication of Interest (IOI) - a non-binding offer that outlines a ballpark valuation and deal structure.

At this stage, buyers are mostly reacting to financials, growth, and market opportunity. But know this: their technical diligence team is already in the background. If they win exclusivity later, they’ll be coming straight at your product.

What this means for you: even though technology isn’t the main focus yet, don’t assume it’s invisible. Buyers are already building a hypothesis. If you’re a SaaS company, they’re assuming you have scalability challenges, security exposures, or cost inefficiencies. The question is how big those issues are.

3. Management Presentations and Letters of Intent

Once the IOIs are in, a smaller group of serious buyers is invited to management presentations. This is your chance to tell the story of your business in detail. For the leadership team, it’s about painting the vision. For the technology team, it’s about showing that the product can support that vision.

Expect questions like:

  • How is the product architected?
  • Can it scale to support 2-3x the customer load?
  • How does the engineering team operate day to day?
  • What’s the product roadmap, and how predictable is delivery?
  • How do you manage security, uptime, and incidents?

These aren’t traps - buyers want reassurance. But if your answers are vague, or worse, contradictory, you risk losing credibility.

After presentations, the buyer that’s most aligned will issue a Letter of Intent (LOI). This is a non-binding agreement that sets out the headline terms and gives them exclusivity for diligence. Signing an LOI doesn’t guarantee a deal - it just guarantees the next, hardest stage begins.

4. Due Diligence

Diligence is where deals are won or lost. It’s a full-body scan of your business, with specialists looking at every dimension: financial, legal, tax, commercial, HR, and technology.

For technology, diligence usually includes:

  • Architecture review. Can the system scale without reengineering? Is it modular and maintainable?
  • Infrastructure and cost analysis. How efficient is your cloud spend? Is there a disaster recovery plan?
  • Security posture. Who has access to production? How are vulnerabilities tracked? Have there been intrusions?
  • Technical debt review. What shortcuts have you taken, and do you have a plan to remediate them?
  • SDLC and operations. How do you deploy, test, and monitor software? How dependent are you on key individuals?

This is often the most stressful stage for founders. It feels invasive, and it can last weeks or months. The best way to get through it is with preparation. If you’ve documented your systems, if you have policies and metrics ready, and if you’ve already remediated obvious risks, diligence becomes a process of confirming strength instead of uncovering weakness.

Buyers don’t need you to be perfect. They need confidence that the risks are understood and managed.

5. Negotiations and Documentation

Diligence findings flow straight into negotiations. If the buyer finds serious risks, they’ll adjust the deal. Maybe the purchase price gets lowered. Maybe more money goes into escrow. Maybe warranties get added about security or IP ownership.

On the flip side, a clean diligence process can reinforce valuation. If the buyer expected big risks and didn’t find them, their confidence grows.

This stage is also where lawyers start drafting the purchase agreement and the related schedules. Technology shows up here too: reps and warranties about intellectual property, security standards, and data protection are all baked into the contract. If you can’t stand behind those reps, the deal stalls.

The theme here is simple: surprises cost money. If diligence confirms what you already told the buyer, negotiations are smoother and the paperwork is straightforward. If diligence uncovers surprises, expect the deal to slow, the terms to shift, and trust to erode.

6. Closing and Transition

When everything is signed, funds move and ownership changes hands. But the story doesn’t end there. The post-close transition is where a deal succeeds or struggles.

For technology teams, this often means:

  • Onboarding to the buyer’s portfolio playbooks for security, compliance, and reporting.
  • Integrating with new finance and HR systems.
  • Executing remediation plans that were identified in diligence.
  • Adjusting to new expectations for velocity, metrics, and visibility.

Some founders underestimate this stage. They think the hard part is over once the money clears. In reality, this is where trust is either confirmed or eroded. If your team can deliver on what you promised during diligence, you set the tone for a strong partnership. If not, friction starts early.

Wrapping It Up

The M&A process is intense. From preparation through close, it tests every part of your business. The companies that come out ahead are the ones that prepare early, tell a clear and consistent story, and minimize surprises.

Technology is central to that story. Buyers want to know that your product can scale, that it’s secure, that infrastructure costs won’t eat into margins, and that your team can keep delivering after close.

If you take one thing away, let it be this: diligence is not the time to figure out your weaknesses. Figure them out early, fix what you can, and be honest about what remains. Buyers will respect that - and your valuation will reflect it.