The three stages, and what each is for
Selling a small software business has a document at each gate. Before the conversation you need something to send. During the conversation you need numbers that reconcile. After the handshake you need the folder of things that legally move. Founders who lose months usually lose them at the first gate — a buyer asks "do you have a memo?" and there is nothing to send, so the momentum dies while it gets written.
| Stage | What you send | What the buyer is deciding |
|---|---|---|
| First contact | A one-page teaser: size, category, growth, asking range, no name | Whether this is worth an NDA at all |
| Serious interest | A confidential information memorandum — fifteen sections | Whether to make an offer, and roughly at what number |
| Offer on the table | A metrics pack: MRR history, cohorts, churn, the P&L behind your earnings figure | Whether your numbers are the numbers |
| Diligence | The folder: contracts, code, infra, IP, invoices, subscriptions | Whether anything they are buying fails to transfer |
| Closing | An asset purchase agreement and a transfer plan (lawyer-drafted) | Nothing. By here they have decided |
Stage order and buyer intent reflect how deals below $1M are actually run; the memorandum section list is read off the document our engine generates, so it changes when the product does.
The memorandum is the one that stops people
A confidential information memorandum — a CIM — is the document a broker's analyst produces and charges a success fee for. It is not a pitch deck and it is not a spreadsheet. It is the written case for the business: what it is, what it earns, why the earnings persist, what the risks are, and how you arrived at the range you are asking for. Ours runs fifteen sections, twelve of them written from your six numbers, with 49 places left blank for the facts only you have — your stack, your contract names, your reason for selling.
The reason it matters more than its length suggests: a buyer reading a memorandum is deciding how much homework this deal is going to be. A business that arrives explained looks like a business that was run carefully. One that arrives as a Stripe screenshot and an enthusiastic email looks like work.
What a buyer is actually testing, section by section
| Section | What they are reading for |
|---|---|
| 01 Executive summary | Whether to keep reading. Size, margin, trading history, the range you think it is worth, and the reason you are selling. |
| 02 The business | What the thing is, in a sentence they could repeat to a partner, and exactly which assets transfer. |
| 03 Product and technology | What it costs them to run it without you. Stack, hosting bill, dependencies, and the technical debt you admit to. |
| 04 Revenue model and pricing | How durable the revenue is before churn is even discussed: plan mix, monthly versus annual, grandfathered pricing. |
| 05 Financial summary | Whether your earnings figure survives contact with a bank statement. Add-backs stated, not implied. |
| 06 Growth | Which pool they are in — trajectory or cash flow — and whether the trend is real or a restated chart. |
| 07 Retention and churn | The number they model hardest, because it sets how much of what they buy still exists in year three. |
| 08 Customer base and concentration | The single largest account as a share of revenue, and whether it is contracted or month to month. |
The first eight of fifteen. A worked example of the whole document, generated by the engine, is on our sample page.
The metrics pack: where deals die quietly
The memorandum makes the case; the metrics pack proves it. Expect to produce monthly recurring revenue by month for at least the last twenty-four, gross and net revenue churn, a cohort retention view, your customer count, and the profit-and-loss that supports whatever owner-earnings figure you quoted — with add-backs stated explicitly rather than implied. FE International, 21 Jan 2026 is direct about this: the earnings figure a buyer will underwrite is the one they can reconcile to a bank statement, not the one in your deck.
The diligence folder
- 01Every customer contract, and a plain note on which are annual, which are month to month, and which have assignment clauses that need consent to transfer.
- 02The code, and an honest list of what is borrowed: licences, dependencies, anything with a commercial restriction.
- 03Infrastructure and the bills — hosting, database, email, monitoring — with who owns each account.
- 04Domains, trademarks, the app store listings, the social handles. Anything with your personal name on it that should not have.
- 05Third-party subscriptions the product depends on, with the monthly cost and the cancellation terms.
- 06Anything you pay a human for: contractors, support, a bookkeeper, and whether they stay after closing.
What you should not write yourself
The asset purchase agreement. A memorandum is a document of persuasion and you can hold the pen on it; a purchase agreement is a document of liability and it wants a lawyer who has done software deals. It is also, usually, the buyer's draft — so the money is better spent having yours read it than having yours write it.