SaaS Exit Crisis: Why Even Profitable Companies Can’t Sell in 2025

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Welcome to the 173rd edition of The Growth Elements Newsletter. Every Monday and sometimes on Thursday, I write an essay on growth metrics & experiments and business case studies.

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I have seen many SaaS companies; they are profitable and growing, but no one’s buying. VCs don’t care, acquirers aren’t responding. What gives?”

In my opinion, what gives is a structural reset across SaaS valuation markets.

Profitability alone doesn’t guarantee liquidity anymore.

Exit Freeze No One Expected

October 2025 data confirms it:

• SaaS M&A volumes down 62% year-over-year.​

• Exit multiples collapsed from 25x to 15x EBITDA since 2021.

• Private equity firms now demand 40%+ EBITDA margins and an AI thesis before considering deals.

Even good SaaS businesses, profitable, steady, mid-market, are getting ignored.

Why? There’s no capital appetite for “steady.” Capital wants differentiated.

Why “Good Enough” SaaS Doesn’t Sell Anymore

Macro reality:

• AI-first companies pulled 60% of all new B2B funding in 2025.​

• Vertical SaaS specialists are still trading above 3.3x revenue, while generic platforms stagnate below 3.0x.​

• Buyers are consolidating around assets that extend AI ecosystems, not standalone apps.

SaaS used to be the darling of predictable cash flows. Now, predictability isn’t sexy, innovation narrative is.

New Rules of the Exit Game

Rule 1. Investors buy “engines,” not “utilities.”

• If your product feels like infrastructure, you’re competing on efficiency.

• If your platform fuels another’s ecosystem, you’re commanding premiums.

Rule 2. Profitability ≠ Scalability.

• Buyers don’t just want profit; they want strategic fit.

• A profitable $20M ARR SaaS without AI relevance or vertical lock-in looks like a melting ice cube.

Rule 3. Average doesn’t transact.

• You can be “good” and still unsellable. Market consolidation rewards category dominance, not competence.

Playbook for Founders Who Can’t Exit (Yet)

[1] Build for profitability and optionality.

• Target EBITDA margins above 25% while keeping scalability narratives alive.

• Architect modular solutions that larger players can integrate or spin out.

2. Package the business like an acquirer would.

• Clean financials, clear ARR references, AI-aligned roadmap.

• Strong data governance and defensible IP language matter more than growth slides.

3. Monetise beyond acquisition.

• Operator dividends or share buybacks, PE-style playbooks are back.

• Consider minority recapitalisation instead of selling 100%.

• When exits freeze, liquidity strategy becomes your CEO's KPI.

Lessons from the Market

From operator-side turnarounds:
SaaS companies still closing deals in 2025 have three distinct traits:

1. Vertical dominance (niching beats scaling).

2. Predictable expansion models (115%+ NDR, low churn, measurable upsell).

3. Clear AI synergy (integration points with AI ecosystems).

Everyone else, horizontal apps with “workflow automation” is fighting depreciation.

Bottom Line

SaaS exit crisis isn’t a death sentence. It’s a filter.

Founders who treat M&A as a product-market fit test who align with buyer strategy, not just vanity metrics will still exit. The rest will have to do something harder: build sustainably profitable businesses that they’re proud to keep.

You don’t have to sell. You just have to be worth wanting.

That's it for today's article! I hope you found this essay insightful.

Wishing you a productive week ahead!

I always appreciate you reading.

Thanks,
Chintankumar Maisuria