Every legacy SaaS company has
an empty chair in the deal room.
Published
Every legacy SaaS company has an empty chair in the deal room. Usually, it costs them more than a full turn of revenue on their exit multiple.
When a major enterprise renewal is on the line, Sales, the CEO, and the CTO are all at the table. Everyone in that room is paid to get to "yes."
When the client demands a custom workflow to sign, the room agrees. And because the board capped professional services as a share of revenue to make the P&L look like pure software, that custom work doesn't go to a services team.
It gets absorbed straight into the core product.
The convenient explanation is that engineering wasn't consulted. Usually, tech leadership was sitting right there.
The real problem is the empty chair: nobody in the room owns the line between the core product and custom services. Nobody has the job of saying: "We will build this—outside the core, priced for profit, on its own contract."
How the empty chair kills your valuation
Code bloat isn't bad engineering. It’s the compound interest on a decade of surviving deal by deal. Standards don't break all at once; they erode through forty small favours nobody tracked.
Over time, your R&D budget stops funding the roadmap and quietly funds free custom work. Releases stall. Margins shrink.
You can hide custom work from your revenue mix, but you can't hide it from PE technical diligence. When buyers see bloated R&D and slow shipping, they price the business like services: around 1 to 2.6x revenue, against 3 to 3.8x for software that ships like software (published M&A data).
Your earnings are real, but the shape of how you deliver them sets the multiple.
How to fill the chair (and where it sits)
The chair isn't necessarily a new hire—it’s a clear decision rule on a 48-hour clock:
- Under €20M ARR: It’s a hat worn by the VP of Product, reporting to the CEO.
- Over €20M ARR: It’s a Head of Solutions Architecture sitting inside the Deal Desk, reporting to the CPO or COO (never Sales).
Their job is to route every custom request into one of three buckets:
- Into the core (if the whole market needs it).
- Into a reusable add-on (if a few clients need it).
- To the edge on a paid SOW (if only this client needs it).
The product boundary collapses because everyone in the deal room is paid on closing the contract, and nobody is paid on protecting the core.
If you are 24–36 months from an exit, fill that chair first.
First published on LinkedIn on 22 October 2026. The original post.
The full mechanism — how absorbed custom work prices as a services business, and how the shape is resolved — is in the report →
Where this note leads: the papers behind it, in reading order.