- Who Are Your Presenters?
- What Makes Us Special?
- What Will You Learn From This Deal Review?
- How We Vet Your Deals
- What Does a Typical Listing Look Like?
- Monthly SaaS Deal Review (July 2024)
- Deal 1: Personalized outreach tool using real-time Google Ads data to deliver high impact outreach
- Deal 2: SEO tool for building topical authority, auto-blogging, and real time analysis
- Deal 3: Web development and marketing agency poised for growth with strong profits
- Deal 4: The most influential no-code agency and education platform. Helping entrepreneurs launch app ideas
- Industry Spotlight: Agencies
- Q&A
Welcome to the July 2024 SaaS deal review!
As well as our usual roundup of the best in SaaS, our special guest Ky Pratt will present a spotlight on another category that’s in high demand – agencies (including two of our best agency listings).
Watch the full video below or skip to the section you’re most interested in for a bitesized video breakdown.
Who Are Your Presenters?
Rainier Nanquil, Managing Director of M&A
Rainier has over a decade of experience in M&A, capital markets, and investment sales. He’s been part of over a billion dollars of deal volume sourced, analyzed, and brokered. Previously, Rainier was at Empire Flippers, Cushman and Wakefield, and Marcus and Millichap. Rainier’s goal is to help clients get the best price, terms, and transaction experience possible.
Christian Steverson, Director of Acquisitions
Christian is a seasoned leader across SaaS, technology, and sales. When not closing multimillion-dollar transactions, he’s helping founders navigate the trickier parts of the acquisition process and setting them up for success under the Guided by Acquire program. Christian is a renowned troubleshooter within the Acquire.com M&A team and regularly rescues deals using expert negotiation tactics.
Ky Pratt, Acquisition Success Manager
Ky understands what it takes to sell a business. With a background in coaching and client success, Ky has been instrumental in several large exits, shepherding buyers and sellers through the acquisition process and ensuring satisfaction all round. Today, he talks a little about what it takes to sell an agency business and how to evaluate them for acquisition.
What Makes Us Special?
In just four years since Acquire.com launched, we’ve marked some incredible milestones (and world-firsts) in the acquisition space, testament to the talent, services, and technology we put behind your acquisition.
We’ve helped over 1,200 startups exit, closed nearly a billion dollars in transaction volume, and registered over 500,000 buyers since 2019. Live internationally? No problem – we’re active in over 100 countries and in every continent except Antarctica, with a multilingual M&A team to support cross-border transactions.
What Will You Learn From This Deal Review?
You’ll discover our top listings, why we love them, and tips on how you might earn a return on investment. We know our market better than anyone, and you can use our insights to make better choices about your next acquisition, or if you’re selling, learn how buyers will assess your business.
How We Vet Your Deals
We’ve invested hundreds of thousands of dollars into a world-class curation and advisory team to publish the best listings only so you don’t waste time on founders unwilling to sell or at a fair price.
Strict Curation
Only around 45 percent of startups make it through our curation process. We verify the seller’s ID and business, review their goals, and prepare them for acquisition, ensuring you get the highest quality deal flow and founders who’re easy to work with and committed to closing.
SaaS Specialists
We have the biggest pool of SaaS companies and buyers in the world. We love the SaaS business model and the problems it solves. You can acquire other business types, but our biggest market is SaaS.
Expert Support
On the seller side, we offer expert support in-house. Our M&A success team helps sellers with everything from perfecting listings to navigating due diligence. Why? To help sellers succeed while ensuring you get all the info you need when you start acquisition talks. For example: is there a P&L? A confidential information memorandum (CIM)? Due diligence checklist? Transition plan? And so on.
Listing Scorecard
When you evaluate a SaaS startup for acquisition, you might not know where to start. The same is true of sellers listing for the first time. To help, we’ve developed the listing scorecard – a checklist we use to ensure sellers and buyers start from the best possible foundation.
For example, we’ll check the seller has completed their profile, uploaded a P&L, and connected their metrics, and so on. Have they prepared everything you need as a buyer to evaluate that business and make an offer? Is this price within market expectations?
The listing scorecard benefits you and the seller, ensuring you’re aligned when talks begin. You want the seller to understand the acquisition process and be ready to answer your questions quickly. Likewise, the seller wants to keep you engaged to encourage a fair offer.
What Does a Typical Listing Look Like?
How the Marketplace Works
If you’ve entered your acquisition criteria, the first row is listings matching your criteria. The second row is listings receiving a lot of attention from other buyers. The final row, our top picks, are listings under our guidance – startups we’ve prepped for acquisition.
But this isn’t the only way to find startups you like. Rather than browse 1,000s of listings, use the filters to zero in on startups matching your criteria. For example, filter for revenue or profit multiple, gross revenue, net profit, startups under guidance, and other criteria.
Just click All Listings and then you’ll see various filters at the top (see above).
If you want to see our absolute best deals – of unrivaled quality – check “Guided by experts” under the Highlights filter to see those we’re helping get Acquire’d. You can also use the highlights filter to find deals pre-qualified for financing and with connected metrics (which means real-time data updates).
To view the full listing and chat to the founder, request startup access by signing a mutual NDA. You can only do this with a paid subscription to one of our buyer plans.
Premium and Platinum buyer subscriptions give you access to closing tools such as LOI and APA builders, free escrow, and unlimited access to deals within your plan’s limits. To find out which buyer plan is right for you, check out our pricing page.
Monthly SaaS Deal Review (July 2024)
Please note that the deals we discuss below may no longer be active on the marketplace. As some of our best SaaS listings, they’re in high demand and typically go under offer within a few days.
Deal 1: Personalized outreach tool using real-time Google Ads data to deliver high impact outreach
Highlights
- Asking price: $1.4M (4.9x profit, 1.7x revenue)
- TTM revenue: $877k
- TTM profit: $296k
- Growth rate: 23%
- Founded: 2021
Watch the breakdown
Deal 2: SEO tool for building topical authority, auto-blogging, and real time analysis
Highlights
- Asking price: $222k (2.2x profit, 2.1x revenue)
- TTM revenue: $107k
- TTM profit: $101k
- Growth rate: 21%
- Founded: 2023
Watch the breakdown
Deal 3: Web development and marketing agency poised for growth with strong profits
Highlights
- Asking price: $3.8M (3.8x profit, 2.1x revenue)
- TTM revenue: $1.8M
- TTM profit: $1M
- Growth rate: 0%
- Founded: 2003
Watch the breakdown
Deal 4: The most influential no-code agency and education platform. Helping entrepreneurs launch app ideas
Highlights
- Asking price: $2.4M (4.9x profit, 1.8x revenue)
- TTM revenue: $1.2M
- TTM profit: $439k
- Growth rate: 35%
- Founded: 2016
Watch the breakdown
Industry Spotlight: Agencies
What Makes an Agency Stand Out?
Watch the breakdown
Recurring Revenue and Predictability
Watch the breakdown
Brand Impact and Tenure
Watch the breakdown
Quality of Work: Expense Ratio (Profitability)
Watch the breakdown
Relevance of Service: SWOT
Watch the breakdown
Q&A
Does Acquire.com make introductions to lenders for acquisition financing?
Yes! Our M&A team helps thousands of transactions close and has a broad, deep knowledge of which lenders are active in each vertical. Get in touch with the team for an introduction.
How much do lenders typically offer for SaaS and agencies?
It depends. Some lenders will expect 20-30 percent down giving you 70-80 percent leverage. With an SBA loan, you might be able to push your leverage to 90 percent (with 10 percent down). Most lenders we see want 30 percent down and give 70 percent leverage. For more details, get in touch with the team – once we know your goals, we can help you get the financing you need.
When would you recommend asking for a quality of earnings report?
A quality of earnings (QofE) report will give you a clearer lens into the performance of the business. Whether you need the additional clarity or not during due diligence will depend on the business and your risk tolerance. A good rule of thumb is to request a QofE if the business is complex or with multiple sources of revenue and expenses. For example, you might want a clearer picture of cashflow – is revenue recurring or earned from one-off sales? The QofE will give you the answer, so it’s generally a critical component of financial due diligence.
Agencies often rely on a few key staff for doing the work and managing clients – how can I mitigate this risk?
If the seller of an agency is a keystone for the business, we help them create a transition plan to mitigate the risk of them leaving (before we even list the business). For example, maybe they’ll transfer high-value clients to employees staying on or build SOPs for handling sensitive accounts. In any case, you can expect the seller to have a plan for mitigating this risk.
An agency with a strong brand and reputation but a tight founder focus is still better than an agency with a weaker brand and reputation. The seller’s transition plan will include steps for transferring knowledge and clients to you and maybe even a period of co-managing relationships. If you maintain the quality of work, clients will stay on.
How much help does Acquire.com give serious buyers?
We give you all the help you need to find, evaluate, and close your acquisition. Not only do you have deal management but also letter-of-intent (LOI) and asset-purchase-agreement (APA) builders inside your workflow, making it easy to make offers and formalize your acquisition. We’re available for personal consultations on bigger or more nuanced deals and offer a ton of detailed resources on how to derisk acquisitions, conduct due diligence, negotiate, engage sellers, and more. Speak to the team today if you’d like help finding your perfect startup.
If is a business is bootstrapped, does that make it a better acquisition opportunity? If so, how?
In many cases, yes, a bootstrapped startup is a better acquisition opportunity. Why? One, you usually only deal with the founder (or founding team), the key decision-makers, meaning you can usually close faster. Investor-backed businesses usually have other stakeholders like a board that the seller must get permission from. Also, bootstrapped businesses are often leaner and more sustainable. With less cash, there’s less bloat. They run more efficiently.
Can you give some examples of how a startup’s reason for selling would influence the price, terms, and so on?
A founder may sell their business for many reasons. For example, if they want to cash out after years of building, they might ask for a higher price but accept some conditional terms such as an earnout. Or maybe the reason for selling is more personal, such as a divorce, sickness, or a death in the family, which means they need an all-cash offer, shorter transition, and faster exit, and as such, would likely have to accept a lower purchase price to drive enough interest.
Speak to founder as there’s often a lot of nuance to their reason for selling. The Acquire.com M&A team helps set expectations here and will prepare sellers with an acquisition plan to help them achieve their goals.
If I’m based in the US but want to acquire a business in Europe, how can Acquire help?
Uruguay, Estonia, Spain – no matter where you want to acquire a company, we’ve got the experience to help you. Many of the advisors on the M&A team are multilingual, too. We even have people to help with the tax and legal aspects of acquiring across borders. We recently completed an international transaction for a US buyer acquiring a Spanish company, entirely in Spanish, with our President, Rosa Romaine, and General Counsel, James Graves leading.
Since very few unique ideas exist, at what point does competition become a red flag when evaluating a startup?
Competition is seldom a red flag. It can be the opposite. If you’ve got no competitors, maybe your market isn’t big enough. Healthy competition is a sign a business is doing something right – solving a real problem. Now, that’s not to say competition isn’t a risk. It is. That’s why it’s important to evaluate a company’s competitive moat, years in business, and so on, to ensure you understand what’s unique and how it competes. Or what you can do to give it an edge over the competition. The harder it is to win that edge, the more you might want to add post-closing conditions like earnouts that tie performance to the purchase price.
I am a first time buyer and my biggest fear is the downside risk, that the company I buy will start declining soon after closing. I understnad that the price and multiples reflect the risk but do you have any stats on how well your companies do post-acquisition?
Unfortunately, Acquire.com does not track the post-acquisition performance of businesses acquired through our platform. While we conduct a strict review process before listing businesses, including verifying the seller’s identity and the business itself via Persona, we cannot guarantee the performance of any business. We encourage buyers to perform thorough due diligence on acquisition targets to understand all associated risks. If buyers feel uncertain, we recommend engaging M&A advisors for support. Ultimately any business, even a distressed one, can be successful if the next owner has the right skills, resources, and time/effort to grow it (barring any apocalyptic or economically detrimental events occurring).
However, we do have a few founders we've interviewed or have shared their success stories publicly on social media and tagged us. Take a look at the five below:
- Sukh Sidhu (Twitter | Podcast with Andrew)
- Varun Kundra (Twitter | Podcast with Andrew)
- Dev Shah acquired a company and grew it (Twitter)
- Ranjit Bhinge acquired and still runs atomicfusion.io (Podcast with Andrew)
- Kjael Skaalerud acquired his first company as a microPE model and is building in public via his substack (Podcast with Andrew)
How well do new owners do if they finance an acquisition, how often are they able to recoup their investment in 3 or 4 years?
Every acquisition is different, as is each buyer and their view of success. If recouping their investment is the goal, they need to consider this from the very start when assessing potential acquisition targets. This impacts their choices by the type of business model and metrics (e.g., recurring revenue, high margins, low churn), the sale price, and the deal structure (e.g. how much cash upfront, seller financing, earnouts, buyer financing), along with a wide range of other factors.
With the five post-acquisition stories linked in the previous question, you can get an idea of their timelines and how they all navigated different paths to their success.
The content on this site is not intended to provide legal, financial, or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of a tax advisor before filing your taxes or conducting tax-related operations. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any tax professional.