
Ask HN: Where can I buy real software companies? - bluedevil2k
So I have a software company that is generating a good amount of cash. I&#x27;d like to buy another small software company and (ideally) optimize it and make some more money.<p>Problem - most of the sites, like flippa, have crap businesses for sale.  Is there a real place that one can find $50k - $500k software businesses for sale?  Side projects that people make money from but don&#x27;t have the time for?
======
patio11
I sold Bingo Card Creator through FEI
([http://feinternational.com](http://feinternational.com)) and have nothing
but good things to say about them. Something like 20% of their listings are
SaaS businesses. The going rate for a SaaS business is roughly 3X yearly SDC
("seller discretionary cashflow" \-- revenue minus costs _required_ to run the
business as opposed to e.g. the owner's salary, distributions, interest
expense, etc). It is closer to 2X for software businesses where the revenue is
not by-nature recurring. (Naturally, these are guidelines -- businesses are,
like all things, priced at where a buyer and a seller can mutually agree, and
certain factors can make buyers very agreeable.)

~~~
codegeek
Could just be me but it feels like feinternational always show a very inflated
price. 3x seems too much specially for companies that are barely 1 year old.

Also, it is extremely difficult to sign an NDA just to inquire more about a
sale as feinternational does not give any details upfront. Totally
understandable that the company in question wants to maintain its privacy,
secrets etc but this is a difficult situation. How do we move forward without
knowing more about a company but they want you to sign NDA even without giving
_any_ details.

~~~
imaginenore
3x doesn't seem bad at all. It's like an investment that generates 33.3%
annually. After 3 years it's all free money.

~~~
lsc
It's counting the founder's salary as profit. In these small businesses?
founders usually have to do a good bit of work. what do they say? you are
buying yourself a job?

if you're making 33.3% of $50k-$500K per year... the very top end of that is
close to what you'd get working for someone else, and usually you don't have
to put down a half million to get those jobs.

So, while I don't think I'd sell you my company for 3x SDC, I completely don't
blame you for wanting to pay less than that. It'd really only make sense if
you were sure that I had things setup to the point where I didn't have to do
any work (which is something I can deceive _myself_ about... I don't see how
you could get a solid answer out of someone who had an interest in deceiving
you.)

~~~
nedwin
"you are buying yourself a job?" Bingo. And the prospect of growing the
business to a point where it can sustain a team and be less reliant on you.

If the business can run without any input from the founder a) why would they
sell it? and b) if they did they would sell at a much greater multiple.

~~~
heliodor
People might need to sell companies because of:

1) sudden financial hardship like hospital bills

2) a divorce court judge ordered it

3) a non-founding owner has no emotional attachment and wants to switch to
another investment.

Online companies that produce passive or near-passive income are bound to
become obsolete quickly. The internet moves quickly in a lot of niches. The
potential lifespan of the business affects the multiple.

~~~
lsc
Your fourth option, I think, is the most important one to understand here.
Just about any business, assuming you have a competent employee or two, can
kick along without your input for a while. But without you, the owner,
actively putting in work? it's going to do worse this year than it did last
year. It's gonna fade pretty fast. And yes, if you do need to ignore it for a
while, selling it to someone who won't ignore it is a good option, too.

But it's just plain wrong to think that you can look at the current numbers
and assume they will go forward without more input from the owner.

I would argue that the whole idea of 'passive income' when combined with the
idea of a 'small business' is a little flawed, or really, a lot flawed. Owning
a small business is not like owning stock in google. You are an active
participant in the business. A small business owner is fundamentally different
from someone who owns shares in a large corporation.

I kind of like using marxist terminology for it. We are bourgeois[1]. We are
not full members of the capitalist class; we still need to combine our labor
with that capital, or else it's all gonna go to shit pretty fast.

But the real takaway you need to understand is that owning a small business is
not at all like owning stock in a large business. It's a completely different
thing, and your return on investment capital should be very different (and in
my opinion, much higher.)

[1]no, not necessarily in the 'poor taste in lawn furniture' sense. I don't
even have a lawn.

------
callmeed
Like Patrick, I also sold my company through FEI
([http://feinternational.com/](http://feinternational.com/)) last Fall. Once
we got all our information in place, the process went very quickly. We had
several interested parties and due diligence calls almost immediately. After
that, we had 3 offers. There were a few unexpected hiccups (I think there
always are with acquisitions) but overall the process was very smooth and I'd
use them again. I'd recommend registering with them and getting to know one of
the brokers. They'll start sending you deals as they come in.

A few recommendations based on my experience (YMMV):

\- Cash is king. While you should definitely structure the deal with a
transition period, an all-cash offer carries more weight than a deal where you
are financing some/all of the price. You'll need to show proof of funds too,
so make sure you can do that easily.

\- Get your attorney on standby. You'll probably need help with offer letters
and purchase agreements. Plan on going through a couple rounds of revisions
for both.

Feel free to email me if you have more questions.

------
brucehart
You will probably want to work with a business broker. These are two that I
know of that have a listing of businesses for sale:

[http://feinternational.com/buy-a-website/](http://feinternational.com/buy-a-
website/)

[http://empireflippers.com/marketplace/](http://empireflippers.com/marketplace/)

It seems like the best deals come through old fashioned networking. Maybe look
at several businesses that would compliment your existing product and get in
touch with the owners?

------
xfax
I work at Axial ([http://www.axial.net](http://www.axial.net)) and this is
what we do. Check us out and if it seems interesting, submit the form and
someone will get back to you.

(Caveat: the size of the business you're looking for is on the lower end of
the deals on Axial)

------
bemmu
Most businesses are for sale if the price is right.

I've sold an app before where I just got a phone call from an interested party
(without it being listed for sale anywhere), agreed on a price and just a few
weeks later the transfer was complete.

If anyone wants to buy candyjapan.com for 4x profit, feel free to contact.

~~~
veb
I'd love to buy Candy Japan! But it doesn't make much sense for me, and I
don't have the money to pay for it - but I would honestly put in an offer if
the contacts/network for supplying the candy and such was well set up and
going from your blog posts about your journey so far, that probably _is_ the
case.

Keep up the excellent work Bemmu! :-)

------
pcunite
I would like to sell my business. You'll need to know C++ and care about the
Windows desktop market. I get about 8K downloads every month. I want $225K
which is 5x revenue.

I don't know if I'm entirely serious. It just makes money and I don't work it
properly. It should make $90K-$110K if someone cared about it.

~~~
72deluxe
I know C++ and care about the Windows desktop market but don't have that
money. Out of interest, what software is it? What sort of market? Do you need
assistance or another developer?

~~~
pcunite
email me, look at my profile.

------
lazyant
(slightly OT) I don't understand Flippa; I've search several times for a
regular web site making a bit of money and all of them look like scams, even
the ones that are sold, with no PageRank since all the incoming links are
spam.

~~~
trimble-alum
Any decent marketplace for one-app or brand companies needs to prominently
display _intedependently-verifiable, evidence-based_ due-diligence metrics
than can be dug into by your legal and forensic/tax accountant folks _before_
a transaction. Saves lots of time. BTW: on apps, it is usually more profitable
to _license_ source code to games and similarly common apps (say for gyms,
restaurants, etc.). If it's a FNAC app that you're bored of _try to sell it,
first_ , don't just throw out your work (or at least salvage the best parts
business of assets/staff/knowlege)! Reduce, reuse, recycle.

(Some, but not all, due-diligence is worry alleviation through hazing ritual
business theatre.).

~~~
binarray2000
Google search did't help, so I have to ask: What is a "FNAC app"? Thank you.

~~~
biot
Fart Noise Amplification Chamber:
[http://www.urbandictionary.com/define.php?term=FNAC](http://www.urbandictionary.com/define.php?term=FNAC)

~~~
hmate9
I did not expect that!

------
marissamary
[http://sideprojectsforsale.com](http://sideprojectsforsale.com) \- I had the
same thought last year and made this working prototype for these types of
businesses. It's pretty straightforward and mostly for the purpose of putting
people in touch.

~~~
carbocation
It's a two-sided market, and seeing only 1 side project listed there (from
August 2014) makes me think the marketplace is dead.

Two thoughts:

1\. If there are prior successful sales, show those!

2\. If possible, try to show more (even if this means linking out to projects
for sale on different sites until you get some traction).

------
cookiecaper
I just want to say this thread is awesome. I have a side project that makes
real, substantial revenue that I've been wanting to offload for a while. I
don't think it's quite in condition to be listed with a broker yet, but it's
great to hear about these resources and read about other hacker-entrepreneurs
experiences offloading their own side projects.

------
gohrt
Why are the answers here so coy?

"Send me an email, we'll talk"

Is it a secret to be shopping your website/product to a new management? Why?

~~~
jacquesm
Advertising your business is for sale may bring unwanted attention too.

~~~
dennisgorelik
Could you give an example of such unwanted attention?

~~~
shill
Customers/users abandoning a product when they learn it is for sale.

~~~
jacquesm
Bargain hunters, brokers of ill repute, press and so on, it may also put a
serious dent in your ability to do business development until the situation
around the (potential) sale has stabilized which in turn will hamper your
ability to negotiate.

------
forestcall
I own Peaceofcode.com a PAAS with a focus on remote software development.
Think Freelancer/Elance but with project manager/project owner/developer roles
and business process flow to reduce risk (scrum/git/unit testing). In the past
we focused on creating features that greatly reduce the risk of loss for the
customer and development people. This last year we moved toward scrum and
extreme programming features throughout the platform. We want to create a API
and integrate 50+ 3rd party tools such as (codio.com Online IDE). A big
feature-set we want to complete is based around opening the platform so the
members can actively steer the features we release. Another endeavor we want
to move forward is a "non-profit foundation" that focuses on Online Remote
Software Development and identifying a "standard".

We want to give away up to 50% of the company in exchange for working capital
and business expertise.

We do not want to sell the company but we dont mind giving up majority
ownership so long as we can stay on as key executives. I currently own the
company 50/50 with another American.

Any ideas how we might find such partners?

Sorry if I am way off topic.....

------
phkahler
I think this is going to be important now and in the future. Systems are
getting so complex nobody can build something complete from scratch. I see
people making high quality components and then merging or being acquired to
create a whole end user product. Prior to that point, you'd have something
that's not very profitable unless lots of companies license your component and
do integration themselves.

~~~
aculver
So, an interesting thing I observed while building a SaaS company was that you
_can_ actually get off the ground with a very simple solution, you'll just end
up serving smaller customers with relatively simple needs (say $50-100/mo.)
These initial folks will pepper you with feature requests while still paying
you money for what you've got, which _can_ give you feedback about which
complexities you're missing that you really need to implement. If you choose
which things to implement carefully, you end up making your product more
useful to larger customers and you'll start closing some larger deals. (E.g.
$500/mo.) Rinse and repeat and before too long you've got a product with all
the bells and whistles and you're closing enterprise deals. (E.g. $2,500+/mo.)
The numbers here are all relative, but the point is that the smaller customers
end up subsidizing the development of what becomes an enterprise product.

(I think the advantage this approach has over the one you've suggested is that
the product is always capable of making money even from the very beginning,
just on a smaller scale at first. I think this is a critical feedback
mechanism so that folks know whether what they're developing is actually
useful to folks.)

~~~
vram22
Great comment. In a way, it's like what Geoffrey Moore talks about in his book
"Crossing the Chasm", about the difference between early adopters and
mainstream users.

------
rexreed
I (had) a good ecommerce inventory management company going - if you want to
buy it, drop me a note. I'm on to bigger / better things.

~~~
justintocci
you don't have any contact info on your profile

~~~
rexreed
fixed ;)

------
pmrd
A $500k business would mean you'll end paying on average between $3-5 million
for it. May I ask your rationale behind chasing these deals?

Why not split the $3-5 million into risk-based chunks and invest in startups
instead? You only need 1 of them to hit 50x.

~~~
bluedevil2k
I don't think that multiple is right - for a $500k rev software company, I
wouldn't pay any more than 3x.

~~~
tobltobs
This 3x yearly earnings is mentioned quite often. But I can't believe anybody
is selling for this. Maybe for 5x if you are in need of money. And in times of
zero interest rates this 3x thing sounds even more unbelievable.

~~~
antaviana
3x revenue, not 3x earnings. Revenue and earnings are two different beasts.

~~~
ownagefool
In a one man software company, there's often not a great of outgoings.

------
justjimmy
I run www.hearthstoneplayers.com

It's a profitable site (making enough profit the equivalent of a 2nd job),
minimal upkeep - just managing/scheduling content/writers. If anyone is
interested in taking it and scaling it or even automating it (it's about 2
years in and I don't mind letting it go and moving on to bigger stuff), I'm
open to contact!

------
hamhamed
I'm selling Zilyo [https://zilyo.com/](https://zilyo.com/) for around 200k
USD, which is a meta search for vacation rentals, big competiton in this space
and it's currently the inudustry leader in terms of product quality and # of
features and data. Many of its competition has raised millions and today it's
running on it's own with a monthly burn rate of 30$. It does around 12,000$ a
year. You can reach me at hamed@zilyo.com

It also hosts one of the most active and fastest growing APIs in mashape, to
leverage vacation rental data for developers and other businesses. Currently
it hosts around 250 API consumers (most of them are businsess leeching it for
free, so great oppurtunity in the B2B side of things)
[https://www.mashape.com/zilyo/zilyo/](https://www.mashape.com/zilyo/zilyo/)

------
layble
ExitRound ([http://exitround.com/](http://exitround.com/))

------
ukaner
Love this thread. I've been looking to find answer to this question. I used to
get more quality results from Flippa when I wanted to buy sites, back when
they were Sitepoint. Now it's more or less for newbies to drop their money.

For sales, Flippa offers a brokerage service as well. They don't charge,
unless the site is sold. I've got an extension for a CMS that stably makes
6-figures profit for past 3 years. Last year I wanted to experience the
process and test the market, but didn't find the right buyer. This year might
try again. If interested, reach me on Twitter: @ugurkaner

~~~
nstart
I'd be super interested to hear the story behind said extension. Sounds really
impressive.

~~~
ukaner
Hah, never considered it would be considered as "impressive" :)

------
dennisgorelik
Why buy another company (as opposing to focusing on your existing business)?

~~~
cpayne
It depends on what skills you bring to the table. (Personally) I know I can
execute and grow. But I can't for the life of me find an idea to get started
with.

Also, if you already have an existing business (such as the OP), then you may
be able to bring some cost savings (therefore more profit) than someone coming
in cold.

Or if you already have an existing client base, adding another business to the
mix means you may be able to sell to them

~~~
dennisgorelik
Buying your own customers is a very expensive way to increase sales...

------
greenwalls
Find apps you like then do some research and see if you can get a general idea
of the revenue they are making. If it looks like you could afford to acquire
them then email them and see what happens.

------
clarky07
I'm planning to refocus my mobile app business, and while I had planned on
just continuing on cashing the checks from my other apps, lately I've
considered the idea of selling them and really concentrating 100% on the main
one.

A few questions: 1\. What kind of cost do the popular escrow services charge?
I assume it's percentage based, only on successful sale?

2\. Do places like FEI sell apps, or just websites?

3\. If not, any recommendations on places to sell an app or bundle of apps?

~~~
justincooke
Here's a company that focuses on buying/selling apps specifically:
[http://www.appbusinessbrokers.com/](http://www.appbusinessbrokers.com/)

~~~
clarky07
hadn't seen them before, looks pretty good. thanks a lot.

------
bvc1000
We've got a profitable Bitcoin casino for sale...
[https://bitcoinvideocasino.com](https://bitcoinvideocasino.com)

------
trimble-alum
Again, if a side hobby/business is getting too time-sink, boring or unsure how
to scale it, selling off the value, happiness of customers, employees,
vendors, etc. created, is a rational act. Shutting down is only advisable if
the business model cannot ever have hope of being monetized AND folks running
it lack ideas (and asked around to advisors and such) how to adjust the
consumer/producer relationship.

------
raasdnil
On this thread, services like the reinteractive Operations as a Service
([https://reinteractive.net/service/sentinel](https://reinteractive.net/service/sentinel))
can help with a SaaS sale. Getting operations and deployment outsourced means
one less thing for the buyer to worry about and one big less thing for the
seller to handle.

Disclaimer: I work for reinteractive

------
Firegarden
Have you considered hiring a software developer? Some one extremely technical
most likely can deliver on any business model you conceive of.

~~~
bluedevil2k
It's the opposite situation here - I have the technical and business skills
but am looking to buy the idea.

------
dutchbrit
To be honest, you'd be better off starting from scratch. Buying something
already existing will take a while to make back the revenue.

------
tempestn
I have no interest in selling in the near future, but I'm curious whether
anyone in this thread has a sense of what kind of multiple an ad- and
affiliate-supported site like www.autotempest.com would bring. It's not
recurring revenue in terms of recurring billing like a SaaS, but revenue and
user base are very highly correlated.

------
arikrak
There are many startups with 1 or 2-person teams who fail to raise funding
since investors are looking for companies that can become worth $20M+. They
might be interested in a cheap sale to someone who would be happy with a solid
long-term revenue stream.

------
csomar
If you are (or any other investor/buyer) interested in WordPress/Advertising
and looking either to buy or invest, email me and maybe we can have a short-
talk to exchange information, knowledge and who-knows.

------
maxsavin
We're selling one called Flutter - [http://flutter-app.com](http://flutter-
app.com)

We're about to close it down, its got customers and MRR

~~~
karl_gluck
Also FYI to anyone trying this out -- this app gives you no warning or prompt
before following hundreds of accounts on your behalf. I went through the FTUE
and the first thing I saw was "You followed <rapidly increasing number> of
Tweeter's [sic] today".

~~~
maxsavin
Wrong - every action has to be initiated by the user. Nothing is automatic.

------
philjackson
Would you like to purchase yipgo.com? Feel free to email me.

~~~
samstave
needs more demo... the bubble screen shots should be clickable to see the
whole thing.

~~~
quickpost
Agreed... let someone try it out by themselves. A screencast of someone using
it would also be useful (think laracasts style screencast or similar). Being a
user of this product really appeals to me (aligns with some stuff I already
do), but the marketing is a bit light to convert me.

------
tbrooks
I've thought about selling my side business, but I want to sell it to the
right person.

I'm in Austin. Lemme know if you want to meet. My email is HN username +
gmail.

~~~
codex_irl
What is your side business?

~~~
tbrooks
Send me an email.

~~~
codex_irl
What is your email address? (I don't see it in your profile)

~~~
ladybro
Read his first comment :)

------
edbyrne
Drop me a note (email is in my profile) if you'd like to look at a SaaS
business at the higher end of your revenue target.

~~~
gknoy
Note: While HN's profile indeed shows an email field, that's not made public
to people looking at your profile. You will need to put it (obfuscated) in
your "About" section if you want other users to be able to see it.

------
nicogevers
We've just decided to sell our company. Squire.io give us a shout if it's
something you're interested in.

~~~
hughstephens
no email address in your profile :(

------
qthrul
Take a look at [http://exitround.com](http://exitround.com)

------
digvan
I am selling my fashion e-commerce website and app. Check my app at
leposha.com

------
dpweb
Need to sell my chrome extension, 130k users.

~~~
wusatiuk
where are the 130k from? which countries?

------
strooltz
send me an email (address is in my profile). we have something that might fit
what you're looking for...

------
cyberjar09
www.greenfossil.com <= crazy about engineering good software

------
tomasien
Can you send me a note - tomasienrbc@gmail.com. I'd like to run something by
you.

------
jfccohen
Ask Patrick McKenzie!

~~~
ryanjm33
You do see he already responded, right? (patio11, first comment above) :)

------
GFK_of_xmaspast
This strikes me as one of those 'if you have to ask, you shouldn't do it'
situations.

~~~
genericone
Care to explain? The OP's question was not whether it was a good idea, but the
specifics of how, where, and why a particular website marketplace.

~~~
trimble-alum
I was confused as well. A market place is basically lead-gen into the funnel
of deciding whom is worth further diligence (interviews, tours, IP review,
finances, customer surveys, etc.)

