
Selling My Bootstrapped SaaS Business - AlikhanPeleg
https://www.indiehackers.com/@tylertringas/selling-my-bootstrapped-saas-business-26c8406e1d
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tylertringas
Hi folks. I'm the OP here. Hit me up if you have any questions.

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le-mark
_Go to Conferences ... I only reached a critical mass of serious acquisition
offers after attending my first Micro-Conf in Las Vegas._

Just curious, what types of activities did you do at MicroConf? Did you
speak/present? Did you attend sessions (which ones)? Did you just talk to
people and network? How did you plan to approach people at the conf? What
worked, what didn't?

I once paid to attend an industry conference for a product I was working on,
it was a complete waste of time because I basically did nothing, could not get
out of my shell, and didn't know what to do. So any guidance you have here
would be very valuable!

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tylertringas
Didn't speak. Just walked and talked. I spent a lot of time at conferences in
a previous job and no longer get massive anxiety from it. Two things that make
going to conference better: 1) Build a reputation online before (blog, tweet,
be transparent) (2) get a speaking slot if at all possible b/c then people
come speak to you.

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nathan_f77
> Purposefully under-optimize

> For example, I really do not understand paid search advertising (Google
> Adwords, Facebook, etc) so I purposefully put almost no effort into it as a
> customer acquisition channel for Storemapper.

This article is awesome and super helpful, but that particular point seems
like terrible advice. Surely it would be much better to hire a
marketing/adwords contractor, and increase the value of your company by
getting more customers.

I don't think I would want to purposefully leave any "room for improvement",
just to make a startup more attractive to buyers who have some experience with
ads and SEO. I'd prefer to do the best job I possibly can, and I'm sure people
would be still interested in buying, as long as you have the customers and
revenue.

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cultvoid
In my experience, hiring a marketing/adwords contractor is the very easiest
way to transfer cash out of your business and into somebody else's business,
with no discernible value gained.

I'm sure there are some hotshot marketing/adwords contractors out there...and
unicorns probably exist also.

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ProblemFactory
The "problem" with SEO and adwords consultants is that the good ones would be
working for the most lucrative verticals: insurance, consumer finance, medical
lawsuits, etc.

If your small SaaS business can afford to hire them, then they aren't worth
hiring.

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HeyLaughingBoy
You can say that about literally anything and have it be false. Simply because
someone/some company is amazing at what they do, does not mean they are priced
out of reach or otherwise unavailable.

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hahla
I buy bootstrapped businesses. Email in profile. Shoot me a message would be
happy to discuss even if its just to chat. I don't ask a lot of questions,
have numerous references, and I have been buying for the last 10 years.

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danieltillett
... and what revenue multiple do you pay?

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csa
> ... and what revenue multiple do you pay?

I'm trying to figure out if you're just being a jerk here, or whether you are
genuinely curious about a question with a wide range of acceptable answers. I
hope it's the latter.

Market rates are typically something between 2x and 5x some sort of revenue or
profit measure.

That said, the price can go over 5 if there is a big strategic advantage to be
had.

Conversely, the multiplier can be measured in months if there are some red
flags -- bad management, suspect financials (e.g, lots of charge backs,
excessive debt, cash flow mismanagement, etc.), suspect marketing activities
(e.g., janky backlink profiles), evidence of black hat / gray hat activity,
publicity issues, etc. Sometimes folks just want to sell these to get away
from them, and they are willing to offer the right price. Is offering a 12
month revenue/profit multiple or lower bad here? I would say potentially no.

Also note that some people are motivated to sell for some reason. If you've
got cash on hand, they will sell for less.

Anyway, whether you intended to or not, this sounded like a snarky reply. Much
has been written about markets for small companies, so blithely challenging
someone on HN seems inappropriate.

On the other hand, if you do know someone who has an unconditional open offer
to buy businesses at a specific multiple of revenue, please let me know. I can
hook them up with as much as they want. I'm fairly certain that this is not
the case, but I think it is prudent for me to ask.

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danieltillett
No I am asking a genuine question. My experience is all buyers want to pay 1x
to 1.5x of the after tax profit after some massive owner salary has been
subtracted.

From a financial perspective it almost never makes sense to sell unless you
have to get out today. If you have a good business that is earning good money
then just run it out for cash. At worst take your best employee, give them 10%
of the business, and let them run it.

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klttunets
This hasn't been my experience at all - I'm sorry you haven't had better
offers. If you haven't already, I suggest contacting the brokers mentioned on
this page (FE International, Pixel Paycheques) and see if they can get you
better deals

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danieltillett
I am not really looking to sell, this is just my experience of approaches I
have had. My favourite was the offer I got which came with a three year earn
out that was half my expected profit over the timeframe. Really.

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hyperpallium
I wanted to keep my first business as a life-style business, to fund other
ventures, because the income is financially a much better deal than a sale...
but also found that it just takes too much to run miltiple ventures (Elon Musk
notwithstanding).

Really liked the "see an opportunity", of the business being worth more owned
by them - the sale creates value in the world. Really, it's how a sale of
anything, product/service, should be.

Unfortunately, getting a business into a saleable state, and getting a sale
actually done, seem about as much work as creating a profitable (but not self-
running) business in the first place. Conceptually analogous to Brooks'
_program_ vs. _product_.

> In a strategic acquisition, businesses can be purchased

Typo/something missing after that?

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matrix
Excellent and very informative post. I'd love to see the things SureSwift
needed for due diligence and their hand-over list - it would be a good
checklist of things you need to have squared away to ensure a smooth
transaction.

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top256
imho this article is a good illustration of how business get bought and not
sold. The business has to be able to live on its own and be interesting to be
bought. But that means you have less reason to sell

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webbie917
Whew... I can think of a long list of reasons to sell a business. Many sell
simply because of life events - wanting to spend more time with family,
travel, buy a new house, deal with personal health. Running a small business
is a 24/7/365 job and you can't just take a month off because you have got a
honeymoon or a newborn in the plans.

Accounting (consult your own accountant please0: when you make salary/profit
from your small biz you get taxed at ordinary tax rate (up to 40% in the US)
where is when you sell biz as assets you may be taxed at capital gain tax rate
(0%-20%) which is a financial advantage - like you get paid 3-4 years ahead.
Again, consult a professional on this.

You could have other ideas or projects you want to work on, but unable to
because your business is your 100% priority and has been for too long.

You might not want to deal with hiring a team because that's the stage your
business is at - too big for you to handle on your own or you don't want to
work 60-hour weeks anymore.

I could just go on and on, but a combo of 2-3 of these will certainly make the
thought of selling quite appealing to many.

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scoot
I'm kinda wowed that something so rudimentary (the map doesn't even have
clustering FFS!) can generate a "life changing" income.

Developed during a single flight? It shows. So the real question is, why the
$$$$$ valuation?!

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bryanph_
Shows how out of touch I am with the corporate world. I can't believe people
pay monthly for this.

~~~
tylertringas
I know right. Big thanks to patio11 for convincing me (via blog posts and
tweets) that, yes, many businesses will pay quite a bit more than you think
for things like a store locator

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patio11
Thanks! That made my day. (I would have liked it regardless of the context but
particularly nice to hear in the context of helping a business to a materially
successful outcome.)

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webbie917
It's time you wrote a book (aka package your popular blog posts into an ebook)
Patrick and made people pay $$ for your advice :-)

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joosters
_...the cash, from selling the business has built momentum for other projects
like [...] angel investing,_

I just _knew_ that would be in there. Why do so many tech people seem to think
that VC investment is what they want to be doing once they have spare cash?
This isn't a personal critique of the OP, but it just seems so very common in
general. I don't understand it.

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danieltillett
I "invest" in new startups because I want to help the next generation. I put
invest in quotation marks because I don't expect to make any money (I will be
happy if I break even), but I do want to give back and create the environment
that I never had access to. I know others feel the same.

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amelius
> I "invest" in new startups because I want to help the next generation

That sounds noble. But, concretely, you want to help people make SaaS products
like Storemapper (mentioned in the article)? I don't want to sound demeaning,
but is that really such a noble goal?

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danieltillett
I am not trying to be noble, just trying to change things where I live for the
better (I am not in SV, I am in Australia).

When I started there were zero angel investors and next to zero VCs. Things
have got a lot better, but we still have a long way to go.

