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Ask HN: Should I sell my SaaS (400k rev)?

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Re: Ask HN: Should I sell my SaaS (400k rev)?

#11

Post by gigatexal »

just_to_ask_sam wrote: post #3
gigatexal wrote: post #2

If you can't fix the slowing growth and someone else wants to buy it and attempt to do so I'd say why not sell: the multiple you'll probably get on your revenue should be a tidy sum.

Thanks for your comment – another thing I'm worried about is what next? I've been doing this so long, that, unfortunately, I've gotten quite comfortable at it, and worry that I wouldn't know what to do next.

400k a year means the selling price would be about 4 million? How're your savings? I think that would be enough cushion to either seed your next thing or help you have the time to study and get up to speed for a 9 to 5.

Re: Ask HN: Should I sell my SaaS (400k rev)?

#12

Post by pesfandiar »

cylinder wrote: post #7

If you went completely passive (let your top employee just be CEO) today, how long will it take to lose all your customers and wind down to $0 revenue? I would just map out how long you think that would take, and forecast all future cash flows by that hypothetical method, and then make your sale price $1 above that amount (discounted). Very simply if this year you net $240k, next year $200k, then $150k, then $50k, th…

That makes financial sense, but people's time, sanity and overall health has some utility too. What if OP is simply burnt out?

Re: Ask HN: Should I sell my SaaS (400k rev)?

#13

Post by cylinder »

pesfandiar wrote: post #12
cylinder wrote: post #7

If you went completely passive (let your top employee just be CEO) today, how long will it take to lose all your customers and wind down to $0 revenue? I would just map out how long you think that would take, and forecast all future cash flows by that hypothetical method, and then make your sale price $1 above that amount (discounted). Very simply if this year you net $240k, next year $200k, then $150k, then $50k, th…

That makes financial sense, but people's time, sanity and overall health has some utility too. What if OP is simply burnt out?

Well that's why I said go completely passive. Not involved at all beyond getting a dividend payment

Re: Ask HN: Should I sell my SaaS (400k rev)?

#14

Post by wnm »

gigatexal wrote: post #11
just_to_ask_sam wrote: post #3

Earlier quoted context omitted.

Thanks for your comment – another thing I'm worried about is what next? I've been doing this so long, that, unfortunately, I've gotten quite comfortable at it, and worry that I wouldn't know what to do next.

400k a year means the selling price would be about 4 million? How're your savings? I think that would be enough cushion to either seed your next thing or help you have the time to study and get up to speed for a 9 to 5.

I don't think you can get 4 million.

Looking through some listings on a broker like FEInternational (https://feinternational.com/buy-a-website/), most SAAS businesses are valued at 3-4x anual profit.

He said profit margins were 60%, so $400000 x 0,6 x 4 = $960000.

And thats for a healthy business. This one is not growing, so you get probably less then that. After the seller's fee, and taxes you might end up with something like $600k.

Re: Ask HN: Should I sell my SaaS (400k rev)?

#15

Post by codegeek »

cylinder wrote: post #13
pesfandiar wrote: post #12

Earlier quoted context omitted.

That makes financial sense, but people's time, sanity and overall health has some utility too. What if OP is simply burnt out?

Well that's why I said go completely passive. Not involved at all beyond getting a dividend payment

Except that is not that simple when you own the business. You will always be responsible for things at the end of the day and that itself is a big burden.

Re: Ask HN: Should I sell my SaaS (400k rev)?

#16

Post by nstart »

Couldn't help but take a look at your profile. I noticed that you asked Sam 1.5 years ago whether to sell. It feels like you've been considering the selling option for a while now. Given the slow growth and that you are starting to tip towards negative growth, my hunch, and it's only my hunch, is that deep down, you've been feeling a little burnt out on this for a while now. But because of certain attachments naturally created because you made this thing, it feels like you can't get yourself to sell it.

That's just a long long hunch. But if it is true, and you feel that way even a bit, I'd say sell. Not as a financial or any other kind of scientific piece of advice. Just out of kindness to yourself and those working with you, allow yourself to step away and sell.

Re: Ask HN: Should I sell my SaaS (400k rev)?

#17

Post by simon_kerstein »

I have created this account for responding to this answer.

Move product development to 3rd world country, by spending 6-7K$/month you can gain 3-4 fresh bloods, who will continue working on your project. You will go to passive CEO position, where you control project development and oversea new features. may sound weird, but you dont need to think about giving shares to new employees, taxes for salaries or giving them office space. Just pay for their work and it will go as much as you want to continue with your project.

I am living in one of the developing countries, reach me out by email if you wish. simon dot kerstein at gmail

Re: Ask HN: Should I sell my SaaS (400k rev)?

#18

Post by AngeloAnolin »

Two things that stood out for me when reading your question:

1. I'm quite bothered by the fact that I can't fix churn Maybe you have already done, but I would suggest that you can be more transparent with your employees, who may have some ideas on how to resuscitate the business and make good returns again. This statement seems to imply that you are solely trying to fix whatever is broken with your current business model.

2. My broker believes we can get a good payout for the business Do you believe that your broker is acting on your best interest or the interest of the company? There's a fine line between those two. A payout at this stage of the company seems to be a scenario where you are simply abandoning ship while the rest of the crew is still paddling towards shore.

Hope you find what's best for you, the company and everyone that may be affected.

Re: Ask HN: Should I sell my SaaS (400k rev)?

#19

Post by gigatexal »

wnm wrote: post #14
gigatexal wrote: post #11

Earlier quoted context omitted.

400k a year means the selling price would be about 4 million? How're your savings? I think that would be enough cushion to either seed your next thing or help you have the time to study and get up to speed for a 9 to 5.

I don't think you can get 4 million. Looking through some listings on a broker like FEInternational ( https://feinternational.com/buy-a-website/ ), most SAAS businesses are valued at 3-4x anual profit. He said profit margins were 60%, so $400000 x 0,6 x 4 = $960000. And thats for a healthy business. This one is not growing, so you get probably less then that. After the seller's fee, and taxes you might end up with so…

Ahhh well then I am way off.

Re: Ask HN: Should I sell my SaaS (400k rev)?

#20

Post by just_to_ask_sam »

AngeloAnolin wrote: post #18

Two things that stood out for me when reading your question: 1. I'm quite bothered by the fact that I can't fix churn Maybe you have already done, but I would suggest that you can be more transparent with your employees, who may have some ideas on how to resuscitate the business and make good returns again. This statement seems to imply that you are solely trying to fix whatever is broken with your current business m…

Hi, OP here. Thank you for your comment. I'm baffled by how many wonderful people have shared their POV & experience.

I don't believe my employees would know what to do. I've spoken to them before, and gotten very little value from it. They don't have much of a business acumen.

It goes without saying that the broker is doing what's in his interest. But I've found this particular broker to be very truthful, upfront.

He believes we could get $700k, upfront cash and the rest ($100-200k) an earn out.

Of the 700k, I'd get $560-600k upfront after paying back investors (10%) and broker (10%).

At this point, I'm really paralyzed on how to move forward.

I'd LOVE to be able to fix the business, but my worry is I'd have to redo the product from ground up (we have a wonderful codebase that we rewrote a few months ago), in a way where we essentially put out a completely different product.

^^ That is one of the reasons I thought about selling – If I have to build a new product to fix churn, I might aswell sell, and do it from 0, given the risk at hand.

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