I sold Bingo Card Creator through FEI ( 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…
Worked next to the FE guys in a startup space and they are certainly hard working guys and know there stuff. Would recommend chatting to as well.
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.
3x revenue, not 3x earnings. Revenue and earnings are two different beasts.
In a one man software company, there's often not a great of outgoings.
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.
"Systems are getting so complex nobody can build something complete from scratch." I would claim there is still a large chunk of areas that have very poor service from the software field and would find tremendous value of a trivial software product that is just applied correctly. So it's more about service design rather than hightech, if one is just looking to make a profit.
Please forgive me if this presumissious of me, but you wouldn't happen to know of some of these areas that need more quality software? The only one that I'm aware of its medical, which usually has regulations and long leads before making money.
"Systems are getting so complex nobody can build something complete from scratch." I would claim there is still a large chunk of areas that have very poor service from the software field and would find tremendous value of a trivial software product that is just applied correctly. So it's more about service design rather than hightech, if one is just looking to make a profit.
Please forgive me if this presumissious of me, but you wouldn't happen to know of some of these areas that need more quality software? The only one that I'm aware of its medical, which usually has regulations and long leads before making money.
I'm mostly clueless. But I see the pattern all around me still that in established business processes there are so many places where lots of things are done as in pre digital ages. B
As an example...
Building and construction is still in infancy as what it comes to utilizing digital technology. The field is fragmented with long subcontractor chains. The digitalization that happened in e.g. car manufacturing is not yet complete. The field is dominated with clunky, expensive cad packages which, while some may be eatabslished standards, are never the less decades old piles of legacy software. Most of the data is still transmitted between parties in paper drawings.
We're selling one called Flutter - http://flutter-app.com We're about to close it down, its got customers and MRR
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 of Tweeter's [sic] today".
Wrong - every action has to be initiated by the user. Nothing is automatic.
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.
I don't know why people are downvoting this comment, but I'm having lunch with the OP next Wednesday so clearly there is some value here...
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 fo…
"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.
> a) why would they sell it?
If I had to come up with something... Risk that the business fails. Some would rather take $200k than hope a $66k income sustains in 2019 and beyond.
And liquidity, although it's usually not terribly difficult to borrow money if you're cashflow positive, it can be very nice to get $200k today to jumpstart an even more promising business or jumpstart a mortgage, instead of delay that for 4 years.
Rob Walling and Mike Taber have a more authoritative answer on that than I do. There was a videographer there but I'm not sure what got shot. Don't quote me on this, but I think the talks were recorded. They typically release them midway through the year as part of marketing the next conference.
I have a bootlegged audio recording - think it'd be alright to post it here?
Why so little? It contrasts sharply with the valuations at which the startups (or even established companies, which no longer grow like crazy) are invested into at. Why would i sell my business at 3x SDC (which, if it's a small one-person shop, probably just 15-20 months' worth of all 'take home money')? Only if was a 'crap business' as said, and i know it is heading straight into the ground and can somehow conceal i…
3x SDC is the normal rate. I've worked at a few companies where we've been sold to VCs and the like. Anything more, and the risk of no recuperating the invested money is too great. (unless you find a sucker to dump it on, which is basically the current buisness model for most of silicon valley)
Average P/E across all business sectors tends to be around 15 long term, with fluctuations mostly staying between 10 and 25, getting out of these ranges only in extreme cases like a war or a major international crisis (in XX century, U.S. average p/e was under 10 for any significant time only during WWI, WWII, and the 1970s oil shock). If some business is really worth only 3x of its annual profit it must be a really, really dodgy one (only one of the hundreds of tracked business sectors with P/E under 3 now is TV broadcasting, which is agreeably on its death track).