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Ask HN: Where can I buy real software companies?

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Re: Ask HN: Where can I buy real software companies?

#161

Post by vram22 »

aculver wrote: post #22
phkahler wrote: post #5

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.

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 rea…

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.

Re: Ask HN: Where can I buy real software companies?

#162

Post by vram22 »

gaius wrote: post #68
log_n wrote: post #35

Earlier quoted context omitted.

Valuing companies based on revenues is a bit of a stretch in my mind. Actual income/earnings/cashflow makes a lot more sense. If you don't take into account expenses then you get some really wacky valuations: ie a company is in the business of selling houses (or other large cost item) for a small percentage higher than they bought them. If you don't take into account the cost of buying the house and running the busin…

There is a word for that: EBITDA

And interestingly, VC's themselves use it. See Fred Wilson's blog, avc.com, for example.

Re: Ask HN: Where can I buy real software companies?

#163

Post by schlumpf »

anovikov wrote: post #160
KaiserPro wrote: post #149

Earlier quoted context omitted.

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,…

A company’s valuation multiple can be highly sensitive to the choice of denominator. You are making an apples-to-grapefruits comparison by trying to equate “seller discretionary revenue” with US GAAP net income per share.

The SDR calculation [1] excludes compensation and looks like a generous net revenue measure. Earnings per share -- from which P/E multiples on public companies are typically calculated -- includes compensation, interest expense, various non-cash adjustments, and adjustment for dilution.[2] Generally you would expect the SDR number to be higher than net income and correspondingly attract a lower multiple in estimating firm value.

As others have commented, there are additional reasons why valuation metrics for large-cap listed companies don’t make for useful comparison with SaaS startups. See also Heidi Roizen’s cautionary tale [3] about the perils of multiple envy.

[1] https://news.ycombinator.com/item?id=9589223

[2] https://en.wikipedia.org/wiki/Earnings_per_share see also ../Net_income

[3] https://news.ycombinator.com/item?id=9516910

Re: Ask HN: Where can I buy real software companies?

#165

Post by nicdo777 »

patio11 wrote: post #8

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…

Hi guys

I have a website that makes quiet some amount of money (at least according to my own criteria) and out of the blue I have been contacted by a so called buying/sellin sites company, named Hautesite, on behalf of a potential client interested in buying my website.

Ever heard of Hautesite? Their french website is http://www.hautesite.fr/, they say they are from the UK and are big in the UK (but no website to be found). I was wondering if it was a scam?

I even got into a Skype call with one of the employee who seemed very professional and so on...

But still... a buying and selling sits business with NO website in english, no social network, no presence on social media... I find it very strange.

Thanks in advance for your help :)

Nicolas.

Re: Ask HN: Where can I buy real software companies?

#169

Post by ukaner »

nstart wrote: post #119
ukaner wrote: post #108

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 ye…

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

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