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Ask HN: Where can I buy real software companies?

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Ask HN: Where can I buy real software companies?

#1

Post by bluedevil2k »

So I have a software company that is generating a good amount of cash. I'd like to buy another small software company and (ideally) optimize it and make some more money.

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't have the time for?

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

#4

Post by 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://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?

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

#5

Post by 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.

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

#6

Post by 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.

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

#8

Post by patio11 »

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 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.)

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

#10

Post by patio11 »

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.

Systems are getting so complex nobody can build something complete from scratch.

Come out to Microconf sometime. You can meet ~300 nobodies all at once!

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