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Q&A with both buyer and seller of a 6 figure web app. Ask us anything

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Re: Q&A with both buyer and seller of a 6 figure web app. Ask us anything

#11

Post by kareemm »

derrickreimer wrote: post #5
kareemm wrote: post #4

I'm going to cheat and ask derrickreimer a question because i'm curious. Was there any point in time during the negotiation when you thought the deal with us was going to fall through?

Good question! I felt really good about the prospect of selling to Kareem and the partners after our initial conversation. It seemed like a really good fit. Probably the point of highest doubt for me was after receiving the first offer. I was able to stay pretty logical about things, but I was definitely concerned we would not be able to bridge the initial gap. Having David from FE International as an advisor was key…

David @ FE did a great job for you guys. We had talked to him a couple years ago about being our broker when we sold a previous company. We didn't use him for other reasons, but having been on the buy side of the transaction, we wouldn't hesitate to him him represent us if we were selling a business.

Re: Q&A with both buyer and seller of a 6 figure web app. Ask us anything

#12

Post by sachinag »

I've been bootstrapping a small project management tool for non-technical folks that integrates with Gmail and Gcal called Braid - https://braidhq.com .

Obviously, getting people to recognize that the tool is important enough in terms of time/hassle to pay for is super hard. What advice would you have for me?

Re: Q&A with both buyer and seller of a 6 figure web app. Ask us anything

#14

Post by derrickreimer »

sachinag wrote: post #12

I've been bootstrapping a small project management tool for non-technical folks that integrates with Gmail and Gcal called Braid - https://braidhq.com . Obviously, getting people to recognize that the tool is important enough in terms of time/hassle to pay for is super hard. What advice would you have for me?

I think the most important thing is to know your target market, how to reach them, and to be talking to them about how best to solve their problems.

Re: Q&A with both buyer and seller of a 6 figure web app. Ask us anything

#15

Post by kareemm »

sachinag wrote: post #12

I've been bootstrapping a small project management tool for non-technical folks that integrates with Gmail and Gcal called Braid - https://braidhq.com . Obviously, getting people to recognize that the tool is important enough in terms of time/hassle to pay for is super hard. What advice would you have for me?

> getting people to recognize that the tool is important enough in terms of time/hassle to pay for is super hard.

In my experience if it doesn't solve a top of mind burning problem for your customers, selling is going to be uphill all the way. When do people have the pain that your tool solves? And how would they go about finding a solution to that pain? And how do you harvest that intent?

Hiten Shah has a good framework for marketing:

1. “Who are your customers?” 2. “Where do they hang out?” 3. “How should you engage?”

You can read more here: http://home.profitwell.com/saas-dna-project/hiten-shah-saas-...

Re: Q&A with both buyer and seller of a 6 figure web app. Ask us anything

#16

Post by kareemm »

vinceh wrote: post #13

> specific numbers So what were the specific numbers? How did you guys arrive at the number? Did you negotiate? Were there any fees?

We paid $128k, which was asking, and 3.5x seller discretionary earnings (basically revenue minus expenses, where expenses don't include any money the seller chooses to take out like his salary or healthcare, etc). Our opening offer was 2.8x SDE. We came up because we looked at our alternatives to buying it and they were unpalatable - we really liked Codetree because it ticked a lot of the boxes for us.

Transactions of this size typically go for between 2.5-4x SDE.

Fees, if any, were paid by the seller.

Re: Q&A with both buyer and seller of a 6 figure web app. Ask us anything

#17

Post by freakyjoe »

vinceh wrote: post #13

> specific numbers So what were the specific numbers? How did you guys arrive at the number? Did you negotiate? Were there any fees?

Whilst I'm also interested in the actual numbers :) I'm also interested to learn how you came about an evaluation.

Was it based on user count, current revenue, growth potential, etc?

Thanks.

Re: Q&A with both buyer and seller of a 6 figure web app. Ask us anything

#18

Post by freakyjoe »

kareemm wrote: post #16
vinceh wrote: post #13

> specific numbers So what were the specific numbers? How did you guys arrive at the number? Did you negotiate? Were there any fees?

We paid $128k, which was asking, and 3.5x seller discretionary earnings (basically revenue minus expenses, where expenses don't include any money the seller chooses to take out like his salary or healthcare, etc). Our opening offer was 2.8x SDE. We came up because we looked at our alternatives to buying it and they were unpalatable - we really liked Codetree because it ticked a lot of the boxes for us. Transactions o…

I think that answers my question, thanks... Sounds like pretty straight forward maths for the most part :)
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