Anyone have an idea on why 3.7x revenue for SaaS was considered a fair valuation? I thought SaaS was always closer to 5-6x
I almost sold Baremetrics for $5M
111–120 of 244 posts
Re: I almost sold Baremetrics for $5M
#112Earlier quoted context omitted.
I've heard this too, except it got really annoying to be working crazy hours doing annoying crap while you have a team of devs working 40 hrs working on interesting tech with not much pressure. I burnt out, now I delegate lots of crap work and it works better for me and I think the team as well as they get a wider perspective.
> I burnt out, now I delegate lots of crap work and it works better for me and I think the team as well as they get a wider perspective. I think this is an underrated (but very accurate) opinion. While I'm not the founder of a company, I do have the tendency to shield my team from much of the insanity I deal with on a daily basis. I've made active, conscious efforts to stop doing this. When you shield your team from…
Regarding 1st point: If you manage people-this is inevitable. I had plenty of situations where you know way more than you can tell anyone,yet you neet to put a face on just so could people carry on working. In most cases it's better for one person to be worried rather than the entire team.
Re: I almost sold Baremetrics for $5M
#113This is very painful to hear. I've tried selling my main company to 4 different buyers now... every single time we get past the LOI phase, they see all our financials in plain sight, and there's always some stupid hangup/ghosting/sketchiness exactly like in this article. Very disappointing, considering how transparent we are up front sending every financial, and there's no real 'discoveries' later that would change t…
"I found out later our accountant had dementia, and did all our taxes wrong"
Holy shit. I can't even imagine if that happens to my business. But really, you always want a second set of eyes to review your taxes, always. Even if you are not the expert, never trust the accountant. I always manually verify the drafts myself even if I don't quite understand everything on it. But I have a high level idea of the important line items. I have caught errors by my CPA (without dementia). So always verify yourself before taxes are filed.
Re: I almost sold Baremetrics for $5M
#114This is very painful to hear. I've tried selling my main company to 4 different buyers now... every single time we get past the LOI phase, they see all our financials in plain sight, and there's always some stupid hangup/ghosting/sketchiness exactly like in this article. Very disappointing, considering how transparent we are up front sending every financial, and there's no real 'discoveries' later that would change t…
"I found out later our accountant had dementia, and did all our taxes wrong" Holy shit. I can't even imagine if that happens to my business. But really, you always want a second set of eyes to review your taxes, always. Even if you are not the expert, never trust the accountant. I always manually verify the drafts myself even if I don't quite understand everything on it. But I have a high level idea of the important…
Yes.. great advice. They're all fixed now, thankfully, but yes that lesson was a painful one.
Re: I almost sold Baremetrics for $5M
#115This is very painful to hear. I've tried selling my main company to 4 different buyers now... every single time we get past the LOI phase, they see all our financials in plain sight, and there's always some stupid hangup/ghosting/sketchiness exactly like in this article. Very disappointing, considering how transparent we are up front sending every financial, and there's no real 'discoveries' later that would change t…
Require 10% of the deal in escrow after the first 2 weeks in the discovery phase. If the deal doesn't go through, the amount in escrow defaults to you. If they jerk you around on the escrow, cut them loose, they're not actually interested in acquisition
I've handled a decent volume of small tech startup m&a and I've never seen an escrow. Better advice is for the sellers to spend a decent amount of time in person with the buyers. Get to know who you are dealing with. It's a lot easier for a buyer to mislead (intentionally or otherwise) via email as opposed to in person lunches and dinners.
Re: I almost sold Baremetrics for $5M
#116Earlier quoted context omitted.
I'm very sorry for your circumstances, but are the "every buyer ghosted me when they saw our financials" and "our accountant had dementia" elements of this related? How could millions of dollars of net income go to insolvent so quickly? There are two sides to this general issue, and while there are bad buyers there are people dishonestly presenting their companies. Not that you are, but it seems like a very low-trust…
There's obviously a lot more nuance to the situation. I'm here just posting my in-passing rambling, glossing over most details. In general, any mistakes made were clearly presented, and no numbers were deceivingly absent or misrepresented. The accountant issue is related because there were a number of major issues that lead to the downfall. One being the entire year-long+ selling debacle, the other other was accounti…
I'm so sorry. I hope you bounce back and have an exit on your next try such that you don't worry about fico.
Re: I almost sold Baremetrics for $5M
#117Re: I almost sold Baremetrics for $5M
#118Earlier quoted context omitted.
Tye typical reason for long closings, at least in the US, is sale contingencies and financing. If sale of your existing home is contingent on closing on your new home, and that sale is contingent on another closing, things can take awhile to sort out (and not much time at all to blow up). Financing can also take quite a long time, especially if you have a non-traditional income stream (i.e. you're a startup founder).
A buyer who doesn't have the money now, doesn't have the money. The only reason to humor such people is if you have the asset priced too high. In that case, those might be the only people interested...
In the UK, ordinary families don't have access to large amounts of ready cash - the money they intend to spend on your house is currently tied up in their existing house. So if you want the deepest pool of buyers (& hence to realise the best price for your property) you have to accept being part of a chain of house buyers, all of whom need to perform a dance where they simultaneously sell their houses to each other in order to raise the cash they need to buy the next property in the chain.
It should be unsurprising that this process is widely regarded to be more stressful than anything other than death in the family or divorce.
Re: I almost sold Baremetrics for $5M
#119Earlier quoted context omitted.
Sure, Amazon does it all the time to small startups. They fly you into Seattle, setup a fancy meeting with strategy teams and M&A, make you run through a pitch deck, explain every aspect of your business. They take diligent notes until they fully understand your inner workings, they tell you thanks, you'll hear from us soon. And nothing happens, 6 months later AWS launches your exact product. Founders need to be extr…
I believe that's also not one but two episodes of Silicon Valley. The second time they believe they've figured out how to avoid it happening to them again.
Silicon Valley,while hilarious,has tons of invaluable business lessons.I think I could probably even say it's one of the best series about business. It covers absolutely every aspect of building, growing, maintaining and ultimately selling a business.
Re: I almost sold Baremetrics for $5M
#120Earlier quoted context omitted.
My lower class upbringing is showing, is that what an investment bank does?
Yes - this is a major function of private equity in general. They even have investment banks and firms that specialize in "buy side" versus "sell side" of the transaction.
Not for small companies that generally do less than $2M in revenue.