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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?

#91

Post by hkmurakami »

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…

>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).

Fascinating. I just messed around in Excel to see what the DCF discount rate would be, and it's exactly 25% discount to get to the 3x number.

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

#92

Post by patio11 »

davepeck wrote: post #61
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…

Out of curiosity, how do growth (and churn) factor into these valuations?

About in the way you would expect. In general, demonstrable recent growth tends to bias valuations upwards. Remarkably worse churn than average tends to bias valuations downwards. Remarkably better churn than average tends to bias them upwards.

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

#93

Post by patio11 »

aerovistae wrote: post #71
patio11 wrote: post #23

Earlier quoted context omitted.

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.

Unrelated to this thread, but have to say, text/background color contrasts and font sizes on starfighter landing page are a bit painful to the eyes.

Noted. It's a placeholder, and will likely not survive the launch of our first game in its present incarnation.

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

#94

Post by jacquesm »

derefr wrote: post #86
jacquesm wrote: post #72

Earlier quoted context omitted.

It's quite hard to gain traction on a corporate sale and you're right that keeping the customers and the consumers in the dark is 'par for the course', but to withhold the name of the company from an interested party serves only one goal. Think about it: I have this company for sale but I won't tell you which one it is until you sign this document. What's is there to lose for the company to have its name spread to th…

And journalists wouldn't pretend to be interested in purchasing companies just to get a scoop?

Not on this size companies. Mid sized deals involve 20 to 50 people 'in the know' and very rarely leak, even if the deals fall through. Any broker that can't tell a journalist from a serious entity won't be in business for long.

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

#96

Post by nedwin »

lsc wrote: post #90
imaginenore wrote: post #56

Earlier quoted context omitted.

3x doesn't seem bad at all. It's like an investment that generates 33.3% annually. After 3 years it's all free money.

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.

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

#97

Post by carbocation »

marissamary wrote: post #73

http://sideprojectsforsale.com - I had the same thought last year and made this working prototype for these types of businesses. It's pretty straightforward and mostly for the purpose of putting people in touch.

It's a two-sided market, and seeing only 1 side project listed there (from August 2014) makes me think the marketplace is dead.

Two thoughts:

1. If there are prior successful sales, show those!

2. If possible, try to show more (even if this means linking out to projects for sale on different sites until you get some traction).

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

#98

Post by trimble-alum »

lazyant wrote: post #34

(slightly OT) I don't understand Flippa; I've search several times for a regular web site making a bit of money and all of them look like scams, even the ones that are sold, with no PageRank since all the incoming links are spam.

Any decent marketplace for one-app or brand companies needs to prominently display intedependently-verifiable, evidence-based due-diligence metrics than can be dug into by your legal and forensic/tax accountant folks before a transaction. Saves lots of time. BTW: on apps, it is usually more profitable to license source code to games and similarly common apps (say for gyms, restaurants, etc.). If it's a FNAC app that you're bored of try to sell it, first, don't just throw out your work (or at least salvage the best parts business of assets/staff/knowlege)! Reduce, reuse, recycle.

(Some, but not all, due-diligence is worry alleviation through hazing ritual business theatre.).

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

#99

Post by trimble-alum »

genericone wrote: post #26
GFK_of_xmaspast wrote: post #7

This strikes me as one of those 'if you have to ask, you shouldn't do it' situations.

Care to explain? The OP's question was not whether it was a good idea, but the specifics of how, where, and why a particular website marketplace.

I was confused as well. A market place is basically lead-gen into the funnel of deciding whom is worth further diligence (interviews, tours, IP review, finances, customer surveys, etc.)

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

#100

Post by trimble-alum »

genericone wrote: post #26
GFK_of_xmaspast wrote: post #7

This strikes me as one of those 'if you have to ask, you shouldn't do it' situations.

Care to explain? The OP's question was not whether it was a good idea, but the specifics of how, where, and why a particular website marketplace.

I was confused as well. A market place is basically lead-gen into the funnel of deciding whom is worth further diligence (interviews, tours, IP review, finances, customer surveys, etc.)
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