2024.09.10 - Online Biz Acquisition Opps

Hey hey peeps. 3 week we got 2 good SaaS Businesses and an ecommerce examples that I believe is over priced — to learn from.

I know its been a minute since I’ve sent out a deal round up. I’ve been busy trying to enjoy the last month of summer here in Whistler Canada. Time has gone fast and feel like I’ve been too consumed with business =( . My recent acquisition has been going smooth, although time consuming as I get into the driver seat. Plans are being executed and things are moving along. I have written some blog posts recently on AcumenWire.com such as Why Lead Magnets Are Bad For Business. In the fall/winter months I am planning to do a podcast where I share more about online business acquisitions and the things I am working. on. Yea lots in the fire.

🔫 Gun to my head question:

If I had to write a check for one of the businesses in this email, with no other details which one would it be?

I would go for the for the Data Visualiation Tool, the software is newer and in hot demand.

Here’s the deals!

// Award-Winning SaaS Productivity App | $265K Profit

💰 Asking Price: $1,100,000
📊 TTM Revenue: $465,000
💼 TTM Profit: $265,000
📅 Established: 2016

This SaaS productivity app, likely similar to tools like Boomerang, operates within your email and has been around for 8 years. The details are sparse, but it seems like a solid opportunity for anyone interested in SaaS, especially given its profitability.

The fact that it’s owned by an angel investor is interesting. On the one hand, the bull case is that this is the smallest business in the investor's portfolio, so it hasn't received much attention. That means there could be untapped growth potential. On the other hand, the bear case is that the seller has already explored every growth channel and hasn’t been able to scale it further. If you’re considering an offer, it would be crucial to come in with a fresh growth plan that hasn’t been tried yet.

The app is 8 years old and making $265K, which is respectable, but there are some key details you'd want to dig into:

Questions:

• ❓ What’s the customer lifetime value?

• ❓ Who are the main competitors?

• ❓ How much revenue did it make in the past—has it been on a positive or negative trend?

At a 4x profit multiple, this seems like a reasonable deal, especially if there’s a growth plan that can push it to the next level.

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// Subscription-Based Data Visualization Tool for Traders

💰 Asking Price: $800,000
📊 TTM Revenue: $379,000
💼 TTM Profit: $228,000
📅 Established: 2023

This SaaS business provides a data visualization tool tailored for traders, simplifying Wall Street data into an easily digestible format. Traders spend a lot of money on data access, often driven by the addictive nature of needing to stay informed, even if they don't always need the data. The fact that this tool has a community behind the subscription adds an additional layer of stickiness, keeping users engaged.

With a monthly recurring subscription model and a low multiple, this is an intriguing opportunity despite the business being only 1-2 years old. The ticket to winning here would be fast customer acquisition through ads—traders are known to invest in tools they believe will give them an edge, and a well-targeted ad strategy could drive significant growth.

Highlights:

• Addictive Market: Traders are heavy spenders on data access, often driven by the need to stay informed.

• Community Support: The subscription includes access to a community, adding value and stickiness.

• Recurring Revenue: The business operates on a monthly recurring subscription model.

• Low Multiple: Priced at 3.5x profit, which is reasonable for a SaaS business, even one this young.

Questions:

• ❓ Who are the main competitors, and how does this tool differentiate itself?

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// Overpriced eCommerce Brand in Health, Medical & Wellness

💰 Asking Price: $2,300,000
📊 Gross Revenue: $8,830,566
💼 Cash Flow: $503,587
📅 Established: 2020

I’m not paying 4.5x for this one. I’ve included it as a more a lesson in ‘what to look for’.

The Bad:

• Low Margins: The business has incredibly low margins of 5.6%, which makes the asking price unrealistic at 4.5x.

• Heavy Reliance on Paid Advertising: Nearly all revenue comes from paid ads. That’s not necessarily a bad thing — if you can still turn a nice margin afterwards. 15% is the absolute lowest I’d want to go.

• Newly Established Recurring Revenue: The recurring revenue model was only started recently, so it doesn’t have a long track record.

The Good:

• Product Market Fit: The business has found a market, as substantiated by its revenue.

• Manageable Product Line: With only 33 products, it’s a manageable amount for someone looking to take over.

• Recurring Revenue: There’s some recurring revenue, although the details are vague.

• Diverse Sales Channels: Most of the revenue comes through their website, with 10% from Amazon. There’s room for growth on Amazon if that’s something you want to explore.

This might be a good business… at a 3x multiple.

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