Tips on valuing my SaaS company from a search-funder perspective
August 02, 2019
by a searcher from The University of Sheffield - Sheffield University Management School in Leeds, UK
Hi, I have a SaaS company which I am thinking of posting as a deal, but I have little idea how to value it and what information to present for a search fund aside from the turnover and EBITDA.
The company provides B2B services online with a price-per transaction model and we have been profitable since starting the SaaS business in 2012. We provide two main products, each providing roughly 50% of revenue.
The company seems too small for an institutional investor but too large for an individual so a search fund in theory might provide a nice middle ground. Turnover is 1.1m USD, gross profit around 60% before staff costs. We are two full time director/employees and 4 part time programmers who work on new versions of the software and making our website look better,. I've had a look at the existing deals listed on searchfunder but haven't seen a comparable sector.
Customers aren't tied into any long-term contracts, although our customers usually integrate our API and we have very low churn rates.
We have a handful of competitors and we don't have any evidential data on our relative market share nor total market size.
What kind of information should I include in the deal listing. Obviously turnover and EBITDA, but how would searchers evaluate the value of the company if EBITDA has already taken into account office rent and salaries of employees who the searchers may decide they don't need/want. I want to maximise my sale price but don't want to turn away a search fund by providing too little information for the valuation - at the same time I don't want to ramble on in the deal listing if information would be irrelevant.
edit###-###-#### : The industry which we serve is data cleaning of contact/user databases for telephone numbers . Just the same as email cleansing to remove fake/invalid emails.
from University of Virginia in Miami, FL, USA
You should consider including customer and account summary statistics. Things like top 10 customers as percentage of revenue (the lower the concentration typically the better).. Even if a portion of your revenue is transactional in nature (e.g, API calls), if your per customer transaction volumes are fairly consistent year in year out you are going to want to spell this out. Additionally, if you see volume expansion over time (e.g, per customers volume tends to grow at XX rate year over year), you will also want to highlight this.
In relation to your comments about personnel and office related costs baked into EBITDA those are real costs of running the business. If anything, a searcher acquiring your business is looking to grow it over time and will need to invest more in personnel and infrastructure.
from Friedrich in München, Deutschland