Are most~$400K-$1M SDE businesses for sale using a CRM?

October 28, 2024

by a searcher in Chicago, IL, USA

I have been surprised to see that most businesses for sale I come across in the $400K-$1M SDE range already have a moderate-advanced tech stack in place with things like CRM, rule-based inbound call management, SOPs, templated estimators, route planning software, employee communication tools, etc. Is this typical?

I was expecting to see more fax machines and paper-based businesses but this has not been the case..... Maybe I am focusing on the upper end of quality since I am seeing that in the multiples, but I just haven't even seen true paper-based businesses.

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Reply by an investor
from University of Puget Sound in Seattle, WA, USA

I think this is likely industry specific and based on stories circulated of what searchers experienced in 2014 rather than###-###-#### COVID likely expedited the tech stack of small businesses and user-friendly CRMs that can scale (ie. Hubspot) have now been around for 20 years. With that being said, I closed on a company in January that constantly ran three dot matrix printers and their ERP was run on a unix terminal (~$400k SDE). The true paper business are likely the smaller ones that likely will close up shop without being sold or hit the desk of a searcher.

Reply by a searcher
from The University of Chicago in Nashville, TN, USA

I haven't seen any truly paper-based businesses out of the ones I have looked at but definitely a couple that run on excel, e-mail and QuickBooks. Most have had some level of CRM, but when I ask questions it sounds like they are only using a fraction of the features and compliance may not be too good. There may be some self selection bias though as I'm mostly working through brokers and they have prepped their clients businesses and likely recommended some upgrades. If you do proprietary outreach you may see more paper-based businesses.

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