Experience with SaaS and/or Automotive Components Distribution Business

July 09, 2024

by a searcher from The University of Michigan - Stephen M. Ross School of Business in Detroit, MI, USA

Hi, I am a solo searcher looking in the area of SaaS and Automotive component distribution business. If anyone has any experience in either of these areas or both will like to connect to understand the nuances of these areas

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Reply by a searcher
from Colgate University in Charlottesville, VA, USA

These are wildly different industries, with SaaS being particularly unique, and often not considered a good fit for most searchers. My personal advice is to avoid SaaS unless you have deep software engineering/product experience. These businesses tend to trade at very high multiples, are usually run by a small team of A-players (hard to hire the right talent that has the fit for the exact tech stack + ICP knowledge), and operate in a market where they cannot win by being "just a copy of this other product". As such, success requires you to actually have a top product nationally in a very specific industry/work process, unlike other markets where you can simply be "top 10 in X city". In SaaS companies trading below $5M EV (and above really), the CEO is going to need to be a deep product expert, and in most cases they have oversight of the engineering. The skills required are just so much more narrow than in other industries, and I have trouble believing many searchers would be able to successfully run/exit a SaaS business without having those niche skills. A hiccup in a SaaS company is unlikely to be right sided by a non-technical searcher. Overall, I'd recommend focusing on the auto parts distribution industry, which is a much better fit for most searchers.

Reply by a searcher
from University of Stellenbosch in London, UK

Any SaaS platform that is doing well and growing will unlikely be sold. In all likelihood you will be buying someone else's problem.

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