Tips on cold contacting potential targets
March 11, 2021
by a searcher from California State Polytechnic University - Pomona in Los Angeles, CA, USA
Hello Everyone. Recently I was lucky enough to attend the first SaaS ETA meet up. Tony, the main speaker, mentioned that a priority deal flow is especially necessary for searchers with a lower target purchase price. As a working self funded searcher (looking for a purchase price of < $3M) I was relying on the broker network to source deals but seller price expectations, especially in Software, is inflated at times. Tony's point resonated with me and I have started to formalize my proprietary deal flow.
I would like to ask the audience for any tips or guides as to how I can better cold contact business owners. My outreach is mainly thorough email and making that first introduction effectively is something new to me. I appreciate any advice and I want to thank Searchfunder and each community member for supporting one another.
from New York University in Menlo Park, CA, USA
I'm often able to get my clients 10-12x EBITDA (3-5x Revenue) on a software transaction for a growing company. This quickly makes any type of viable software company completely outside of your budget.
But, not all software companies are doing well right now. Many have been adversely effected by Covid and the founders are ready to move on to other ideas and projects. If you have the patience to wait out the virus and can see a path to profitability, it would make sense to look into these opportunities. These types of companies can typically be purchased for 1-2x revenue.
I currently know of a couple of these 'distressed' type software companies, glad to discuss in more detail if you contact me directly.
Regards,
David
from University of Pennsylvania in Austin, TX, USA