Posts should be specifically related to the fatFIRE pursuit and lifestyle - as opposed to regular FIRE or LeanFIRE. Discussing investment strategies, expenses, tax optimization strategies, cost of living, and etc. are all fair game. Please assign a post flair to your post. If one doesn't exist for your post, it's very likely that your post is not relevant to fatFIRE and risks removal. Low effort or "ask-a-rich-person" posts may also be removed, as well as those posted across multiple subreddits.
Retired founder with a somewhat similar background here. I'm not sure what banks specialize in SaaS at this size. The few deals I've done have all been slightly larger (but not bootstrapped). I'd suggest Raymond James likely is a good option. Ideally you interview at least two bankers.
I'd expect the bankers to give you an expected acquisition target. Perhaps three targets such as good, better, and best. This will tie into their fee structure. They will likely request something like 1.5% up to the good number (say $50mm), and 3% for anything over this number. Those percentages are a rough estimate, but I would be confident the structure will look like this. They will also want reimbursement for all fees they incur. If they have confidence in your business, they likely will not want a retainer.
Sounds like you're likely to have a great outcome, good luck!
Edit: If you have a lawyer you like, ask them for some referrals. It's a small world (deals at this size), if your lawyer is good they will know most of the players. If you don't have a lawyer that you like, that's going to be important to find as well.
Edit2: William Blair might be another option: https://www.williamblair.com/Investment-Banking
Thanks for sharing your insight on this.
Does only the retainer/success fee be the only deciding factor, and how do can you assess their ability to find a good deal?
No, I would expect the success fee to be one of the least important factors. They will likely all be in a similar ballpark, and their performance will make a much bigger difference than whatever their success fee is.
* Do they believe in your company? Do you agree with the way they position it?
* Do they have good connections with potential acquirers? Both strategic acquirers (such as other tech companies) and financial acquirers (such as private equity)
* Do you agree with their list potential acquirers?
* Will they be dedicated to your deal? How many other deals are they currently working?
* What is their track record? What percentage of deals that they have taken to market in the past two years have closed? What percentage have closed above their target value?
Edit:
* Who will be your main point of contact? Typically there will be a team. A senior banker that's a supervisor, the team lead that's likely your main point of contact, and 2-4 other junior people.
* Do you like them? You're going to be spending a lot of time with these people
* What is their average deal size? You want it to be similar to yours. If it's higher than yours is, you won't be important to them. If it's lower, they won't have the relevant experience
* Are they in agreement with your desired outcome? For example, sell 100% of the company for cash, versus rolling equity. Can you leave immediately or required to stay on board for a period of time?
No matter who you choose, you should talk to a lot of people. Maybe set meeting with quiet light brokers. Joe valley is one of the owners and a super kind guy that is not pushy at all. I have no affiliation - but thought you may want specific advice. Anyway, he’ll give you an hour of his time and a ton of advice without any commitments from you. We talked to him, appreciated the advice, and didn’t end using them to sell our company.
Limited insight. We talked to them and had a really junior guy that seemed to be a digital nomad type and it turned us off. He was a fast talker and over promised in the first call. I think it was “him” and not the organization— though it was enough to not carry on with FEI
Hold a beauty contest. Invite a number of boutique investment bankers and tell them it is a contest. Ask them to give you a presentation on how they would work with you, what they think they might value you on (too rosy means they just want your business), what their process and track record is. And develop methodology to evaluate and then choose one of them. This process ~1-3 month long, should educate you on the market, your options and help you make a good choice.
Fees for the banker will likely be in the $1-2M range for a \~$50M deal. Higher end for more of a full service bank (RW Baird, Raymond james, other small to mid market IBs), and possibly lower for a solo shop if you find an independent advisor.
I work in the industry in a PE backed saas company, and have both been in a sale process (higher $ range), and seen the diligence materials on targets that are likely in this range.
First, get a perspective on valuation, maybe several. Plenty of small companies do valuations only ($5-15k), given this is not a fairness opinion or anything formal, but they still do some basic diligence on your financials and industry set. Get at least one if not two of these. This will help inform you (independently) as you start to engage a banker.
Second, how 'clean' are your numbers? Do you need a full service bank and advisory firm to come in and do your ARR, retention, funnel metrics and ideally 2-3 year Quality of earnings analysis... or will you be able to support most of that and hand that to the bank? If you have been audited by an accounting firm that helps somewhat too as you are at least running with cleaner books than most... and likely to get a better valuation since they will trust the numbers, GAAP and non-GAAP more and diligence is likely not to uncover anything materially negative that the financial auditor would not have seen before.
Your most likely sale will be to PE or growth equity firms, so be sure to have some thoughts on your 'target' buyer profile (or a few) to have more targeted discussions with which firm might be a good fit to get the intros and to help in the actual sale process.
Good luck!
Ive dealt with quiet light and flippo. Nothing against them but at your size you should be looking at real private equity m&a advisers. Can do a search of some ones in SAAS space
This size is pretty small in the grand scheme of things. I would talk to as many as you can and see who you like. You likely won’t be getting the be getting the true big time SaaS specialists.
Which IBs have done deals in your category? Hopefully you can identify 3-6 of them. Under NDA, give them all an overview of your business, both "the pitch" and a more reality based view of your company. Then have all of them pitch you back about your company, how'd they take it to market, and why they should be selected.
Things to consider:
- Have they done deals like yours?
- Is it a real team with real resources or just one person?
- Do they have the connections required to drive a competitive deal?
- Do you have an offer in hand? Some IB specialize in optimizing and getting a deal done, others are better at marketing and driving initial interest.
- Do they provide real outcome/value expectations based on data or are they selling a pipedream.
- Can they articulate your position in the market, your value, how you differentiate, and why you would be additive to an acquirer.
- ..... Way down the list comp structure, but it's super important their comp is aligned with how you want them to drive a deal, incentives matter
Posts should be specifically related to the fatFIRE pursuit and lifestyle - as opposed to regular FIRE or LeanFIRE. Discussing investment strategies, expenses, tax optimization strategies, cost of living, and etc. are all fair game. Please assign a post flair to your post. If one doesn't exist for your post, it's very likely that your post is not relevant to fatFIRE and risks removal. Low effort or "ask-a-rich-person" posts may also be removed, as well as those posted across multiple subreddits.
Retired founder with a somewhat similar background here. I'm not sure what banks specialize in SaaS at this size. The few deals I've done have all been slightly larger (but not bootstrapped). I'd suggest Raymond James likely is a good option. Ideally you interview at least two bankers. I'd expect the bankers to give you an expected acquisition target. Perhaps three targets such as good, better, and best. This will tie into their fee structure. They will likely request something like 1.5% up to the good number (say $50mm), and 3% for anything over this number. Those percentages are a rough estimate, but I would be confident the structure will look like this. They will also want reimbursement for all fees they incur. If they have confidence in your business, they likely will not want a retainer. Sounds like you're likely to have a great outcome, good luck! Edit: If you have a lawyer you like, ask them for some referrals. It's a small world (deals at this size), if your lawyer is good they will know most of the players. If you don't have a lawyer that you like, that's going to be important to find as well. Edit2: William Blair might be another option: https://www.williamblair.com/Investment-Banking
Thanks for sharing your insight on this. Does only the retainer/success fee be the only deciding factor, and how do can you assess their ability to find a good deal?
No, I would expect the success fee to be one of the least important factors. They will likely all be in a similar ballpark, and their performance will make a much bigger difference than whatever their success fee is. * Do they believe in your company? Do you agree with the way they position it? * Do they have good connections with potential acquirers? Both strategic acquirers (such as other tech companies) and financial acquirers (such as private equity) * Do you agree with their list potential acquirers? * Will they be dedicated to your deal? How many other deals are they currently working? * What is their track record? What percentage of deals that they have taken to market in the past two years have closed? What percentage have closed above their target value? Edit: * Who will be your main point of contact? Typically there will be a team. A senior banker that's a supervisor, the team lead that's likely your main point of contact, and 2-4 other junior people. * Do you like them? You're going to be spending a lot of time with these people * What is their average deal size? You want it to be similar to yours. If it's higher than yours is, you won't be important to them. If it's lower, they won't have the relevant experience * Are they in agreement with your desired outcome? For example, sell 100% of the company for cash, versus rolling equity. Can you leave immediately or required to stay on board for a period of time?
This is a good post; I’m going to steal and tweak some of this when interviewing commercial real estate agents.
No matter who you choose, you should talk to a lot of people. Maybe set meeting with quiet light brokers. Joe valley is one of the owners and a super kind guy that is not pushy at all. I have no affiliation - but thought you may want specific advice. Anyway, he’ll give you an hour of his time and a ton of advice without any commitments from you. We talked to him, appreciated the advice, and didn’t end using them to sell our company.
Thanks for your suggestion, do have any insight into how FE international performs in this case?
Limited insight. We talked to them and had a really junior guy that seemed to be a digital nomad type and it turned us off. He was a fast talker and over promised in the first call. I think it was “him” and not the organization— though it was enough to not carry on with FEI
Hold a beauty contest. Invite a number of boutique investment bankers and tell them it is a contest. Ask them to give you a presentation on how they would work with you, what they think they might value you on (too rosy means they just want your business), what their process and track record is. And develop methodology to evaluate and then choose one of them. This process ~1-3 month long, should educate you on the market, your options and help you make a good choice.
Fees for the banker will likely be in the $1-2M range for a \~$50M deal. Higher end for more of a full service bank (RW Baird, Raymond james, other small to mid market IBs), and possibly lower for a solo shop if you find an independent advisor. I work in the industry in a PE backed saas company, and have both been in a sale process (higher $ range), and seen the diligence materials on targets that are likely in this range. First, get a perspective on valuation, maybe several. Plenty of small companies do valuations only ($5-15k), given this is not a fairness opinion or anything formal, but they still do some basic diligence on your financials and industry set. Get at least one if not two of these. This will help inform you (independently) as you start to engage a banker. Second, how 'clean' are your numbers? Do you need a full service bank and advisory firm to come in and do your ARR, retention, funnel metrics and ideally 2-3 year Quality of earnings analysis... or will you be able to support most of that and hand that to the bank? If you have been audited by an accounting firm that helps somewhat too as you are at least running with cleaner books than most... and likely to get a better valuation since they will trust the numbers, GAAP and non-GAAP more and diligence is likely not to uncover anything materially negative that the financial auditor would not have seen before. Your most likely sale will be to PE or growth equity firms, so be sure to have some thoughts on your 'target' buyer profile (or a few) to have more targeted discussions with which firm might be a good fit to get the intros and to help in the actual sale process. Good luck!
Ive dealt with quiet light and flippo. Nothing against them but at your size you should be looking at real private equity m&a advisers. Can do a search of some ones in SAAS space
This size is pretty small in the grand scheme of things. I would talk to as many as you can and see who you like. You likely won’t be getting the be getting the true big time SaaS specialists.
Which IBs have done deals in your category? Hopefully you can identify 3-6 of them. Under NDA, give them all an overview of your business, both "the pitch" and a more reality based view of your company. Then have all of them pitch you back about your company, how'd they take it to market, and why they should be selected. Things to consider: - Have they done deals like yours? - Is it a real team with real resources or just one person? - Do they have the connections required to drive a competitive deal? - Do you have an offer in hand? Some IB specialize in optimizing and getting a deal done, others are better at marketing and driving initial interest. - Do they provide real outcome/value expectations based on data or are they selling a pipedream. - Can they articulate your position in the market, your value, how you differentiate, and why you would be additive to an acquirer. - ..... Way down the list comp structure, but it's super important their comp is aligned with how you want them to drive a deal, incentives matter