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29 - Negotiating a Micro Saas Acquisition
"The Real Art of Negotiating Micro SaaS Acquisitions"
In this episode, Andrew Pierno from XO Capital offers an insider’s look at how to navigate the complex waters of acquiring a micro SaaS business. Drawing from his extensive experience, Andrew stresses the importance of simplicity and clarity in negotiations. Here are some key takeaways:
1️⃣ Price & Payback: Stick to your guns on the price and aim for a 2-year payback period. A firm price sets the stage for straightforward negotiations.
2️⃣ Deal Speed: If negotiations are dragging, take it as a red flag. Over-complication is not only a hassle but can be indicative of an uncooperative seller.
3️⃣ Initial Offers: Feel free to low-ball at first, especially for first-time sellers who may have inflated expectations.
4️⃣ Diligence: Always aim to agree on a price before due diligence. The aim is not to drive the price down during this phase but to confirm that the initial assessment was correct.
5️⃣ Two-Track Offers: Usually present two types of offers—one with a lower overall price but more cash upfront, and another with more seller financing but a higher overall price.
6️⃣ Turnouts over Earnouts: For businesses with less than 10k MRR and high churn, Andrew introduces the concept of a "turnout" — a reverse earnout that's paid if the MRR remains stable post-acquisition.
7️⃣ Reputation Matters: If you’ve done deals before, flaunt it. The reassurance can expedite the process.
8️⃣ Human Element: Being firm doesn’t mean being an ass. Reputation is everything.
9️⃣ Avoid Bidding Frenzies: Don't let emotions get the better of you. Remember, the price will determine the success of your acquisition.
Middle Finger Response: Expect initial resistance, but don’t be disheartened. Many sellers come back to reality and are open to negotiating after some time.
Whether you're a first-timer in the micro private equity space or a seasoned buyer, this episode is packed with actionable insights. Happy hunting!
Follow us for more episodes of 'Fund Stuff', the podcast that delves deep into the nitty-gritty of buying and scaling SaaS businesses.
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By Andrew Pierno
5
11 ratings
"The Real Art of Negotiating Micro SaaS Acquisitions"
In this episode, Andrew Pierno from XO Capital offers an insider’s look at how to navigate the complex waters of acquiring a micro SaaS business. Drawing from his extensive experience, Andrew stresses the importance of simplicity and clarity in negotiations. Here are some key takeaways:
1️⃣ Price & Payback: Stick to your guns on the price and aim for a 2-year payback period. A firm price sets the stage for straightforward negotiations.
2️⃣ Deal Speed: If negotiations are dragging, take it as a red flag. Over-complication is not only a hassle but can be indicative of an uncooperative seller.
3️⃣ Initial Offers: Feel free to low-ball at first, especially for first-time sellers who may have inflated expectations.
4️⃣ Diligence: Always aim to agree on a price before due diligence. The aim is not to drive the price down during this phase but to confirm that the initial assessment was correct.
5️⃣ Two-Track Offers: Usually present two types of offers—one with a lower overall price but more cash upfront, and another with more seller financing but a higher overall price.
6️⃣ Turnouts over Earnouts: For businesses with less than 10k MRR and high churn, Andrew introduces the concept of a "turnout" — a reverse earnout that's paid if the MRR remains stable post-acquisition.
7️⃣ Reputation Matters: If you’ve done deals before, flaunt it. The reassurance can expedite the process.
8️⃣ Human Element: Being firm doesn’t mean being an ass. Reputation is everything.
9️⃣ Avoid Bidding Frenzies: Don't let emotions get the better of you. Remember, the price will determine the success of your acquisition.
Middle Finger Response: Expect initial resistance, but don’t be disheartened. Many sellers come back to reality and are open to negotiating after some time.
Whether you're a first-timer in the micro private equity space or a seasoned buyer, this episode is packed with actionable insights. Happy hunting!
Follow us for more episodes of 'Fund Stuff', the podcast that delves deep into the nitty-gritty of buying and scaling SaaS businesses.