Selling Your SaaS To A Serial Acquirer: All You Need To Know
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Selling your SaaS company is a significant decision that requires careful consideration. One of the key choices you'll face is who to sell to. Would you go with a strategic offer, PE, or a serial acquirer?
Serial acquirers like saas.group, Berkshire Hathaway, and Constellation Software offer unique advantages that can potentially make the process smoother and more beneficial.
Understanding what makes a serial acquirer the right choice for you and what you should look out for can help you make an informed decision that aligns with your goals.
The advantages of serial acquirers
1. Streamlined acquisition process
Serial acquirers have perfected the acquisition process through extensive experience. They provide a clear roadmap, making the transition smooth and efficient. Their expertise in these kinds of deals ensures they can handle complexities, minimizing disruptions for the founder. After all, their business is buying businesses. They know the ins and outs of it and why they should move fast if the match is there.
2. Operational expertise and resources
One of the key benefits of selling to a serial acquirer is access to great resources and operational support. Acquirers have teams of experts in marketing, sales, and product development, significantly aiding in growing your company post-acquisition.
Not all the serial acquirers have the same approach in terms of your future growth but it's always in their best interest to make it happen. So if preserving your legacy and seeing your business conquering new markets is something on your values list, it’s a good idea to consider this type of buyer.
3. Cultural fit and long-term vision
Serial acquirers who are in it for good reasons focus on long-term growth and sustainability rather than just quick wins. They work to maintain the original culture and vision of the companies they acquire, ensuring that the company's legacy is preserved and nurtured.
Don’t expect everything to stay exactly the same. Changes will eventually just happen or slowly creep in because, frankly, businesses are like snowflakes. None of them look completely identical. Be it the change in the communication tools, office vs remote culture, or the way you report your financial data at the end of the month. The best approach is to negotiate the absolute no-gos but be flexible on the nice-to-haves and stuff you can definitely adjust to in a couple of weeks.
4. Trust and transparency
Transparency and trust are essential components of a successful acquisition. Serial acquirers emphasize honest and open communication throughout the process. This includes allowing potential sellers to speak with previous founders to gain insights and build confidence in the acquirer's promises and capabilities. If a potential buyer does not offer you the chance to speak with past sellers, consider it a red flag.
5. Proven track record
A proven track record of successful acquisitions and integrations is a significant advantage. Serial acquirers have demonstrated their ability to grow and scale companies effectively, providing a sense of security and confidence to founders.
Look for case studies online, talk to people, and just don’t neglect your part in the due diligence process. If you’re looking at staying with the company a couple of years after the acquisition, do you want to go with someone who’s just figuring it out or someone who’s ready to hold your hand and bring you in with the least disruption to the business?
Best practices from serial acquirers
Core competency
Serial acquirers excel at identifying and purchasing good companies at fair valuations. They use the cash flow generated by each acquisition to fund further purchases, creating a compounding effect that benefits shareholders.
Constellation Software is a prime example, having acquired over 500 companies in various vertical markets. They reinvest profits from these acquisitions into further growth.
Designing incentives
They design incentives that align with long-term company goals, ensuring that everyone is working towards the same objective and enhancing overall performance and growth.
At saas.group, even though the acquired brands remain independent, with the expertise added from the Central team, they’re all working towards the same goal and are incentivized to share knowledge and support each other.
Decentralized Management
Many successful serial acquirers adopt a decentralized management approach, allowing acquired companies to operate independently while benefiting from the acquirer's resources and expertise.
Recommendations for SaaS founders
Before selling your company, ensure you:
- Don’t skip buyer due diligence
- Evaluate the buyer's financial stability and cultural fit
- Prepare for the exit early, making necessary adjustments to streamline operations and highlight growth areas
- Take advantage of resources, founder calls, and case studies to understand the impact of the acquisition
Serial acquirers offer a unique and beneficial approach to acquisitions, providing founders with the support and expertise needed to ensure their companies thrive post-sale. By considering these factors, founders can make informed decisions that align with their long-term vision and goals.
For more insights on valuing your SaaS business and buyer due diligence, check out these resources from saas.group:
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