SaaS Owners Sell $9/Month Accounting Solution for $81,697
Updated on April 19, 2022
Do all ‘lifestyle businesses’ give the owner the lifestyle they wish for?
For this brick-and-mortar business owner, the answer was ‘No’. They ran a business for 11 years, and they had 30 staff across two Australian states and were still working in the business instead of on it, or, preferably, not at all.
When they rekindled a school friendship, they put the idea of starting an online business to their friend who was working in sales at the time. In agreement, they started multiple online businesses, closed some down, and kept some running. Seven years later, they became aware of a recurring problem they were having with organizing tax information.
This problem led them to produce a solution in the form of a software. It was immediately popular as it got signups with very little marketing and no more than 5K monthly site visitors, and because of the nature of the SaaS business model, it took only three hours of maintenance work each week.
Why would you sell a SaaS business like this?
They Were Sitting on a Mini Goldmine
The owners finally had their passive business, but even though the work required for this site was minimal, they decided to sell and focus on other business opportunities that demanded more of their attention.
The same day their listing went live, 24 buyers had unlocked the listing.
SaaS businesses are desirable assets to buyers because they generate recurring revenue, which usually means more consistent earnings. And speaking of consistent earnings, take a look at what the P&L figures looked like for this business:
It’s quite rare we see a business with earnings in such a linear trajectory, which is likely one of the main reasons this business had such high interest.
The Opportunities to Continue the Growth Were There
Little advertising was done for this business. The owners had tried email outreach, social posting, answering a few questions on Quora, and they had run some paid ads on rare occasions without much thought, and that was all.
Yet their profits were growing consistently every month.
The thing with SaaS is if it solves a problem for customers, they’ll stay loyal to it and tell their friends and acquaintances about it. So although there’s no record of the effectiveness of word-of-mouth marketing for this business, it’s likely that it was part of the growth of the customer base.
They offered a freemium version of the service, with an upsell to an upgraded version for $9/month, and they claimed to have seen customers converting to the paid version in as little as 30 minutes.
The demand was clear, and with some paid advertising and more effort put into brand growth, the chances of success for a buyer were high.
The owners had also received an inbound collaboration request.
A large digital agency in New Zealand that had 3,000 customers sent a support request saying they had a solution to help business owners create eCommerce stores and that they wanted to package this SaaS into their service.
This was a sign to a buyer of potential for business growth deals.
How the Business Was Sold
When your business is listed for sale on our marketplace, it’s common to receive questions from buyers about the business’ history. They may want to find out why there was a dip in profits one month or a spike in traffic, as well as more in-depth information. As an example, the software for this business was down for three days at one point in its history, so one buyer asked if there was monitoring or alerting in place to mitigate this problem. The questioning occurs when potential buyers are conducting due diligence on your business to see whether it’s the right investment for them.
After receiving a total of 57 unlocks, multiple offers, and buyer calls, it came down to two buyers negotiating with the seller for the purchase. One buyer decided to instantly secure the business by offering the full list price.
Time to Hand Over the Reigns
Once the final offer had been accepted, it was a case of transferring everything related to the business to the buyer: WP logins, cloud hosting logins, subscription payment platform, social media properties, other software accounts, Google analytics property, and content/images/files were all sent to the buyer.
For a SaaS, it’s usually not as simple as handing over the assets. When it comes to transferring the software it gets a bit more complex as the buyer or their developer needs to understand what type of coding was used to create the software, and the rights of ownership of the software need to be transferred too.
In this sale, the seller had to gather information from the developer used to create the software and gain insight into which type of coding was used. The original developer wrote up a one-page document that the buyer could use to engage a new developer.
Once everything was transferred to the buyer, they sent us the money so we could verify the funds and hand them over to the seller.
Conclusion
We held the seller’s hand throughout the whole process, including migrations where we acted as a trusted middleman to ensure the legitimacy of the migration. This is where our service is ideal for first time sellers who don’t understand the process. It is also great for experienced sellers as they don’t have to deal with finding buyers and transferring the business themselves.
When it comes time to sell your SaaS business, using a trusted broker like Empire Flippers takes the hassle out and eliminates the possibility of being scammed.
Why not see what your SaaS is worth by trying our free valuation tool?
