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SaaS Provider of Business Management Software – Case Study

Closing Price: $ 40,000,000
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Summary:

This BSM company presented with high LTVs, strong KPIs and a very low risk profile for the space, making it a very attractive acquisition target.

The target was a Business Management Software provider with over 2,000 active clients and growing. The company was primarily comprised of a collaboration tool used to manage all parts of a business, including the creation of structures to plan team workload, manage projects, clients and more.

This SaaS company presented with extremely strong financials, roughly $7M in sales, the majority of which was recurring revenue ($580k MRR) and a CAGR of over 40%. Additionally, projections on this beast of a company triggered at 30% go forward, pegging it at a strong $3.5M recurring discretionary earnings run rate. The business was taken to market based on its top line and growth and was valued at $40M.

Multiple offers were received on this business. The ultimate buyer was a strategic player already in the space. This acquisition allowed the buyer and seller to cross sell offerings to each others clients, all without increasing SG&A, a true economies of scale opportunity through M&A.

Solution:

The buyer was assisted by the team at Website Closers as a sponsor in the capital markets. We introduced the buyer to a number of banks, private equity groups and Mezzanine lenders that were interested in taking debt and equity positions in this business. In the end, the acquisition structure was a sale of 70% of the stock of the company with 30% as rolled equity. The 70% was structured as 50% in cash, 10% in promissory notes and 10% in a one-year hold back. In addition, the owner of the company continued with the buyer as an adviser with a healthy salary, continued distributions and the opportunity to exit his 30% down the road. The purchase agreement included a put clause to exit in 5% increments starting in year 3.

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