Questions on buying SaaS company

[DaveC]

I’m looking at acquiring a SaaS company. Wondered if anyone had any experience with the following:

Valuation: I’m seeing and calculating valuations in the 2x-3x Yearly Profit area. This is for a small mid six figure revenue SaaS business. Are other people seeing similar valuations?

Tech due diligence – I have a software implementation background but wanted to get a 3[SUP]rd[/SUP] party to check off on the code. Quotes I’m getting are $10K and up though, which seems steep for a fairly straightforward app. Anyone have a firm that they use?

Lawyer/acct – I know I’ll need to incorporate beforehand, but I’m trying to find a tech savvy guy to handle the transaction. Most lawyers I know can do real estate, wills, but don’t “get†software IP. The one tech focused guy wanted about $4k-5K for the transaction. Seemed a little steep. Would love a recommendation here and for a good accountant too

SBA loans – I’m pushing for as much seller financing as possible, but has anyone been through a process to get SBA loans on top of that? I’m told its difficult for software, since the gov doesn’t see that as a hard asset. An SBA loan looks like it could finance up to 85% so that would be key.

Thanks in advance!

 

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[EastWind]

10x monthly profit.

 

[JoeV]

I can help with the valuation. Valuation is much more than just looking at the revenue and profits. I can help analyze the market, the company's marketing strategies, viability, potential growth through optimizing the business, etc.

Send me a PM if you have some targets that you need help with.

 

[redshep]

Check out Rob Walling; he's built a portfolio of saas sites and blogs/podcasts about it in depth: Softwarebyrob, Startupsfortherestofus, and the Micropreneur Academy.

 

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[DaveC]

Yeah I've checked out Rob's stuff....he's definitely given me some good ideas. I've seen the 10x monthly numbers before but that seems like its usually for Adsense or smaller sites reliant on Google traffic. I haven't seen any software or SaaS companies under 12x months profit.