🧐 What I Learned Last Week
Week ending Friday, November 5th, 2021
What I Learned Last Week curates the most interesting content relating to business acquisitions, operations, entrepreneurship, finance, and more. WILLW is a publication of The Business Inquirer.
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Bloom equity partners published their Q3 software M&A update where they discuss highlights and notable transactions.
SaaS M&A deal volume set an all time record surpassing the previous high by approximately 17%.
498 SaaS deals were recorded in Q3 v.s. 425 in Q4 of 2020 (previous record high).
Aggregate software deal volume also reached record figures with 933 transactions recorded in Q3.
The quarter also included several mega transactions; Afterpay’s acquisition by Square ($28.6B), MailChimps acquisition by Intuit ($12B), & Medallia’s acquisition by Thoma Bravo ($6.1B),
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The truth is that there’s a higher than 80% chance that your business will fail. Sorry. Crunchbase published an article where they discuss the process of unwinding a failed startup and the options that are available. It talks about dealing with investors, filing the right paperwork, selling the IP, etc. Hopefully, it’s not something that anyone of us will have to deal with but better to be prepared.
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If you’re operating a SaaS, you probably have nightmares about client churn. Kyle Poyar writes Growth Unhinged newsletter and in the latest issue, he discusses ways for SaaS operators to limit client churn.
It’s easy to dismiss churn as a Customer Success problem that just requires additional bodies. Here’s the thing: much of the churn happens within a user’s first 3-6 months (below is a real life example), which means SaaS companies need to get their customers to see value extremely quickly. It can be extremely tough to win a customer over if they stumbled out of the gate.
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Middle Market Growth has a deep dive into the fractured residential and commercial services market. A lot of great insights and data in this report. Make sure to check it out if you’re buying or running HVAC, landscaping, electrical services, plumbing, roofing, or similar businesses.
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A bit off topic but I’m a big fan of Allbirds shoes. Personally own four pairs and have even given some as gifts to friends. They went public this week and are valued at close to $4B. Corey Turner of Swaylytics did a great write-up of their digital sales and advertising.
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DueDilio is a due diligence concierge providing pre-vetted due diligence solutions. If you prefer the DIY route, check out the latest post by Big Deal Small Business that offers creative industry due diligence tips and hacks.
The pet niche continues to be one of the best areas to be in…
Really interesting idea and a lot of great comments in this thread…
Hey, we’ve all been there…
So you’re saying SDE is a made-up valuation metric by brokers to get you to pay a higher multiple? 🤯
Anyone buying a SaaS with annual contracts will have to deal with this. A lot of great comments and solutions here…
Great cheat sheet on what to focus on at various stages of ETA companies…
I have mixed feelings about these types of “anyone can do it” threads or narratives. This one has some really great examples of people that did it. Highly recommend. Especially the UpCounsel story…
Great opportunity to learn entrepreneurship. Jump on this if you fit the requirements…
🤔 Thoughts & Commentary
Invest vs. Buy vs. Build
I recently came across BitsForDigits and had a conversation with the two founders. BitsForDigits is a private equity marketplace for professionals and founders of proven internet businesses. It’s a platform to buy or sell equity stakes in internet SMBs. Super interesting concept that’s getting some traction. Highly recommend checking it out.
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Business Buyers Advocate
Earlier this week I had the pleasure of chatting with Ted Leverette, aka “The Original Business Buyer Advocate.” Ted is a well-known and trusted figure in the business acquisition community having written several books and helped thousands of clients find the right business to buy. He’s been doing this since the 1970s and not one of these folks who popped up out of nowhere (like me).
This is totally meant as a compliment but he reminded me of Gunner Sergeant Tom Highway (Clint Eastwood) in the movie Heartbreak Ridge. Just a no-nonsense, straight to the point, let’s get this done type of attitude. If I was looking to buy a business and needed guidance, he’s the guy I’d want to go to battle with. Check out his website here.
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The topic of board compensation comes up a lot. How and how much do you pay your advisors? My friend John Rood is trying to answer this question by aggregating the collective experience of the community. Please fill out this survey and share your experience with board/advisor compensation: https://forms.gle/jLCaY7Vi1As5gEYV9
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DueDilio Referral Program
DueDilio is a due diligence concierge connecting business buyers and private investors with quality, pre-vetted due diligence solutions. We just launched a Referral Program where we will pay a % of the total project value for any clients that are referred to us. Ping me or read more about the program here: Referral Program - Top Due Diligence Experts On-Demand (duedilio.com)
🛠 Tools & Resources
These are tools & resources that I personally use or have used. They may contain affiliate links so I’ll get a few pesos if you sign-up.
ProjectionHub - Access to 50+ CPA-developed financial projection templates. 25% discount.
PrivSource - Deal aggregator for lower and middle-market listings.
Logology - Best automated logo & brand identity tool I’ve come across.
DeepBench - Access a cutting-edge expert network. $200 discount.
OpenPhone - The best business phone solution that I have found. $20 credit.
Eloquens - Knowledge marketplace. I’ve bought a few guides and templates here.
Deal Flow Scout - peer-to-peer deal flow exchange. Free, open, transparent.
That’s all for this issue of What I Learned Last Week!
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Important Disclaimer: This newsletter is provided for informational & educational purposes only, and should not be relied upon as legal, business, investment, or tax advice. This newsletter may link to other websites and certain information contained herein has been obtained from third-party sources. While taken from sources believed to be reliable, it has not been independently verified. The Business Inquirer makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. References to any companies, securities, listings, investments, or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any business, tax, or investment decisions. Content in this newsletter speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.