🧐What I Learned Last Week
Curated M&A content for week ending Friday Jan 27, 2023.
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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Hello Friends!
This issue of What I Learned Last Week is brought to you by DueDilio.
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📰 Articles
GP. Bullhound published a collection of sector updates for Q4 2022. The reports highlight key trends that they see in software, digital services, Fintech, digital media and commerce.
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BizBuySell writes about working capital for a business and how to calculate it.
How do you determine the "right" amount of working capital when buying or selling a business? Do you leave it up to the SBA lender to decide? Do you take the seller's or buyer's word for it? Is there a formula to figure it out?
While small business owners understand the need for working capital, determining how much is needed for the operating cycle is sometimes a mystery. When I was a commercial lender, I remember discussions with business owners asking for a $1,000,000 credit line for working capital purposes, when in reality they needed only $500,000 to fund the operating cycle and a $500,000 term loan to replenish the working capital (i.e., cash) spent on equipment acquisitions.
What is the Right Amount of Working Capital to Include in a Business Sale?
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Software Equity Group published their annual research report on trends in both SaaS public market and M&A.
Report highlights include:
The median SaaS M&A multiple of 5.6x surpassed the median SEG SaaS Index public market multiple and demonstrated a healthy environment for SaaS M&A deals, despite a decline from the nosebleed multiples of 4Q20-1Q22.
Private equity continues to drive volume and valuations, accounting for a record 60% of SaaS M&A deals, including some of the highest multiples in 2022.
While public SaaS valuations are depressed across the board, highly profitable businesses and companies with mission-critical solutions demonstrated resiliency and outperformed the broader index in valuation multiples. Download the report to see which categories fit the profile.
🧵 Twitter
Seller’s viewpoint…
Great insights…
A few trends in the SMB market…
90-day close timeline…
Initial questions to ask during diligence…
Lessons learned from 2nd acquisition…
I like the thought process here…
Cool infographic…
🤔 Thoughts, Events, Other
🛠 Tools & Resources
I want to share some tools & resources that I have found helpful. Please note that some of these may contain affiliate links. This means that I may receive compensation if you sign-up and use them.
PrivSource - PrivSource helps you source deals and connect with transaction partners without ever paying a success fee.
BizNexus - Marketplace + off-market origination in one platform. The marketplace averages about 10k active listings & pre-CIM opportunities, and the off-market origination focuses on data & multi-channel. Local Boston company and I consider the founder (Adam Ray) a friend.
X5 Deals - Proprietary deal sourcing. They do the outreach and send you relevant, actionable deals directly into your inbox.
Import Dojo - a newsletter that sends eCommerce and Amazon FBA businesses for sale to your email inbox. They send deals each Wednesday at 9:00 AM CST.
Kumo - Find every deal in one complete platform. Spend less time sourcing deals and more time closing them. Kumo aggregates 180K+ business listings into one easy-to-use platform.
Cerebro Capital - Cerebro has a network of 1,500+ lenders who can provide debt financing for your acquisition, refi, etc. $500k minimum.
Curators - Proprietary deal sourcing. You need targets that fit your investment criteria, and Curators delivers week after week - we even update your personalized database on a daily basis with new information on best-fit targets.
Deal Flow Scout - Peer-to-peer deal flow exchange. Free, open, transparent.
Deal Sourcing Guide - A directory I put together of online marketplaces, brokers, DFY deal flow, and more.
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.