July Deal Review with Rainier Nanquil, Christian Steverson, and Ky Pratt

All right, welcome everybody to acquire.com July 2024 deal review. What we're going over today do some introductions. We've got a special person on our team that's joining our webinar series today, so we'll introduce him as well. While you're here, let's review some deals together and how to get matched with the best. So before we go over all of that, let's go over some of acquire.com's impact. We've been in business for over four years now. We've served over 100 countries. As you can tell in the chat, we're doing deals all over the place. We've got buyers and sellers all over the place. We've got over 600 listings live on the marketplace that you can choose from and scroll through. We've done over 1200 deals sold. We have over $750 million in closed transaction volume and over 500,000 registered buyers on our platform. And going over our introductions, here's our beautiful team in La Jolla and here's a little introduction about myself. If you don't know me, my name is Rainier. I'm the Managing Director of M and a here@acquire.com I have over a decade of experience in M and A investment sales capital markets. Previously I was at Empire Flippers selling Amazon, fba, Shopify content websites. Previous to that I was at Cushman and Wakefield, Marcus and Millichap selling shopping centers, retail properties. Fun fact, I used to sell tons of Taco Bell investment properties and Jack in the Box investment properties and deal making has been in my blood for the last decade. So some of my notable recent transactions I sold the $7 million deal in LATAM, $1.5 million deal in Canada and another $1.45 million deal in the U.S. so let me go ahead and pass the mic over to my colleague Christian.

Thanks so much Rainier. Hi everyone. I see some familiar names from our previous webinar, so welcome and welcome to all the new ones as well. I'm our Director of Acquisitions. I have over a dozen years working in leading divisions across sales technology in the SaaS space from smaller corporations all the way to ones with billion dollar portfolios. Now with Acquire, I help a lot of our founders get ready, get curated and prepped to go on live on market to make sure they have a lot of what you buyers are looking for. Most recent for me is that top one right there. Notable transactions IR Uruguay 1.2 million. As Rainier said and as shown in the chat, we're Definitely global. So I'm excited to chat with you all today.

Awesome. And let me pass over the mic to our special guest on our webinar today, Kai. Everyone give Kai warm welcome.

Thank you, Rainier. Thank you, Christian. Thank you everyone for being here. It's great to be a part of this. My name is Kai. I work here in acquisition success as a member of the M and A team, work closely with Reneer and Christian and contribute to the knowledge pool that is our M and A advisory services. My background is in mathematics, coaching and leading CS teams, most notably a team in Panama. So what's up to anyone coming from Central America? It's great to see you and as a person, I love mathematics. I love leading with data logic and helping the founders that I work with stay calm in the different twists and turns in the acquisition journey.

Awesome. So let's go over why you're here today. So you're here to see the best deals and what makes them special. So we've got a monthly showcase of our biggest and best deals. They're pre vetted and recommended by our advisors like Kai, Christian and myself. And we're going to give you expert analysis, key insights and Q and A. You're going to get to see how we view these deals, how buyers typically view these deals, and you'll get these type of insights, hopefully pull some nuggets from today's webinar. So let's go over the deal review. So let me go ahead and share my other screen here. So the first one up, we've got a SaaS deal. And Christian, do you mind kicking us off on this one?

Sure, I'd be glad to. I did some work with this founder early on in preparation. I always lead with that. I'm the stickler here on staff to make sure we have all the documents in row and in line. So when you look into the opportunity here, it really is vast. I'll start right away with the founder. They're builders, they're designers, it's a common theme. You'll find they decided to, they found a gap in the market and decided to build it on their own, but didn't have a lot of focus in terms of the marketing and the selling aspect of the business. There's a lot of opportunity to scale there. The business itself is a lot focused on being able to see who's advertising, certain keywords, how often, ad copy, even the contact information. And there's a nice wrinkle in there, being able to white label that for the clientele. So it's a really nice niche that this founder has found and it actually a recent drop, the recent price drop not because the business isn't doing well or anything like that, it's actually doing quite well. But if you look into the reason for selling for near you want to show that really quickly as well. The co founder has is working through a health issue at the moment so there is a necessity in that regard to sell but the opportunity is really really vast. What's nice about this as well is this founder actually is a buyer. So I really like being able to work with some founders and knowing that ahead of time they think lot with that buyer mindset. So they already know reasonable expectations in the process as well as there's in terms of the business model. If you want to scroll up a little bit to that too. Rainier this founder you see subscription and B2B initially offered a lot of lifetime one time payments and transitioned over to month to month payments. So just know that recurring revenues built up quite a bit more of late as well. And the fulfillment costs are pretty low so the margins are pretty strong. So a lot of checked boxes that you'll find for this one, you know, right off the bat.

Nice. That's a great summary there Christian. And if I can jump in and give some comment, here's if you've seen me on the other webinars I jump to some of the fundamentals that I typically look into such as profit margin and profitable. So when you're looking at a business, if it's profitable, that's great. That's one of the first things that buyers look for. And if you're above the 20% plus margin, the higher you go, the more demand it's going to generate and the stronger the multiple. So here it's almost a 30% profit multiple. It's a strong margin on this business. It's motivated to sell because the seller is doing a price reduction because again there's a there's a reason for sale. It seems like the partner has health issues. So there's a strong motivation there. It's not just a seller that's putting up a listing trying to test the market or see if anyone is worth is looking at it and maybe making an offer worth looking at. It's you know this is a situation it sounds like it needs they need to sell. And if I look at some of the other fundamentals I typically look for is the date founded. So this is about three and a half years old. If you've seen in the other webinars I like to preach at least three years because that gives some sort of history that a buyer can at least look at to see is it going up year over year, is it flat, is it going down? You can ask why Is there any seasonality month over month? The difficult part about newer businesses that are less than a year old is they're unpredictable. It may have a rocket ship of growth, but then who knows what happens after you acquire it. There's just the what if and you've got to adjust that risk and typically you see that risk adjusted through the multiple. I start looking more over here. Again, reason for sale if I'm a buyer, get to know the founder. Obviously these are people treat them like people get to know what they're looking for in terms of okay, is it price, is it timing, is it deal structure, is it transition post sale? I would assume timing is going to be of importance because of the health issue and as I look to it's bootstrapped so that's great there Customers ARR growth rate. I want to understand if there's any customer concentration risk. It looks like there's a ton of customers but just to make sure that not a handful of customers are making up the entirety of the revenue, those are the main things that I look at. Kai, anything to comment here on this listing before we move on to the next one?

Absolutely. One of the best places I like to look at a listing is the asking price reasoning. A lot of listings you'll see they'll, they'll say they're in fair market value or within range of market comparables. I like it when a seller decides to put a little bit more into that category. A very savvy buyer will know if you're priced within range or not. So we see here, we see some really strong words of repeatable and predictable customer acquisition. That stands out to me as a nice claim to then go validate with the seller. Once you get to talking to them and with the 45% growth rate on returns within that first month of paid traffic, it seems like they have some really strong processes in place to achieve KPIs that are up to the standard that has allowed them to grow over the years, they've come today.

That's a great point, Kai. And when it comes to these multiples and asking price reasoning, whenever the cool thing about acquire.com is whenever you have this badge guided by experts, you know that these listings are guided by myself, Kai, Christian or someone on our M and A team. And when we're guiding them and educating them about multiples. This is coming from real time data. So when we suggest and educate some of these multiples to our clients, this is coming from the experience of here's real time data. So this is what I'm about to tell you. This is as of Today we've closed 294 transactions year to date. So as of July 17th we've closed 294 transactions. Last month, 38 transactions. As of today we have 177 listings currently under offer closing in the coming weeks. So when I tell you that we have the data and we've got our finger on the pulse on what's trading and what's actually trading at a certain multiple, this is where that's coming from. And again, we've got 600 plus plus listings. We know how long they're sitting, we know what buyers are looking or we know what deal structures they're trading at. So if you have any questions with anything related to what seems to be maybe a question on deal structure or offer or multiple, feel free to reach out to any one of us and we're always happy to help. So let me jump onto the next listing here. This is a SaaS startup based in Australia. Kai, do you want to kick us off on this one?

Absolutely. Thanks Ranier. So let's start with what this offering actually does. It is a SEO tool and a blog writer, all fueled by AI. One of the things that first stands out to me is how this listing is priced. Very evident that this seller is motivated to sell and that tells me that the seller knows the market, that understands what's going on in terms of relevancy with the times and is reasonable what they're asking for. If we go to the date founded, we see that this is a young business. So Rainier, to your earlier point, are we riding the wave upward and what's the probability that this can sustain? That's one of the things you want to get into the conversation with the seller about is what is the legitimacy of this growth or this early onset for success to really last into year two, year three and onward. Because that's going to aid to the predictability of buying this business to then pull some growth levers. The last thing I'll point out here is within the description there is a little bit of a dual offering. We have the SEO tool and then the blog writer I want to know more about. Is this blog writer focused on SEO? Is there a maybe growth opportunity down the road to combine some of the SEO tool within the blog Writer to then get some nice long form SEO going on with the offerings that they're using. So a lot of opportunity here, a very reasonably priced listing and offering something that I'm excited about, especially with such a margin as you see when you scroll down to the trailing profit and trailing revenue.

Excellent. So these are really good points, Kai. And again with this profit multiple, it's price to sell, but also it has something to do with the date founded. And as Kai mentioned, if you're a buyer you just want to make sure that you can understand predictability and that's when something is under three years, there's different ways to go about that and it's either deal structure or, or understanding out of the revenue, how long customers have been around and predictability of in terms of just trying to limit your downside risk as a buyer. And there's different ways to do that. So the good thing is if you look at this profit margin, it's insanely high. So this is something that a lot of buyers are going to salivate at and the asking price is in the bite size range. So if I'm a buyer and as I'm advising the client as well, it's okay. Let's think about who our ideal buyer profile is. If you look at the asking price, it opens up the buyer pool to many first time founders entrepreneurs that are on our marketplace looking for deals because it opens up to a lot of cash buyers. It opens up to a lot of buyers with experience that are pulling money together with a partner. Or you could even structure a deal with some seller financing or earn out to mitigate some of the downside risk from being a relatively newer business. But when it comes to some of the upside, I think they far outweigh being a newer business. I mean look at the profit margin here, look at the multiple here, the bite size range of the pricing and it's bootstrapped. Another thing that I like to see, and if I'm a buyer, I'd like to see, okay, partner or family means needs get a little bit more color on what that is and then really get an understanding of maybe the competitors in the space, what your protective moat in the business is. The thing with SEO is Google, for example, they have a lot of algorithm changes. So you want to make sure that if any of the recent changes has affected the business since the business has been founded in March 2023 and how the founder has overcome some of those algorithm changes. But overall I think this is a deal that a lot of buyers are going to reach out to especially after this webinar. Christian, anything else to add before we move on to the next one?

Yes, just the last couple of growth opportunities. If you want to scroll down a little bit into the growth opportunities, that bottom section there, the founder mentions that onboarding is almost non existent a solopreneur. So just factor in if you're getting churned from customers that don't quite know how to apply and use the app. You have somebody in staff or new owner operator that can support that. You already reduced Churn right away if you have that as your biggest pie piece. Reason for churn. So there's a growth opportunity on improving retention right there as well as parlaying a little bit of what Kai was saying earlier. This founder added in this second wrinkle and second asset more of a long form focus earlier in the year and it's just now starting to really take off. So there are some good seeds that have been planted where you can scale multiple aspects of this business. And similar to actually the previous founder started very early on with more of a one time or a life time payment focus and transitioned to more of a month to month. So a lot of really good ideas early on got formulated, made a better strategy and applied that. So I think this is ready to move forward and rock it up with the right buyer.

Awesome. If anyone out there is interested in this listing, we'll drop it in the chat as well as the other listing that we looked over on the first slide. But for now let me call a timeout and we've got a little presentation on a vertical focus that we have. So let me go ahead and share my other screen and start loading it up here. All right, Give me a thumbs up when you can see this. Cool. Kai, we've got a vertical focus that Kai is spearing up here and it's agencies. So we'll let you kick this one off. Kai, what makes an agency stand out and tell us a little bit more about this vertical?

Yeah, absolutely. So as you may know, acquire very predominantly is SaaS focused. We get a lot of buyers looking at SaaS, but a lot of our other verticals get attention too. And one of those is agencies. I get the pleasure of working with both buyers and sellers and I get to hear from our buyers on what they look for. And as we decide to bring agencies in, these are some of the things that we look for to give you buyers quality agencies to see if it's an acquisition opportunity to make an agency stand out. I've segmented it into Five different categories here, which we'll dive into a little bit sooner. Recurring revenue, brand impact of the agency, tenure, how long the agency's been around, the quality of work that agency does, and then the relevance of the service that the agency provides.

Awesome. Now let's jump a little bit into recurring revenue and predictability. Can you tell us about why this is important in agency type of businesses? Kai?

Yeah, absolutely. And just to do an aside, I saw a question of what is our definition of an agency? With an agency business, you're usually providing some sort of a service. If we're talking about a pure agency, it's largely transactional. So to this point, recurring revenue. As a buyer, what helps build confidence in your acquisition is the predictability of revenue and profit. So with an agency, you're not always seeing subscription revenue. If you can find an agency that has productized services and provide subscription revenue, that's awesome. But otherwise, you really want to look at the recurring nature of the revenue in terms of assessing do customers return? Can you build some sort of predictability by looking at the history of returning customers and repeat clients? And the more you have a lens on that, you get a better idea of what the road ahead would be as you decide to pull growth levers moving forward.

Cool, that's a good point. It's almost like building an agency that's been traditionally like a one off project where you pay to hey, build my website. And that's about it versus trying to make it into a recurring revenue like SaaS. And the reason SaaS gets a more competitive multiple, more aggressive multiple, versus some of these other verticals that we see in the marketplace is because of that predictability and recurring revenue aspect. So as an agency, instead of hey, let me build your website one off, it's like, hey, let me manage your SEO, let me manage some of these other services on a monthly basis. And then you start having a recurring revenue aspect. So that's pretty cool when it comes to agencies that you're almost getting the SaaS multiple because of the recurring aspect. So let's jump into brand impact and tenure. Kai, can you tell us a little bit more about this?

Absolutely, absolutely. So I want everyone to hold on to that word predictability, because these next slides, we're talking about some of the variables that if you can control or stabilize, your predictability becomes more clear. Two of them being brand impact and tenure. If we look at brand impact, that is, what is your reputation? How do others speak about you? And after you've delivered your service, what type of reputation Came with it. How happy are your customers? So as I'm looking at an agency, I want to know notable case studies, I want to know well known clients or large brands that you may have under your umbrella. And then the tenure that comes with that just gives you a better playing field to see the actuality to really map out that repeat customer that we talked about in the past, map out the trends and map out really what can come down to predicting over time. Without that long term tenure, 36 months or more, it becomes more risky. It's similar to a fresh startup business. Within the first year, there's not much data to make an informed decision off of.

Right, that's a good point. Everyone hears that saying. It's like most businesses fail within the first three years and that's why a lot of buyers try to look for a deal that has at least three years of history because they know that they've survived the figuring out, figuring out their client base and their product and all of that. And, and brand impact, tenure and even the recurring revenue part, these are all things that are business fundamentals specifically for agencies that buyers look for and that command a higher multiple compared to if they're less than three years, if they only have one off type of revenue versus recurring revenue. So this is all good in terms of understanding what are the fundamentals for agency. So quality of work and expense ratio, what does that mean? Kai, tell us.

So kind of dovetailing from brand impact is a double edged sword. We want the impact to be significant, but what comes into building that brand impact is the quality of work and maybe the impact of the founder. So we'll talk about this a little bit later in the webinar. But what is the impact of the founder specifically that they have on their clients and how does that impact a potential exit? But with the quality of work, there's always going to be another agency in competition, another agency that provides a similar service. So what sets you apart and that is largely the quality of the service you provide, whether that is the website you're building or just the general service that you're giving to your clients. How do you as a business owner achieve that within your expense ratio? So normally what you'll see is if quality of work is going to increase, your expenses are also going to increase. But if you can find an agency that has a handle on producing high quality of work but also keeping profits high, that's really a gold mine. And those are the ones you want to take into high interest and talk to sooner than later.

Excellent. Okay, and then let's jump into relevance of service.

Yeah, relevance of service is a little bit of a deeper dive. Obviously a SWOT analysis is something that you should do with any business that you're looking at. But if we think about the guiding factor here, which is the predictability of revenue and the recurringness of revenue, we think about transactional work. How likely is it that the service you provided is to be needed? Again, what type of processes are in place as a business owner that you're checking in with your clients to potentially upsell them on new offerings or even reservice them in terms of maintenance on a website or any sort of retainer work? That relevancy of service, and I would say frequency of the service is a huge factor. And again, the leading thing here, which is predictability of revenue. So if the service frequency per customer is low, is the impact of that low frequency service enough to give you the net proceeds to keep taking the business in the right direction.

Got it, got it. So for buyers that are tuning in for the first time and they're understanding the different aspects and business fundamentals of agency, if these things such as recurring revenue, brand impact and tenure, quality of work, relevance of service are strong, then that's going to command a stronger or higher multiple versus say an agency with less years in business, maybe one off revenue versus recurring revenue, maybe not having big clients and just starting off. So that's how you can gauge a deal. And the multiple, the multiple will serve as an indicator as the level of risk and strength of a business that you're looking at. So thanks for jumping in on the agency type of business model things that we look for. Let me actually jump back into two agency deals that we have. So let me go ahead and share my other screen here. Bear with me one second. Kai, I'll have you start off this one. This is an agency as well as a deal that you're spearheading. So bear with me one second, Let this thing load. All right, when you can see this, go ahead and start us off, Kai.

Great. I'd be glad to. So as Ranier mentioned, this is one of the deals that I'm working with as we have our Guided by Acquire program. These types of deals you can expect to come into a well prepared seller that's ready to talk, ready to present supporting documentation. And the place I want to start here with this web development agency is while it's listed as an agency startup, it certainly is not a startup. If we go to date founded, we see that the Tenure here, which was One of the five facets that we spoke about, is 20 years and running. That itself lets me know that we have a business where you're going to have historic data and historic data that pairs with the financial to show that it's withstood the test of time. This is not a business that's gone downhill within the first three years. If anything, this is a business that has impacted its brand and said, hey, we're here to stay and we're actually ready to grow under new ownership once we find the right buyer for this. If we go to the reason for selling, we see a myriad of reasons, but one of the most prevalent ones here is health reasons. Obviously, with respect to anyone that's selling for health reasons, this is a reason that can expedite the timeline. If you are a buyer that's capable of moving quickly and making a reasonably priced offer, that's something that can lead right into this type of seller's goals in terms of why they want to exit working with the seller. I know specifically that there are a couple other objectives that need to be achieved and that is the capability of the future owner. This being a 20 year old business, the legacy is really important to this owner. So getting to know the seller, getting to know what the path ahead is, is one way that you can establish your skill set as a web development operator and maybe become the winning bid if this is something that floats right up your alley. The last thing I'll say here, Raniere, is if we look at my favorite part, again, the asking price reason. We look at the asking price reason and of course we see the tenure, but we see something here that was also in my presentation, which is quality of production, detailed execution, customer satisfaction and then that last sentence. 90% of our clients are retained and spend regularly. While they're not may not be subscription revenue per se. Directly attached to this, there should be a history that's validating that statement. 90% of clients returning, coming back for more work, which means that there is a predictability factor to the revenue here at a million dollar trailing revenue and quite a nice profit margin agency.

This is awesome. Kai, I love this listing because I just want to say wow, at this date, founded 2003, that's over 20 years of history. And I would say looking at the hundreds of listings, if not thousands of listings that I've seen in the not just our marketplace but in the industry, I could probably count the number of fingers on my hand how many have at least 20 years. So this is a really Rare deal when it comes to the time that they've been around. I mean they were the forefront of web development, design, marketing agencies in general for the Internet. So this is extremely impressive. And just knowing that 90% of the clients have been around, I would want to know, you know, have they been around for 10 years, 15 years, 20 years? That's, that's absolutely amazing. And really the other point of that is, okay, well, if the seller sells, what is the probability that these clients will stay on because they've had the relationship for however many years, how can I get some assurance that they won't leave? Because they love this founder so much. And that's one question that I think of. And then also maybe the employees or contractors, what type of incentives to keep them on as well. That's another thing that you want to make sure that you get an understanding of. But overall, I mean, this is an absolutely unique listing. 100 to a thousand customers bootstrapped over 20 years. Bootstrapped, extremely impressive. And retirement health reasons really just get an understanding of what's important to the seller. As Kai had mentioned. And if I start looking at profit margin, strong, very strong profit margin here, especially for an agency business, a lot of fundamentals, when you start looking at the asking price and who the ideal buyer profile is, it's most likely going to be someone that's familiar with agencies, maybe has bought and sold agents before, maybe is acquiring to expand their existing agency. So there's a unique buyer pool of different buyer profiles where it could be micro private equity, it could be a partnership, people familiar with agencies, people familiar in this specific industry. So when it comes to a lot of the fundamentals, this is, this is insane. Especially the, the date founded. I, I just can't go get over it. It's, it's like, you know, thinking about how many people stay in the same industry, the same job, the same business. It's like this is extremely impressive. So shout out to, to this, this seller. And I think this is going to sell quite quickly just because of the fundamentals here. So Christian, you have anything to add before we move on to the next one?

You both conducted a very thorough analysis. I'll just add in too, because we have such a big buyer pool. I've thought of some buyers I've chatted with before. This business may even be older than some of them. You know, we have investors that are quite young. So it's, it's, it's always refreshing to see businesses that have a long stay like this. And we always talk about valuation and what can help to maybe exceed and improve upon your value. When you talk about longevity in the space having not a high customer concentration, proprietary assets and technology, this business does check the box on quite a few. I think the only question I would have if you scroll a little bit further down is that business model there is a pretty big diversity as far as their approach. So just drilling down on that and getting better idea their approach and how they're sourcing their, you know, clients and whatnot. But outside of that, what Kai said, that level of retainment for your clientele is very impressive over 20 years. So again, another good opportunity.

Awesome. We'll drop the link to this listing on the chat. If you have any questions, feel free to reach out to any one of us and let's move on to the next one. You guys mind if I kick off this deal?

You got it.

All right, cool. The reason I want to kick off this deal, I'm spearheading this one Christian as well. And this is an agency. This one is the most influential no code agency and education platform helping entrepreneurs launch app ideas. So if you know me, the first things that I look for is multiple. So this is in line again with what we're seeing trade in the marketplace, the ten year, eight years of history in the business. So well over the three years that I typically advise and look for profit margin, you're just around the 30% profit margin, well over the 15, 20% that most buyers like to see. And then if you start looking at some of the other things, here's a very interesting fact. This was featured on Good Morning America. So this has been broadcast. It has a well known brand on any social media. You'll most likely have heard of this if you're in the space or have ever heard of any of these type of no code agency and education platforms. And again I like to look for reason for sale and it's a lifestyle change in terms of the seller has been running the company for over 8 years and is ready to move on to other ventures. However, she has built in time that she plans to help guide the transition to her timeline. So this is another good thing to hear as well. It's not a seller that's looking to sell for all cash and run. It's a seller that has worked on the business for over eight years. It's going to be really important to select a buyer that's going to take care of her baby that she's had for eight years and make sure that it does well post transaction and she's willing to help whether it takes some time to transition and educate and coach how to run the business. This founder is willing to do that financing, there's some loans and it's mostly bootstrapped. I'd like to get some clarity on that if I'm a buyer. Other things that I'm looking at as I scrolled through here is you start looking at the competitors. You want to get an understanding of okay, how, how is this space? Is it very competitive? What is the moat? As you look into this business particularly it has a very strong niche and that it has a protective moat against some of these other competitors that may be more generic in no code and education space. And in terms of the team size, it's lean again. 2016 founded overall just great fundamentals. This just launched fairly recently so they've already started booking buyer seller meetings. If you do have any serious interest, I do recommend signing an NDA reaching out to the founder as soon as possible as we do expect offers to start trickling in quite soon. Kai, do you want to chime in here with your agency knowledge and point out some things that buyers can think about?

I'd love to, love to in the asking price reason this is well articulated and that's one thing for any sellers here on the web webinar. As you're creating your listing, you get to write your story. It's. It's best if you have the pen and do yourself a favor and detail this out like this seller has done. To be growing over eight years is not anything to shy away from. You usually see businesses pan out or even decline, but the growth is still there over that eight year run. The train team in place is a nice thing for processes ahead. I'd like to know a little bit more about how that team functions, what their skill sets are and their willingness to stay on. And really if I'm to grow this business, what is their capacity? Because there will always come a time where as capacity increases the limitations of just the sheer team size is a factor. So that's one question I'd have for the seller. The growth opportunity here of the large audience. The more as a seller I can convince a buyer or the more as a buyer I can believe in the growth opportunities, the better. So if there's any history of that email list or that social media following being marketed to in the past or upsells for new products, that's something I want to see because that gives me validity that that growth lever is something that can be tapped into. But overall this is a great listing. I'm excited about this agency and I agree with you Renner. It's probably not going to be here for too long on the market.

Nice. Christian, anything to add about this deal? I know you work, you're working on this with me as well and you've talked to this founder and she's been amazing. This is probably one of the most ideal type of founders that it's like all of her fundamentals hit price expectations are there as all of her documents I'll let you add.

Yes, you said it best. Having worked with her, it's just a pleasure to work with another like a person I mentioned before has bought a business before so has that mindset. Very realistic, very thorough in the analysis and providing a lot of documentation. So when you go ahead and look at it, you're going to find a lot of what you need early on and realistic expectations. And what's nice too is the way this is seen is not solely an agency. There's an aspect of productization in an edtech layer as well to this. So there are some scalable aspects of this business that is not found in a traditional agency and it's been shown through the longevity as you both mentioned of how long that she's had this business in addition to the brand awareness that you were mentioning. Rainier brand positioning. Once you sign the NDA and find the name of this business, it's a lot of good value honestly in that alone for marketing exposure. So all that together I really think makes it a really good opportunity. And hey, being featured on Good Main and Good Morning America is nothing to shy away from either. So another, another great aspect that we can focus on for the buyers.

Yeah, that's awesome. And again if you're new here on acquire.com, how to get access to these listings. Once you sign an NDA and the seller gives you approval, you'll see all of the documents to help facilitate your pre due diligence and that will include three years of profit and loss, a recasted financial statement, SIM confidential information memorandum, transition guide, all of these other documents to help you get a firm understanding on the business. And then from there you can invite the seller to have a buyer seller introductory call. And from there we've got all these amazing tools to make an LOI letter of intent on our platform, an APA asset Purchase Agreement on our platform. So we have all the tools here for both buyers and sellers to do everything that you need to do to understand the business, reach out to the business, make an offer and then we'll have all of the tools and vendors to help you with escrow and then lending if you need that and then getting all the way to the finish line. We're always going to be there to get you to the finish line and answer your questions. I see that someone had asked, I think it was David says hey, can you introduce, introduce us to lenders or do you help us with funding? To answer your question, yes. So the cool thing about acquire.com is we specialize in sales and SaaS agency these type of businesses in the startup world. So we know exactly what deals are selling for, how to structure these creative deal structures, who the lenders are that are most active in the space, who the escrow agents are to for these type of businesses. It's not a real estate deal, it's not a traditional brick and mortar deal. These are very specialized transactions and they could get complicated and that's why we're here to help. And we also have lenders that facilitate in this business industry and we also have attorneys that we can refer you to that are specialists in this industry. So all in one, we're here to help you reach out. To myself, Christian, Kai, anyone on our team. When you work with us, you're not just working with any one of us particularly it's the entire team. Engineering, marketing, product. Everyone on our team is here to help and rooting for you with your transaction. So before we wrap up we actually have.

There was a quick question Rainier I thought would be nice for us to tackle from Cordell, if that's okay with you guys. I think it is a good question. Any concerns about an iconic owner leaving and being able to maintain that for the new owner? And I think that's a really good question. Cordell. I'll start it guys. That's okay. That's something that we really touch upon early on with our founders is making sure if that is the case early on they're known as the go to person as a part of the preparation is now making sure that the de risk for the buyer so they start to introduce new aspects into the services, new individuals that are going to be playing also the front. So it's not solely that individual. That's actually one of our core focuses prior to even and having the founder list on the marketplace. We want to make sure that as a buyer you're not going to have someone that is going to transfer a business that's so tied closely to them and leave you high and dry. We actually in that founder, we mentioned that last listing there has actually already created and worked on a transition plan to assist and support as a part of the handoff. So I wanted to start with that and then pass it to you two. I think just hearing your opinion as well would be helpful for. For the buyers here.

Go for it, Kai.

Yeah, so this really is the combination of brand and quality of work. And to give some perspective, it's much better to be dealing with an agency that has brand, even if it has at the expense of the. The brand impact of the founder specifically, than an agency that has no brand at all. So keep that in mind. I strongly believe that this is all within the transition. So if the founder is willing to provide a transition to really teach you the ropes, if you will really transition key clients, and if that quality of work is really at a level that is to be renowned, then that's what's going to stand. Customers will buy for quality of work over the impact of the founder. As long as that type of service, customer service still upstands throughout the future path is it's that quality of work of what they're getting, what they're actually buying for. They aren't buying the founder, they are buying the quality of work that the agency produces.

Right, that's a good answer there. And it's like if the website domain is the person's name and then the logo is a person's face, that's going to be, you know, kind of, that's going to be an interesting way to transition there. But most of the time that's not the case. And again, you just want to get an understanding of the clients, how long they've been around the work. And as Kai and Christian mentioned, there's different ways to mitigate, mitigate your downside risk. So doing your proper due diligence, let us know if you have any questions. We can always help you and we'll let you know what is standard and what type of strategies that other buyers in your position have done to mitigate their risk. When acquiring a business like this, just let us know. We're always happy and we're. And that's a good question though. So let's move on to some of the other questions while we have some time. Would you recommend asking for a quality of earnings report for any of these businesses? Kai or Christian, you guys want to kick this off or you might kick me kicking this one off?

Yeah, I can, I can start off. Renir. Thanks. So with a quality of earnings report, I would say in most cases, yes, as a Buyer, you want the most clear lens on the financial picture and especially if the business model is complex, then this Q E is the analysis of the revenue expenses and ideally gives you that most accurate picture that you're looking for to give you confidence in the offer you're about to make.

Cool. And again, the quality of earnings that's going to help you understand while you're doing your financial due diligence from the revenue, what is one time, what is recurring, what are the expenses, what are the one off expenses? And that will really help you get an idea of you taking over as the owner, what your cash flow will look like, what your balance sheet. Well, this is important. I would to just answer it quite simply. Yes, you should do a quality of earnings report. When you're doing your due diligence at the end of the day as the buyer, the onerous to do the due diligence and to do the homework is to you. And again, if you need any help, if you need any checklists for due diligence, we have that available at Acquire. If you have any questions on what to look out for, what to be wary of, we're always happy to help. But that's a good question there. Let me move on to the next one. Agencies often rely on a few key staff for doing the work and managing clients. How can I mitigate this risk? We kind of went over this earlier, but Kai, if you want to maybe provide some color on agencies and key staff.

Yeah, absolutely. So obviously concentration to rely on a key staff can be a concern. But within the transitional period, the dissemination of knowledge allows that key member to be unfortunately less valuable. But in this case you're, you're transferring knowledge so that knowledge transfer is key. So as you get to know the seller of an agency, as you get to know the roles and responsibilities, who's on the team, you should be asking the questions about who is really driving the ship, who is core to the motor and what processes are in place to keep this alive post sale. In the big picture, having these processes for managing clients is great because an agency should have some type of client success work going on. As a client success person myself, I know how valuable that is to keeping clients coming back and keeping them happy.

Nice. Yeah, that's a good answer there. I see another good question in the chat going back to the lenders. How much do lenders typically lend out for deals like these ones we looked at today? So if I can answer that one real quick, 20 to 30% down and that'll provide you 70 to 80% leverage loan to value. If you're looking at an SBA loan and an SBA business that qualifies for SBA Small Business Administration in the US that has three years of tax returns, you can get more leverage. Maybe 90% loan to value with 10% down. So it really depends on the conservative side. Up to 30% cash down and 70% loan to value is what we're seeing these days. But if you need a lender, let us know. We have many active lenders in the space that are doing these type of deals. They'll get you a real life quote with interest, amortization schedule, etc. And if you have a deal in hand, even better. Let's see what else. How much assistance do you guys provide for a serious buyer? That's a good question. Any Christian or Kai you guys want to tackle that one?

Yes, I'll start off on that one. We're very big on that. I mean outside of Rainier and Kai and our whole and MNA team providing assistance. Just like questions, some may not know what a QOB is QE is. So we have a lot of resources on our platform and a blog. We have webinars that will highlight certain aspects of the deal process. Who's responsible for what, what to ask for, how to de risk the acquisition for you. I saw that as an earlier question as well. So kind of you name it. We have usually a written article and or a recorded overview of it. But if you have something particular and unique, maybe nuance or niche, feel free to reach out to us as well. We do know this is at the end of the day deal making and so there will be some aspects that may not be so easily found attending. These are usually pretty helpful to ask those questions as well and just follow up with us after. But we do have quite a bit of resources here on staff to help.

Yeah, that's a great answer there. Let's move on to the next question. If a business is bootstrapped, does that make it a better acquisition opportunity? If so, how? Kai or Christian, you want to take a stab at it? Kai?

Sure, sure. Yeah. I think bootstrapping is really the way to go. Obviously when you have funding involved that can open up some other doors, but at the same time that can also bring in other people as decision makers and the more decision makers at the table it can be a more complex road. So in some aspects there is benefit to a bootstrap business having less decision makers on the table. There's some other benefits as well too. It Shows that customers are really loving the product from the get go. And you're having success doing this on your own.

Yeah, that's a good answer. And if I could add a little bit there, if I see that a business is bootstrapped, you just know that the founder has more control, has more decision making. If you make an offer, it doesn't have to go through a board, it doesn't have to go through many decision makers. It'll be a faster route to close in my opinion, in most cases. And again, it shows just the sustainability of the business model. They're not over leveraged, they're not taking out too much debt. A lot of the times these businesses are lean, typically with one or two employees or contractors. It's a lot of lifestyle businesses, especially for a lot of first time entrepreneurs that want to buy themselves into entrepreneurship. Looking at a bootstrap business is the way to go because typically that price is going to be in the bite size range, under a million. That's a good question though. Let me move on to the next one. Can you give some examples of how a startup's reason for selling would influence the price terms and so on? Christian, I think this is a good question for you.

Yeah, yeah, I always take a line that you always say there too. The death, divorce, taxes, partnership dissolution, all different reasons that can be a reason for sale and that can affect just the flexibility of maybe how quick the multiple, the flexibility in terms of their openness with deal structure. So it's always important and I would say yes, look at it the way we have it created on our listings. You can see that early on, but have a conversation. The way we make sure our founders are ready and prepared is to exactly dive in and detail this aspect. If it is a, it's, it's a nosedive business, you can kind of tell those in the numbers, but a lot of times there is a lot of nuance into the reason for, for selling. I do find that to be pretty important. Sometimes you'll get some sellers that may just want to get an idea of the market and are open to hearing the market, they're savvy and they know, okay, I may have a desired price in my mind and I want to get an infusion of cash as a part of this deal. But ultimately the buyers set the market. So we have a lot of expectation setting in regards to that, in particular into that section as to the reason for selling and to parlay that into the previous question that potentially could be if they're not bootstrapped could be the board's decision.

Right.

Maybe looking to exit. So it's important if you see a business that maybe bootstrap, to dive a little bit deeper into that and then get an idea of, hey, what are maybe the minimums that have to be as a part of this deal and see if that aligns with what you're looking for ultimately.

Nice. I like that answer. And then here's a good one. If I'm based in the US but want to acquire a business in Europe, how can acquire help either one of you guys? I know you guys both closed deals overseas recently, so whoever wants to take a stab at it, I'll start first.

I love, I mean, I love every deal that we work with, but particularly I love that we have the flexibility and experience to be able to work in domiciles across the globe. We've, you saw in the intro here, Uruguay, Spain, Estonia. We, we can help pretty much across the globe in that regard. We do have obviously preferred vendors to help with tax and legal aspects of the business. But what's nice about our whole M and A team is that we really work very cohesively. And if anyone maybe doesn't have. Kai's a great. We'll chime on to Kai on this one because there was a particular deal that required some nuance that maybe some of us on staff weren't exactly sure because it was a very particular aspect of a particular country. And he did the research, did the digging, found the solution. Now it's something we can apply so we all work independently in that manner and then come back cohesively to apply it to all of our interactions. So there's a lot that we can help with. We like it. And I shall pass the buck to. To Kai to speak about that, if you'd like.

Yeah, I'd love to. Generally speaking, when it comes to international deals, you just want to make sure you have the appropriate professionals involved. So it's absolutely necessary to have a legal team that is advanced in that country that you're dealing with, a CPA that's advanced in the country that you're dealing with, so you actually know what's going to happen on closing day. And the more communicative the buyer and the seller are in an international deal, the better. And then the last thing I'll say is you can check out a great article recently written by our colleague, our general counsel, James Graves, on how to sell internationally.

Yeah, he just did that deal in Spain. It was all in Spanish and they did a great one there. So we do deals all over the world. We need to speak Spanish, Portuguese. We'll help you out. We will even connect you with the vendors. As Christian had mentioned, for tax legal, some of these transactions can get complicated. But the cool thing about us is we've done many deals over 100 countries. We know what not to do, what to avoid, because these could be deal killers. But for buyers and sellers, you're in great hands. We've done this before. We're working on many deals overseas as we speak now. And we're even building lots of contacts of some of these vendors and players out in those markets to facilitate deals faster as we keep doing more and more of them. So that's a great question. Let me get to another really good one. Since very few unique ideas exist, at what point does competition become a red flag when evaluating a startup? You guys mind if I take this one? It reminds me of like you go to like a restaurant or a bar and everyone's saying, oh man, I wish I would have created that. I was thinking of that back in college. It's like everyone has ideas. It's easy to talk to talk, harder to walk the walk. And when I talk about business fundamentals, that's why I take a lot of importance in the years that they've been in business, their competitive moat, their year over year growth. These are the business metrics that are helping you mitigate your downside risk from some of these competitors that are in the space. Because as even Andrew, our CEO, Andrew, he's put it in a good light. It's if you're in a business with no competitors, there's something wrong because maybe the market opportunity is not big enough. You want to see competitors in your space. It's like that's, that's a good thing. Now you've just got to carve out your own niche and you've got to figure out how you add value, particularly to your clients, and how you defend that moat against either new players in the market or existing players in the market. And when I'm a buyer looking at businesses for sale, want to make sure again, three years at least, if it's less, you got to make sure you mitigate that downside risk with some creative deal structures, maybe some earnouts, something like that. And also year over year growth, if it went down, ask why, understand what happened and really get an understanding of who the other players in the market and what piece of market share you have versus them. So it's not a bad thing that you have competitors and everyone has ideas. It's, it's funny, a few unique ideas exist. Everyone's thought about everything. It's who can execute, who can execute for 20 years, like the listing that we saw earlier and have that dominance for 20 years. So great question there. I think we're just about done on time. So let me go ahead and share our final slide here. While I'm pulling this up, let us know in the chat how we did on this webinar. If you have any questions, concerns, comments, let us know and where you're tuning in from. Again, I like to see that while I pull this up here, let us know how we did. So here's the final slide here. If you are a buyer, let us know your criteria and you'll get deals delivered right to your inbox. This will be custom tailored every time. So let us know the price parameters, metrics, location, type of business that'll help us help you get the deals that you're looking for instantaneously. And if you're a founder, you want to maybe get a opinion of value on what your business is worth, maybe you're planning to exit in the near future and you're looking to increase value, we can help that as well. And if you have any questions with our M and A team, myself, Kai Christian, we're all here to help you. We're all dealmakers, we're here to help. And again, we're just getting started. We appreciate you guys tuning in. Thanks for tuning in. All over the world, we're always looking to help buyers and founders just like you guys. Let us know if you ever need anything. Kai, Christian, if you have anything else to say, feel free to make an outro.

Thanks all for attending. I always love these. Can't wait for the next one.

Yeah, it was great to be here. Pleasure to be here guys. Thank you.

Awesome. See you guys later. Take care.

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