SaaS Acquisitions w/ Arsen Nurmagomedov - Founder of Restpack

Foreign.

I'm with Arsenal, founder of RestPack who successfully sold his startup on Microacquire and really thrilled to have you on this podcast.

Hi Andrew, thanks for having me.

So just to kick things off, do you want to give people just a brief background on yourself and maybe Respak as as well?

Sure. I'm doing online projects, let's say projects for the last 15 years but I mean I'm earning money from it for the last 10 years. So I'm kind of entrepreneur for a long time and I started to respect like six or five years ago. I mean I started to think about something SaaS related because before that I was working on always working media companies, advertisement and something like that. So Respec was something new for me and since Respec I just continue to build other SaaS products. So it's my new favorite aspect of this online business.

Nice. And is this your first acquisition with Respec?

Actually I co founded a MIDI company like eight years ago and sold my shares there. I was a small shareholder but I was co founder so it's not my first exit. But.

Was this the biggest exit you've had or the second kind of similar?

The same? It was the same. The valuation that time was like $6 million or something. I just exited.

Nice. Congrats.

Because I had small shares, it wasn't like it wasn't that much good for me.

Yeah, well that's still not a bad thing. I mean it's better than it was.

A real good feel for me to start doing my own next project. So it was that money was like, like $10 million today for me because without that money I couldn't start doing other stuff. So it was like my ticket to freedom.

Nice, I like that. How would. Can you tell me about like how you, you know, how did you. Obviously I know you found the buyer on microacquire. Walk me through the acquisition you first listed on Microacquire. I'm sure you got a lot of requests from buyers. Let's start with, you know, how did you decide on which buyer to sell to?

Yeah, actually before Micro Acquire I just tried to reach out some VC firms. You know there are few VC firms that are buying small SaaS businesses but with them it was like it take too much time to evaluate the business. They and their valuation is really, really low. I mean maybe the starting point for them, you know. So I was not interested that much right after I probably saw Micro Acquire on product Hunt or something and I just signed up and give it a Try and yeah, it was like dozens of messages in my inbox and actually they were, most of them were like curious people that time it was like me also try to ask. I tried to contact some sellers and I just leave it because it was like too many questions and no serious people. So I left Micro require and left the listing and right after that I contacted a well known SaaS broker firm. They actually they were good, they validated really good but you know they take some commission on that. So I decided to give another try with Microacquire. Probably you do not remember but I mailed you saying that I'm getting too many requests but they're not serious people. So you created a new account for me and with that account I just give another try. And yeah, that time there were much more serious people. I mean there were too many VC firms there on Micro Acquire and too many like independent buyers. And actually that second time that I tried microequire was much a big difference for me and I saw the real potential and that's awesome. There were too many buyers.

That's one thing we've been building in is just better mechanics and that's actually how we came up with the Microcar premium program is before that you would have received like a hundred messages. And so we're constantly thinking of ways to really separate the serious buyers from ones that are just potentially interested. So glad to hear that worked out. Are you willing to share the broker that you reach out to? You don't have to. I'm just curious.

The name of the broker?

Yeah, the name of the broker that you engaged?

I forgot their name but yeah, I can't remember but I can make a quick search. FE International. Yeah.

Nice. So and then you relisted on Microacquire. What made you. So you had a bunch of qualified buyers reach out. What was the main selling point for you to engage with the buyer that you sold your company to? What made them stand out? What were some things that they did that made you feel comfortable having your company acquired by them?

First of all, it was like there were different types of buyers and each of them have different negotiation types. So some of them just ask for the link and ask PIN numbers and continue to talk with you or not. And the VC firm's just sending you too many documents and questionnaires so it takes time to talk with. For me right now the buyer who bought our respec he was independent guy. I think he just want to leave the corporate world and invest in SaaS. He was an engineer so it was like the love at first sight. You know, you see the man, he knows what he's looking for. And, you know, because Respec is technical SaaS product, it's API, so. And as he's an engineer, it was a good match and it was really straightforward. So we stopped talking with VC firms because their process too long. You know, they're sending too many documents, too many questions, too many questionnaires. Some of them just want us to work with them after acquisition for a while. And, you know, some of them just want to buy with team, which in our case, we didn't have any team working on Respec. It was like, it didn't require any maintenance. We just built it on autoscale and worked for like more than a year without touching any line of code.

Nice. I like that. So you found a buyer that, you know, aligned really with your goals and you were comfortable with the relationship that you had established. And as you. Are you able to disclose kind of the. The terms of the deal? Like, was it 100% cash up front? Was it split over a certain period of payments? What did that look like?

Almost most of them offers like seller finance or something like that. But we, we just looked for upfront payment with all cash. So we just eliminated some of the buyers, and with this buyer, we got 100% in cash, all of Congrats.

Good for you, man. And I guess another question would be in terms of due diligence and just transferring the assets over to the new buyer. How did you guys, you know, work that out? What was kind of the process? Even from like a high, you know, 62nd level?

Sure. It was based on trust. So he just sent us letter of intent, so we signed it. We didn't ask him to sign any NDA or something. We just like send the document and give access to all the stripe account AWS and everything. So we just checked them out and right after he said he would like to stick the deal, and we just closed the deal in like three weeks or four something. It was really three or four. Yeah, actually it was. It was supposed to close it three weeks, but he had some problems with paperwork. So it was a three and a half or something.

Nice. That's awesome. And then so you have an acquisition under your belt and are you willing to say, is this like a 5 figure acquisition or 6 figure acquisition? Can you give us like a range of.

Yes, it's like upper half million dollars, let's say.

Congrats, man. I need to start charging commissions or something.

Yeah, you should because we paid escrow too much money. So I wish you get that part.

Yeah, no, that's not our plan. So don't worry about that. So any advice for sellers? You know, you went through this as you know your second acquisition. As you said, any advice for startup founders looking to get acquired? They list on Microacquire, what are some like key learnings after going through the process and successfully having your company acquired?

Probably it depends upon the product because we were not like really wanted to sell it. It was like it was a passive income for us and it wasn't a problem for us. It just the business just working by itself. And every day that we did not sold it, it was bringing us money. So we didn't have this high motivation to sell it. So we passed too many buyers because of the terms. So. And we waited until we find the one who agree on our terms. Yes, it's just like at first I saw too many requests, but you need to talk with each of them and get each other better. So at some point you will see the best buyer. I mean it's manual work. There's no quick, not quick way to find the best buyer. You just need to talk with each of them.

That's, that's great advice. And if it makes you feel better, you know, three weeks of, you know, from, from start to finish, how long did it take you to sell rest back on microguire the second time around?

Yeah, second time I just. We put three weeks after we closed. Before the three weeks started. It was like two months or something. Maybe one and a half or something.

Yeah, two months took me three years to sell one of my previous companies. So that's great to hear. So this is, this has been super helpful. I really appreciate you sharing this success story and I'm super thrilled at you having a successful exit and being able to have a small part and helping with that. With that being said, just you know, final questions. I always like to ask this like you know, favorite book, favorite entrepreneur. What else are you working on now?

I don't like, I don't have like something like favorite. I like many of them but right now we. My favorite next thing is to build a startup studio because we were kind of startup studio for a long time. So I just looking for other companies who are doing this. So we will want to build a company that builds other companies. We have two other products right now. One of them is two years old and growing fast and so we try to build next one. So I think it's the next type and I just want to work on that. That is what motivates me.

That's awesome. And that's very typical of entrepreneurs is you sell a company and you just start another one and you start another one. So that's awesome.

I like the process of starting something and I'm builder more. I'm maker more maker than entrepreneur or something. I like to build new things.

Yeah. Builder more than like a scaler, so to say. Yeah, awesome. Well, that's all I got. I really appreciate you sharing this story. I think it's going to be very helpful for a lot of entrepreneurs looking to get acquired. If people want to get a hold of you, where can they find you online?

Maybe Twitter, LinkedIn, anytime.

Sounds good. Well, Arson, thanks so much for joining me on this podcast. I really appreciate it and hope you have a great rest of the week.

I'm happy to be here. Thank you.

Cheers.