SaaS Acquisitions w/ Trevor Hatfield GP at Inturact Capital

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We are live. Trevor, thanks so much for joining me on this podcast. We were just chatting about some big stuff that you're doing. So just acquired a company for seven plus figures, a Microquire. God damn. Thanks for, thanks for joining, man. I'm excited to see where this goes.

Yeah, Microacquire is awesome. It's been a good experience. I mean it's really simple. So yeah, everything went really well. I mean, we have a private equity fund called Interact Capital that we acquired the company through. The concept's pretty much buying bootstrapped businesses, which is something I've noticed you've kind of been promoting lately. And yeah, so we acquired this business. It kind of gives us a head start on growing it.

Right, nice. So when you look at companies to acquire, what's kind of your criteria? What are you looking to buy and what do you, what are you not looking to buy? If you have like a.

Sure. I mean we really work through our expertise. It's not really what's best, it's what we know. Right. So I've been growing B2B SaaS companies for over 10 years now. That's more or less what we look for. We also look for MRR ranges of around 20,000 to 100,000. From my experience, it's kind of where the technical founders cap out or whether they didn't get funding in time or they didn't take funding or whatever. Getting through that growth stage after startup seems to be kind of like where that cliff lives. That's what we know best is that stage. And so we kind of built this concept around taking over at that, at that point. I mean, there's a few other criteria, but like that's the concept. Right.

Nice. I like it. So you acquire and then your strategy is to grow the companies post acquisition. It's not in a buy and hold milk, the cow type P play.

It's not a buy and hold operate, get through the growth stage. Basically five year fund and sell after. After the, you know, basically when it's time to build a real business, really hire people like not juice and optimize what the founders started. That's when we look to get up.

Nice. I like that. Tell me about just, you know, kind of your, your principles around, you know, let's say acquisitions and just like due diligence. So you know, you, you find a target, you really love the company. What are some things like, so if a founder wanted to, you know, get your interest and potentially sell their company to you, what are some, like, what's like Some advice you'd give founders of, like, how to, you know, impress you or just show that you're, you know, show that they're like, a good company to buy.

Sure.

I'm wording this back, but basically what. What advice would you give to founders interested in potentially selling to Interact Capital?

Yeah, I mean, you know, everything sometimes starts with a good fit, right? Like one. One fund or someone looking to acquire. You might look for something completely different than me. And really that fit has to. It starts there. So, you know, that part you can't really control. But outside of that, what you can control to me is like, as much transparency as possible and organized with like, let's say, your metrics, your numbers, your P and L. Like, we need to be able to capture the big picture of the business quickly to make decisions on. So the more you can help do that and make us make, you know, that decision easier, the better. The better it is.

Nice. What are some, like, red flags that maybe like really kind of spook you during due diligence?

Yeah, I mean, for us, like not knowing your metrics or for us also, like, since we're really looking more for as close as possible to bootstrapped businesses, if you take too much funding early and your valuations are way too high or you can't meet the numbers in which we value the business ourselves, those are kind of like red flags also. I mean, obviously for us, depending upon if we think we can grow this company or not is really important. And that's something, again, you can't really control. But I would say, like, making sure the story is clear for us to make that decision and whether or not it is something we can work with or not.

Nice. I completely agree with all that. I mean, just the more founders know just in general about acquisitions, the better. And we try to do that. A lot of microquarters educating, like, what is due diligence, what are typical legal steps? What is an loi, you know, you know how to basically prepare yourself for an acquisition. Because I'm sure you're looking at multiple different businesses on a daily basis and, you know, the more that you can kind of show like you're willing to do a deal, I think is. Is extremely important. With that being said, are you able to talk about any prior acquisitions you've done? You don't have to name names or price or anything, but just maybe like a fun story of bought xyz company took it here. Anything like that?

Well, so the private equity fund basically was birthed out of what we've been doing for almost 20 years now at Interact, which is a SaaS growth agency. And the story behind that is ultimately helping B2B SaaS businesses grow. And we've helped many get acquired, people retire, et cetera. So that we took those concepts and we built basically a SaaS growth framework that was repeatable off of not just what's worked, but understanding what doesn't work. Right. So, like, that's the. That's really where you learn the most, is when you're failing, I think.

I completely agree. So we.

It's the frameworks. A lot of it's like what not to do versus what to do.

But I love that.

That should be like a book.

There's all this stuff not to do.

Yeah, that's almost. It's almost more valuable. So we took these concepts and turned it into a fund, was able to get funding, and we did acquire. We've acquired two entities now. Our first two entities, one prior to the one on microacquire. So this is all pretty new for us. I mean, we've proven it over and over again through the agency side of things, and now we're doing it ourselves. So as far as, like, success stories, so far, everything is relatively new this year, 2021, so we're just right in the midst of it. But everything's going well. Like, we were able to move so fast now it's insane. Like, one decision that would take a month, we do in a day. Just because you don't need, like, certain approvals.

You're speaking my language, man. Speed of execution, wins, markets.

Sure.

I always say, you know, good today is better than, you know, perfect tomorrow. So that's awesome, man. I also love how, you know, you have a team companies that has expertise in growing SaaS. That sounds like a win win, man. Congrats.

Yeah, thanks. I mean, we kind of had two routes to go, like grow this agency or hone in on our own expertise. Right. And that's kind of the route we chose.

Nice. Well, I'm. I'm thrilled to. To hear how far you take.

A.

Microquire, which was, you know, hats off on that acquisition and looking forward to see how far you take it. So with final questions, I always like to ask stuff like this. What entrepreneur inspires you? Like what. Who are maybe a couple people or one person, but you can't say Elon Musk. Everyone says Elon Musk, so I kind of ban that. Yeah.

No, I mean, honestly, I've been following you. I think, like, you have a lot of Inspirational things. In fact, one of the reasons I wanted to stay in touch with you and reach out to you was also because of our mindset. Like, I think our mindset's very, very similar from the post that you've been posting on LinkedIn and whatnot. And crazy how a lot of it has tied back from like this is like five years of stuff that's been like moving into this direction and I feel like you've kind of like gone in the exact same direction. So like, hats off to you if you want to talk about like bigger names. I mean, if, you know, I kind of respect the mentality more of like a Richard Branson. I feel like he's a pretty down to earth guy being that, that, you know, loaded.

I've heard stories about him. I have a buddy who actually, he's a VC and he was with him. The guy's straight up famous. Straight up famous. Like people come up to him like asking for articles and they, this is like, this is the most Silicon Valley like story ever. You want to hear it?

Sure, sure.

He was in Dubai with him or something like that. Dubai, so international. And Richard Branson is walking around like sandals and like, like a couple people came up to him asking for autographs and he, every single person that would come up to him, he would like, like say hi, shake their hand. He doesn't have security like a lot of other like Andrews have. He has no security. He just like is. So you're correct. He's, from what I've heard, I've never met him, but he's a very, very cool, happy, positive person and just loves making an impact in the world. So.

Yeah, and you know, he had a few episodes or whatever on Shark Tank a while back. Like you could look those up. Like the guys aura on the show exudes that as well. Like he's just always caring about the person over himself that's presenting and like pitching. Right. And it's just, it's pretty cool.

Yeah, that's awesome. If. Favorite book. That's my last, last question. Oh no, I got one more after that.

Yeah, favorite book? I don't know. I mean there's this, there's a, there's a few that I've been reading recently that kind of come to mind. But like if I have to give a shout out way back, like Lean Startup or something, maybe, I don't know.

That's a, that's a classic, man. Eric Reese. I remember when that came out. I like literally, I think it was like a decade ago.

I know, but it's like kind of like started a lot that I did and that's why I feel like, you know, you kind of got the new ones are fun, but like kind of go back to core stuff.

Yeah. That's a book that inspired a lot of entrepreneurs. Final question, what do you like to do for fun? Like what?

Well, I mean, I enjoy what I'm doing now, which is nice. Right? Like, I've always kind of chose my own path, which is, you know, I really enjoy this stuff.

I love that. I literally. I'm sure you've seen me tweet non stop. Like, if you don't love what you're doing, you're going to be competing against someone who does and they're going to kick your ass. Like, I believe that fully.

Yeah, well, you get a lot more done when you like what you're doing. Right.

So it's not work, you know.

Yeah, yeah, totally.

Yeah, I. And I same. Same thing with me and Microcore. Like just having these conversations, meeting cool people like you, like seeing you, you know, do awesome stuff that like, you inspire me, man. So really enjoyed this conversation. And where can people find you if they want to get a hold of you? Maybe they want to sell your company to you. What's the best way to contact you?

Yeah, so private equity funds, Interact Capital. It's I N T U R A C T Capital.

I'll get that in the show notes for you.

Yeah. And you can reach out there or the agency is just interact.com either works. Emails trevoract.com happy to talk to anyone interested for sure. Always open to a common.

Right on. Well, Trevor, great meeting you. Thanks for coming on the podcast and looking forward to getting to the Triscomas.

Sounds good.