The Playbook That Turned Simple SaaS Tools Into 18 Successful Acquisitions

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I'm here. Stuart Fraud, a serial builder who's had a total of 18 acquisitions on acquire.com. stuart, how you doing today?

I'm good, Andrew. Thanks for having me, man.

Yeah, I'm super excited for this one because I do believe you own the record for most acquisitions on Acquire. I haven't met anybody with as many as you. Before we dive into that, do you want to just give a brief introduction of yourself for people that may not know you?

Sure, sure. So, yeah, from Southern California. First job out of college was, you know, working for the Man. I worked at a. A dental software company called Dentrix. And I don't know if. I don't know if you've ever seen. You remember that old movie Office Space? Yeah. You ever see that one? So it was like a total office space situation. Hated the corporate gig and always knew I wanted to do something entrepreneurial. This is like back in the day, 2009 or so back when SEO was a new thing and, you know, started looking around for opportunities for, you know, a way to get out of that corporate job and heard about SEO again back when that kind of was a newer thing and. And, you know, decided to launch my own little SEO business. And since I was selling software to dental practices, naturally started targeting them. And then from that experience, I thought, wow, this is great. But really from that experience, learned about reputation and thought like, man, they. These guys just need a simple way to get a review from a patient. And so ever since then, I've been building and kind of selling reputation companies and in the space and yeah, man, just love selling software companies.

Right on. Well, since you've got 18 acquisitions, I don't think we're going to be able to go through every single one of them, but do you want to just talk about maybe three or four of the companies we can start there and see where it takes us? Sure, sure.

So companies I've sold on, Acquire or.

Yeah, like acquisitions that you've been a part of.

Yeah, yeah. So I. Let's see. So I started following you back, I think when you worked, when you started to build that company, Spiff, that's when. That's when I connected with you on LinkedIn and started kind of following your journey. And before this, I had, you know, built a reputation company, just bootstrapped the business for a handful of years and, you know, signed on a couple of thousand users and ended up selling that previous company. And then I started following you on LinkedIn and. And I thought to myself, like, I didn't know there was really a market for, you know, these small little software companies. And I thought to myself, man, that's kind of what I know how to do. And, and so I. I was like, I wonder if I can build and sell and unacquire. And so I went out kind of using my same playbook, went and acquired about a hundred K in ARR and then listed it on acquire. And I think within. I think within like maybe 30 to 45 days, sold that business for 500K. And, you know, it was a nice transaction. And then. And it just continued the process.

Nice. So you have a playbook that you run. Are you open to talking about that a little bit?

Yeah, totally, totally. I'm a big. I think every growth guy has, you know, has their favorite channel. You know, back in the day, for me, it's. It's kind of funny to look back, but what worked really well for me was I would just in person sell. So again, I was, with my first company, I was selling to dental practices and kind of created a method to just go into offices every single day and had a thing where, you know, I would basically hit up 15 offices, I would talk with five decision makers, and I would go home with a contract and kind of a 1551. I'd do that every single day and did that for a handful of years and it was great. But then kind of got, you know, burnt out on that and got a little bit smarter and, and started leveraging partnerships and so, big partnership guy, in a nutshell, basically, you know, I'll pick a vertical, find a couple hundred names of people within that space and. And then have a playbook to kind of reach out to them. And, you know, I position my SaaS products as being kind of the tool on their, you know, consultant tool belt. So I love working with consultants and, you know, basically acquiring customers through them.

Nice. So to kind of summarize this, you build niche products and then you'll look at a specific vertical, whether it's like dentists or doctors or lawn professionals, Businesses like that.

Yeah, exactly. I'm a big believer in vertical SaaS. So I've just learned from experience that if I'm selling a software product and I position it for everyone, it's harder to get traction if I position it for a certain vertical, a lot easier to get traction more specifically from partners within the space. And so, so I like to build simple software that is already out there, but maybe hasn't been verticalized, and then pick a, pick a niche, ideally one that's, you know, really narrow and, and then try to be the, the, you know, that type of SaaS product in that space. Nice.

Tell me more about the niches. I know a few of them, but what's like maybe five or six of them?

Yeah. So like, for example, I mean, dentistry is one that I'm super familiar with. That's probably been my main one. But even within dentistry, you know, you have like oral surgeons, you have orthodontists, the dental specialists, and then, you know, home. Home care services is a big one. But then specifically, like if you go after just H vac guys and you build your product specific to them and their workflows, um, another one would be med spas. I've had, you know, a lot of success working with different med spas and I like that space because it's, you know, it's growing and expanding. But yeah, really all kinds of verticals and it's. I just love positioning my, my products to talk to them and it's just easier to get early stage traction a hundred percent.

I love this. How many different products have you built? Are they all the same? I know a few of them around reputation. Do you expand into other types of products?

Yeah, so really just local business growth tools. So like another one, Andrew, is text. Text chat features that we put on, you know, our customer's website. So instead of, you know, someone chatting, you know, you know, just online, basically the customer leaves a message and then the business can respond, you know, at a later time, but via text. And they can kind of go back, back and forth. That's, that's one. But yeah, really just kind of local business, you know, marketing SaaS tools is, is kind of what I've always done. Nice.

I love that. And it's such a massive market too. When we talk about SMBs, like my first company, I call it sold to SMBs. And you have so many verticals. You have restauran, you have, you know, salons, you have gyms, you have, you know, fitness consultant. Like, I could just keep going on and on. How many of these businesses have you grown to say above like 50,000 revenue or a hundred thousand?

So above a hundred thousand, probably out of the 18 that I've sold, probably about half of them. Bang. Yeah. I really kind of consider my fun zone is like, I'm the zero to a millionaire, our guy. Um, lots of people don't like that, you know, that space and that niche. But I love it. I love to build something new and start fresh and kind of crack out the first handful of customers. I, I just kind of figured it out and enjoyed. Enjoy doing it.

Nice. And this is all direct sales. Correct. So you're to summarize again, you're, you're picking a product that you know, all small businesses need to get new customers, fuel, marketing, then you're spit, you're picking a very specific vertical like H vac or instead of just dentistry, you're going after oral surgeons and then you're basically knocking on doors, right?

Yeah. So I'm, I'm basically reaching out to consultants. So say like med spas. So one thing I didn't know back in the day was every, almost every industry has like full time consultants, full time businesses that all they do is consult that type of space. And so I get it.

So I like resellers in a way.

So really more so really more like, you know, like if you owned a med spa, if you're starting a med spa, you can go hire someone that's a professional consultant and they've got experience in the space and, and they'll charge you and tell you exactly what you need to do to grow. And so that, so I look for those types of, those types of people and try to leverage their, you know, distribution basically to get customers. And I always have a, like a sales webinar that I can just, you know, basically give them and they text it to their, their clients.

Ah, that's so smart. So you're selling to people that already have the relationship and then if you win their business over, they have say 20 clients, say they're all med spas and so that you can grow really quick.

Exactly, exactly. So I try, I create a list of 200 people, I reach out to them, get them on the, an intro call and see if they're working with someone, you know, like us. And you know, 99% of the time they're not. And then again, we, you know, basically, you know, qualify them, make sure they're full time, make sure they've got a good email list and then leverage a sales webinar to convert customers. Yep.

I love this. I love how it's so sales focused where you know, you're executing on your ability to meet with these people and have an offer, a product that makes sense.

Yeah.

If, if someone else was going to roll out this playbook, where do you think they could get tripped up? What's like a common issue you run into?

Yeah. So if you're, if you're looking to build like a partner program, I think, you know, like the biggest, the biggest thing is you Know, you might be able to schedule an intro call, have a great conversation. Yeah, Your clients have a need, we have the solution, and then there's no follow up. And so, so I, I like to automate the follow up and, and make sure, you know, I'm always keeping in touch, always, you know, nurturing and building those relationships so that they actually, you know, give us referrals and we grow through it. But I think it's just as simple as follow up. Nice.

What tools do you use for follow ups? You like HubSpot or outreach or something like that.

So honestly, for me, I just like to keep it really simple. I just plug it into my phone. So I plug it into my phone. I have a cadence where every, every day I, I reach out to 20 either potential partners that I'm working with or, or current partners that I'm working with or potential partners that I would like to work with. And depending on what stage I'm at, it's like I'm either sending a text, I'm sending an email, you know, we have a call scheduled, or I'm shooting them a doordash or some, some type of gifting type thing. And, and that's, that's personally how I do it. And I just plug everything into Trello.

Nice, simple works Y to pick a product and a vertical to go after next. Maybe a founder's listening to this and like, this is a great idea. I think I could do this. What's like, what direction would you point them? Would it be a reputation management platform for gyms? Like, what do you think it'd be?

Yeah, I mean, just because I know the space so well, I like the reputation space. So I would go with that. I would just have like a simple tool that works and yeah, I would niche down to a vertical. And I always say the reputation tool is a great, you know, foot in the door. So the idea is, okay, you're a reputation company for gyms, but then once you get your foot in the door, you start working with gyms, then hopefully you can find out different tools and features that haven't been created yet that you can add on top of the reputation tool. So that's, that's kind of how I would think about that. Yeah.

So land and expand. I like that.

Land and expand. Yep, exactly, Neil.

Right on. Well, when, when you're building these, I, I assume you have a, a clear reason to sell. You like to, to build rather than scaling the businesses. But walk me through that thought process. Do you have like a goal that you Want to hit like I'm going to sell this exactly when I hit 100,000. Or do you sell when you're kind of tired of the clientele or it's just a good time to cash on the chips?

Yeah, yeah, I like, I like building to about $50k in ARR. So about 50k in ARR. So and I, I like to specifically focus on a buyer. So I think that when you're selling a company you should just like if you're selling a product, focus on, you know, a certain type of buyer. So for me that's usually a first time, first time founder. The reason why is like I've learned all these little things just through the years of trial and error and investing in programs and all that good stuff. And I always think to myself man, if I knew someone like me 10, 12, 13 years ago, it would have been so much easier. And so I think the value that I can deliver for a buyer is, is the best for a first time founder. And so with a lot of my deals, you know, one thing that I include is just like hands on training and support through an extended period of time. But yeah, I usually like to around 50k ARR. And you know, I shoot for a decent multiple, one that's fair, one that will sell quickly but make it worth it on my end. Nice.

Walk me through the acquisition process from your lens. You get the businesses to a certain revenue mark. What's your expectations to go through a sale? Do you do a lot of prep work, work up front? Do you record walkthrough videos or do you tailor it to the buyer?

Yeah. So you're talking about once I have a business I'm looking to sell. Like what's that process like? Yeah, yeah, I mean basically I get, you know, I, I get the business to the amount that I'd like to get it again around 50k ARR, we'll say. And then you know, I go to acquire and, and list it and it's interesting and props to you Andrew because every time I list a business it's always easier and there's a couple of new little things that I, you know, have found that just makes it really easy and simple to get listed. And that's pretty much it man. So I just listed and then usually, you know, people will start to inquire and I just try to be quick to respond and make things really simple for me and the buyer to get on a call and see if it's a good fit and then if it makes sense I try to Come up with a creative solution to close the deal quickly and easily.

Nice. So since you've sold 18 businesses, how many buyer calls have you done? Have you done like a thousand?

That's a good question, man. I don't know. So, yeah, usually it'll take me between 30 and 45 days from listing to closing and then usually for each acquisition I'll probably jump on 20 to 30 calls. Sometimes I'll whittle that down a little bit just by shooting. Giving the buyers access to a Trello board with all the information that they might need and kind of demo videos and all that good stuff. But yeah, usually it's a 30 to 45 day process and I'm chatting with 20 to 30 buyers and then usually walk away with a buyer that closes.

Nice. What are some red flags that you've seen from buyers or what are some things that a buyer could do that tells you that they're not interested? And then what are some things a buyer will do that shows you they're really interested and you should focus on that?

Yeah. So buyers that aren't interested. So I always think about what a nightmare would be to do a deal with a bad person or all the Harper in that would come. So if anyone is rude or, or just like a jerk or it's like they think they're, you know, super different or something, I, I usually will just not really, you know, follow up on those, those types of buyers. If someone's cool and, and normal, then, you know, I'm attracted to those buyers. I, I try to pursue those deals and try to be the most flexible with just cool people. So I think, I think a lot of buyers really underestimate, like you really should be cool to these sellers because there's lots of people looking at these deals and at the end of the day it usually comes down to whoever is the coolest and easiest to work with.

Yeah, there's a good quote. I always like to say you can't do a good deal with a bad person. A good old Warren Buffett quote.

Yeah, exactly. So, yeah, I just try to work with people that are easy to work with. Nice.

How important is the transition period that you offer? Do you tailor to each buyer? Do you say, hey, if you buy this business, I'm going to be here, make you successful. I'm going to provide training for three months. Would you say that's like part of the deal and it's really important? Like, I guess if a founder is listening to this and they don't provide transition support, do you think that hurts their deals? Does it help you?

I think so. I think it, I think it definitely helps me especially with those, you know, kind of first time founder buyers, guys that are, you know, lots of, lots of tech executives that are disenchanted with, with the corporate world are looking to acquire their first, you know, first business and I think they value training a lot of. And so one thing that I do and yeah, I do think that it's helping me win, win some deals is I'll get off my butt, jump on a plane and go do a two or three day training with the buyer and kind of get face to face with them and go over every part of the business A to Z. And so they make, you know, make them feel really comfortable and, and, and then usually it's a three to six month kind of period depending on their needs. But yeah, definitely that's a big part of it.

Nice. What do you think, or let me, let me phrase the question this way. If a founder was looking to sell, what are some tips that you would give them to be successful? I think that's awesome. You fly to meet people, shake hands and do in person training. You mentioned a Trello board with I assume some due diligence items. If you had to give three main points that every deal needs, what do you think they'd be?

Yeah, I think first and foremost your website should be solid. Your website should be solid. You should also invest a little bit in just creating a really good deck. Um, I think you guys have tools for, for doing that. But that's, that's one thing I've always had my design team that I work with, you know, try to create things that look really good and presentable and then yeah, just having all the information ready, I like to organize it in a Trello board and, and for all buyers that you know, are, are pretty interested, I'll give them access and that makes the process way easier for sure to get the ball rolling.

Nice. What's in the Trello board? Financials, other metrics, Operation dog, stuff like that?

Yep, Operation docs. I like to put all of the design assets, you know, in the board once I've created an asset transfer board as well for Trello and that's one thing that buyers have, have told me they like a lot. So I'll just, you know, kind of put every process, every system, every, you know, vendor, everything in the, in that Trello board so that when we close I can transfer everything over, you know, smoothly and they can have, you know, immediate access that Way.

Oh, wow. And then you plan out the asset transfer too, so everything's just easily viewable. The buyer knows exactly what's moving over. Do you include like a step by step on how to use each asset that's being transferred over?

Yeah, yeah. So, so for every, you know, design asset, I have everything explained for the software. Usually there's steps on how to create an account, all that good stuff. Every vendor, you know. Yeah, everything is just listed in that Trello board and, and just makes it really easy for me to deliver it and for the buyer to receive it and feel good about the transaction.

Nice. What do you think some big mistakes other founders make when they're trying to sell their business. A first time founder?

Yeah, I think not being responsive, I've, I've heard it's, you know, not being responsive. I think not being organized. I think being unrealistic about, you know, the current market I think is one. You know, I remember when I first started selling companies, I, I didn't really have, you know, it's, I didn't really know how to value the business. And so I think just being realistic about your asking price and all those good things. I also think that, you know, buyers need to, or sellers need to be, you know, creative and a little bit flexible if they want to sell their company.

Completely agree. What do deal structures typically look like with you? Are they mainly all cash? Are they some seller financed? What does that look like?

Yeah, I've, I've kind of experimented with all, all types. I am, at the end of the day I, of course I love all cash but I do want to be flexible. And so usually for me it's, you know, it's a, it's a little bit down and then maybe, you know, the rest over like a 90 day period is kind of the sweet spot.

Nice. How much does being flexible help close a deal in your experience?

I think that's, I think that's probably like 90, 90%, you know, with most of these transactions just being flexible and, and you know. Yeah, breaking the payment up or you know, whatever, whatever the case may be. It's. Yeah, it's a big deal.

Nice. Well, Stuart, this is absolutely legendary. 18 transactions. That's crazy. There's some great advice on this podcast. What are you building next? What's new for you?

So let's see. I'm starting my new venture. It's Help Covington. It's a vertical SaaS for dental specialists. And I'm a big believer in, you know, lean startup, lean principles. And so I'M just right now talking with a bunch of potential users and gathering all that good feedback and all that stuff. But, yeah, really excited about this one. And, and, yeah, hoping this is kind of going to be my next big one.

Right on. Well, I'm sure you'll be at a million recurring revenue probably pretty soon. Yeah. So congrats again on all the acquisitions. Thanks for coming on the podcast. If people want to learn more about your story and follow you online where you can find you.

Yeah. Feel free to connect with me on LinkedIn. Just Stuart fought on LinkedIn and, and yeah, happy to chat with anyone, whether they're a buyer or seller. And I love meeting with entrepreneurs and, and so, yeah, would welcome that.

Right on. Stuart, congrats again.

Thanks, Andrew. Appreciate you, man.