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This SaaS Does $200M in Transactions—Should You Buy It?
Apr 1, 2025
Travis Jamison, an expert in small business investing and contributor to CapitalPad, joins the discussion about a niche SaaS billing platform valued at $7M. They explore the intriguing financial metrics, including $2M in EBITDA, and debate whether its reliance on payment processors is a risk. Travis shares insights from his 15+ business acquisitions, focusing on customer retention strategies and the importance of rigorous technical due diligence. The conversation also touches on selective investment philosophies and the challenges in financing potentially waning technology.
34:39
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Quick takeaways
- The podcast explores the risks of relying on third-party services like Stripe for payment processing, emphasizing the vulnerability of SaaS businesses amidst competitive pressures.
- It highlights investment strategies in small businesses, stressing the need for a diverse portfolio to mitigate risks while assessing the financial health of acquisition targets.
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Industry-Specific SaaS Software Insights
The episode discusses an attractive pricing structure for a specific SaaS billing software built on Stripe, which has an EBITDA of $2 million and revenue of $2.4 million. Priced at approximately $7 million, it is appealing in comparison to typical SaaS valuations, but concerns about market competition are raised. It primarily serves small and micro businesses, focusing on non-technical users who require simple payment solutions. Despite facing some decline attributed to competitive pressures, the software maintains a solid retention rate due to its ease of use and effective customer support.
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