The FemtoConf 2017 Notes and recaps can be found on the central hub page.
Website: FEInternational.com
Twitter: @ThomasSmale
- Started of with writing a book on selling websites
- People started asking whether we offer a service for that
- We’ve continued to buy & sell businesses for ourselves
- 95% success rate on selling businesses
- Now offices in Boston, London and Saigon
- Did 100 deals in 2016
What Buyers Want
- Important to understand from the beginning – need to position yourself correctly
- What buyers look for
- Low churn (sign that product & customer service is good)
- Growing MRR
- MRR > ARR
- Documented Code
- Evergreen
- Growth Opportunities
Process
- Establish clear protocols
- Document everything
- Write everything down
- FEInternational uses Atlassian Confluence
- Create a model that can operate in your absence
- Make the business sustainable
- Will the business still thriving in 10 years?
- Remove single points of failure
- important employees
- co-founder
- yourself?
- consistency vs. one-time
- Hacker News is not a great marketing channel (no predictability, no control)
- do the boring stuff often if it works
- Monthly beats annual
- Consistent cash flow
- Focus less on new customers
- instead focus on retention
Step 4 – Sell at the right time
- Sell while you are growing
- Exit before you become stagnant
- No new clients
- Maxed out what you can sell to existing customer
- Take emotions out
- “If you wait it could be too late”
How we did it
- Building a great team
- Existing customers
- Consistency
- Employees are way better at being consistent than entrepreneurs!
- When you find things that work, continue on doing them
- Removed owner
- Whether you’re buying or building – remove the owner!
- Make sure you’re in a position where a buyer can take over from you
- Systems
- Platform agnostic
What is it worth?
- FEInternational Valuation Model
- Proprietary data
- Data from 400 deals, over 20,000 data points
- Multiple of seller discretionary earnings (SDE)
- SDE takes differences in owner pay into account
- SaaS: 3-6x annual SDE
- Content: 2-4 annual SDE
- E-Commerce: 2-4x annual SDE
Key Takeaways
- Your mileage may vary…
- Make yourself dispensable
- Document your processes
- Outsource as much as you can
- Create recurring income & repeat business
- Sell while you’re still growing
- Know what it is worth
- Complimentary e-course: http://feinternational.com/femto
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