PM and Emails sent

benlbates said:

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Were these offers unsolicited or have you been working with a broker? What has been the level of diligence conducted by the bidders? How confident are you that you could invest the $350k and generate the same ~$8k/mo in pre-tax cash flow? For 2 hours a month, would think holding onto the business would be pretty attractive (unless you are selling at the top). Congrats in either event.

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This.

taking a tax angle on this, assuming you have a gain on this transaction, the royalty would allow you defer some of that income to the future (and the associated tax bill). On the downside the royalty will be considered as ordinary incone while sale of asset without royalty may yield more capital gain which could also be favorable as it is taxed at a lower rate (especially if you have capital losses to soak it up)

Do you know your tax basis in this asset?

Anecdotally, 7.0x TEV / TTM EBITDA for a 3-yr CAGR of 59% isn't even close to market, especially for a SaaS business.

That being said, the sub-scale nature of your company requires a pretty significant discount. Additionally, this strategic acquirer isn't going to do the deal unless it's accretive to their business. What are your margins? (to value the royalty?) I can speculate on what they might be willing to pay based on their trading multiple, growth rate, margins, and potential to ramp your tech. Lot of interesting stuff here. Congrats again.

Proprietary screening software

benlbates said:

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Anecdotally, 7.0x TEV / TTM EBITDA for a 3-yr CAGR of 59% isn't even close to market, especially for a SaaS business.

That being said, the sub-scale nature of your company requires a pretty significant discount. Additionally, this strategic acquirer isn't going to do the deal unless it's accretive to their business. What are your margins? (to value the royalty?) I can speculate on what they might be willing to pay based on their trading multiple, growth rate, margins, and potential to ramp your tech. Lot of interesting stuff here. Congrats again.

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I'm surprised that this business has EBITDA. Most of the smaller SaaS business that I've seen are either struggling with gross margins as they scale their delivery infrastructure or sales and marketing expenses as they attempt to acquire new customers.

Which would have little to no enterprise value. Please stop cluttering this thread with conjecture, suppositions, and misguided animosity. I already posted that the software, "highlights discrepancies between regional/micro-market demand and macro-market supply. It also uses regression and other multi level statistical analysis to predict price projections that let brokers map a better valuation of the individual game tickets for delta hedging."

It has nothing to do with the front page of a retail ticket website. You are looking at the paint job, and getting all Columbo. You are missing that we aren't selling the paint job, or even the engine. We are selling a fuel additive that can boost performance of any car/site by helping identify niche market arbitrage that was being overlooked. Something as simple as making a market where there is demand but no current supply on the major exchanges is one of our specialties. They want to make money. They want to allocate resources efficiently. We provide software that allows them to find events that aren't being served that have a potential market, and inversely identify saturated markets where pricing power is so weak that it results in compressed margins.

For instance, the average sales price for a ticket to the TAMU vs. TENN is ~$240. However, the average sales price in Brazos County is $400. Not only is the sales price higher, but a 65% greater percent of disposable income is spent on athletic activity than Harris county. So, if you are looking to market the TAMU vs. Tenn game, you're better off putting resources into reaching the most likely consumer in Brazos County vs. the more heavily and densely populated (largest % former students as well) Harris County.

I know it sounds stupid and like worthless information, but it's information that companies with a large footprint find very useful to winnow back to the most profitable and underserved events.

i'd love to knickknack with you all day 84, but I don't have the time.

God bless

I know the ins and outs of how to operate the business and how to add value. I have absolutely NO experience in the valuation aspect.

Good problem to have!

Staff already emailed me that they are in the process of cleaning up all of the trolling.

Thanks Staff!

Are you just using this software for your own website? I would think that is significantly undervalued if the software does what you say it does. Seems to me you could sell that as a service to other ticketing companies and make much, much more than what you are doing now.

BTHOtu. Congratulatsion

I am sorry, I am late to this thread, and I mostly skimmed. I had a good bit of experience selling companies when I was a banker, although very little this size.

What are your alternatives to the two offers?
Alternatives might be:
1) Shopping the deal - Does it seem like shopping these offers to other interested parties is possible? While I believe in intermediaries, you don't necessarily need one to test the waters if you know who the potential buyer universe is and can articulate the opportunity properly.

2) Status Quo - Are you excited about potential future growth? How secure do you feel about that growth 2 hours a month seems understated, but it does sound like you could continue to run this business easily.

As an aside, back when I was an intermediary / banker, I remember making pitch books with the "cross roads" slide describing options for a company.

Alternatively, assuming you do want to sell to the two parties, I would consider: 1) can you get them to the finish line? Many potential buyers love to do a "perpetual mating dance" and never close the deal. Again, the right intermediary can help with this. 2) The size makes this less of an issue, but I always like to know a "buyer's ability to pay".

On the two offers, cash is king. Don't over think the tax issues etc. If you lose control, and you already perceive a "technological obsolescence" you want cash.

Now days, when I am on buy-side, I typically like the sellers to keep skin in the game. When I am on the sell-side, I want cash.

Either way, good luck

You are over thinking it. There are a lot of small market SaaS companies out there that make EBITDA. Not every tech company uses a traditional startup model.

Further, I imagine there are "corporate" costs not reflected in the EBITDA. But at $50k EBITDA, it is much more of an art than a science when it comes to small businesses IMHO.

Satellite of Love said:

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Another fine scrub job by nnichols!!!

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Or JHNichols, CSTXAG2015, AgAC, etc...

dlance said:

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Satellite of Love said:

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Another fine scrub job by nnichols!!!

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Or JHNichols, CSTXAG2015, AgAC, etc...

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Also now Random Walk