AcquisitionTax Filing SaaS Acquisition

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ABOUT THE CLIENT

Our client was a US-based Online Tax filing company looking for a Vertical expansion by way of adding a SaaS product into the company portfolio.

 

CLIENT BRIEF

The acquisition had to be a logical product extension to be able to address the immediate market opportunities with the current clientele. At the same time be able to flip the revenue model to a linearly scalable one versus the existing one-time or subscription-based revenue model.

 

SOLUTION OFFERED

Acquisition
We were able to identify a Startup that met the key Acquisition criteria. The company had an enterprise product in the B2B space and had a product portfolio fit. The company was evaluated for technology and product capability, organization and management capability, proof of established product and clients.

 

OUTCOME OF CASE 01/21

Acquired with Size of the Deal being Approx. $200K (Excluding ESOPs)

 

OUR APPROACH
  • Understand the Acquirer’s interest and focus
  • Evaluate the acquisition target on Product, Team and Business
  • Work on a valuation method that suits both the Acquirer and the Startup

 

FREQUENTLY USED VALUATION METHODS
  • Market Multiplier on Sales or EBITDA
  • Cost-to-Duplicate for early-stage Startups (pre-revenue and 1-2 into revenue generation)
  • NPV/DCF for healthy (with sound EBIT) Services companies
  • Hybrid method

 

Case Number:
1/21
Date:
17 June 2021
Author:
Sunita Kumari
Product:
A visitor management product focused on commercial establishments.
Founded In:
2017
Sold In:
2019
Funds Raised:
Through Friends and Family
Status:
Revenue generating with ongoing clientele.
Revenue:
Approx. $ 0.5M with 2 enterprise and 20 SMB customers.
Asset Acquisition:
Product + Team
Valuation Deal type:
All Cash Deal
Methodology:
[EV = 2.5x Sales (Topline) + Product development Cost + 1 Yr. sales projection]
Special Conditions:
Joining Bonus for the Technology Team and ESOPs for the founders
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