💰 Micro M&A Interview 004: Finding the right buyer (and breaking even)

Hi folks, welcome to our 4th M&A interview! This one’s short and sweet. Let’s get right into it. 👇

High-level data

• Asking price: Low five figures

• Revenue multiple: ~12.5x

• TTM Revenue: ~$1k

• Expenses: $50/mo

• Customers: 100 (plus thousands of free users)

• Date founded: Early 2024

• Tech stack: Bubble

• Competitors: Less Annoying CRM, Hubspot, Salesforce

• Marketplaces: Acquire and Buy/Sell Startups

Seller takeaways

• It may be a good idea to wait until the product is turning a profit before selling.

• Go with the best buyer, even if it means sacrificing a bit of money.

• 80 people were interested enough to sign NDAs, but that only resulted in a few LOIs. There are a lot of people out there just kicking tires.

Buyer takeaways

• Sellers care whether you’ll be able to bring their product to new heights. Sell yourself.

• Find a product that fits in seamlessly with your existing products and/or audience.

When I first teamed up Garrett and Val to start our holding company, Whelm was one of the first products we looked at. I spoke with the founder, Chipper, at length to get all the details about his product. He was super open and helpful.

In the end, we decided not to move forward. The build was solid, but we didn’t want to get into the crowded CRM game. Soon after, he sold it and moved on to his next company.

I wanted to hear more about what happened after I ducked out, so I contacted him. Here’s what he had to say.

Thousands of users, $100 MRR

Whelm was a software platform where freelancers could manage all their administrative tasks in one place – invoicing, contract creation, e-signatures, project management, client feedback, etc. Our target market consisted of freelance marketers, videographers, and designers.

It was a freemium product with subscriptions and one-time purchases. Our MRR at the time of selling was low — below $100. But we had thousands of free users and about 100 paid users, including the one-time purchasers.

It was a very low-cost business, with expenses totaling less than $50/mo from software and storage fees.

The decision to sell

We decided to sell it right when the business reached the point that it was self-sustaining — it was paying for itself and growing. It seemed like a good time to do it and anyway, we wanted to focus on our new business, Mallow.

Whelm was beginning to feel like a distraction that we no longer had time for.

The listing and the asking price

We listed it on Acquire and Buy/Sell Startups. Our asking price changed over time, but it hovered around the low 5 figures. The lowest we would have accepted was $15k.

In total, we signed about 80 NDAs and received a few LOIs.

There was nothing that we didn’t tell the buyer. We were an open book with nothing to hide.

The selling process

We ended up selling Whelm for low 5 figures.

The sale allowed us to break even on our work, so we didn’t do anything crazy with the money — we just reimbursed ourselves. That allowed us to refocus our efforts on Mallow.

We chose a buyer that was the most strategic, meaning they already had a business that was poised to integrate seamlessly with our tech. Even their audience was the same. We could see that they were ready to take it to new heights, so they were the right fit.

Payments and assets were all transferred digitally via Acquire.com.

Be intentional about your buyer

Choose the best buyer.

Get as many offers as you can and — as long as the offers are similar enough — go with the best buyer, even if it means sacrificing a bit of money.

That way, you walk away knowing it is in good hands and your customers will be treated well. You won't have any regrets.

No regrets

The most surprising part of this whole process is that I don’t miss the business at all. I thought I would miss it more, but I don't.

It's in good hands and has a bright future, and ours is brighter with our new business as well. Like I said, it’s best for everyone if you choose the right buyer.

Looking forward

All my focus is now on Mallow. Like Whelm, it’s a revenue enablement tool. But we’re building it for agencies and digital service businesses instead of freelancers. 

You can follow along as I build it on Twitter or LinkedIn.

Thanks, everyone! Any feedback? Let me have it!

-James

Creator @ Micro M&A (newsletter teach how to buy/sell micro-SaaS)
Creator @ SaaS Watch (micro-SaaS acquisition opportunity newsletter)
Creator @ Ancient Beat (archaeo/anthro newsletter)
Contributor @ Indie Hackers
Cofounder @ Solutrean Holdings (acquiring 6 products in 12 months)
Cofounder @ LoomFlows (easy customer feedback via loom)
Cofounder @ reHuman writing agency

Micro M&A is a production of Solutrean Holdings (woot)