Business Name: Confidential

Business Start Date: 1/1/2003

Location: Berlin, Germany 

Business Valuation: €14,000,000 EUR

Percentage Being Sold: 100%

Sales (TTM): €2,771,012

Net Profit (SDE): €346,082

Business Multiple (ARR or EBITDA): around 5x ARR

Clients (TTM): 40 enterprise customers

Traffic (TTM): 67,478 total page views from 29,664 visitors

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Summary 

This listing is for a 20-year-old B2B SME software company with a specialization in offering SaaS technology management software alongside a comprehensive suite of complementary services. The business’ main clients are IT professionals responsible for automating software development within their organizations. The solutions that it is offering have a global reach, making them well-suited for companies representing various sectors, particularly those overseeing more than 50 devices.

The Opportunity

This business, founded in 2003, is a B2B SME software company offering SaaS technology management software along with related services. The profitability and positive cash flow from its inception led to achieving $10 million in revenue and $1 million in profit during the XP to Windows 7 migration wave.

This business’ current challenge involves a shift in its software deployment strategy. With the transition from traditional on-premises packaging tools to cloud-based solutions, the company is adapting to the changing landscape of technology management. Additionally, the increasing demand for rapid deployment of vendor updates to endpoints underscores the importance of agility and responsiveness in their operations. This wave represents both a challenge and an opportunity for the company to leverage its expertise and evolve its services to meet the dynamic needs of its clients in an era of cloud-driven software distribution and immediate updates. With this, the company is being offered as a turn-key acquisition for a private equity fund or strategic buyer to take over 100% equity (for 14M USD) to bring it to the next level. 

General Highlights

• A 20-year-old B2B SaaS company selling technology-management software specializes in software packaging solutions

• Currently serves 40 enterprise customers, representing 2.75M+ EUR in revenue a year 

• Long revenue track record (of over $10M a year historically) with monetization strategies encompassing both PAYG and SaaS

• This business is offered as a turn-key opportunity, complete with a dedicated and skilled team of over 40 already in position.

Niche

This business specializes in software packaging, testing, and deployment, leveraging its pioneering expertise in application logistics. The company is at the forefront of cloud application logistics technology. They prioritize keeping their software estate current to proactively prevent security attacks and ensure their users always have access to the most up-to-date software versions.

The niche of this business is experiencing growth in tandem with the expanding needs of companies, who now require automated software deployment solutions. They empower organizations to effortlessly transition from on-premises to cloud-based packaging and deployment. 

The business prioritizes addressing the critical security aspects of software deployment within the organization.

Customer Base

The customer base includes a range of clients, categorized from  T1 to T5, but the majority fall into the T1 category. The business only has paying customers (no free users) but it recently launched its pure SaaS offering.

The company acquires its user base primarily through its social media initiatives and organic Google search. Most of its business is managed services with a strong retention rate of over 90%. This level of customer retention indicates that their clients are satisfied with their services and trust their organization to meet their IT needs effectively. Additionally, the fact that they only lose customers due to strategic decisions, such as selling IT or outsourcing to a larger MSP, suggests that their clients are leaving for reasons beyond their control, which is not uncommon in the managed services industry.

The business operates on a subscription-based model where customers regularly order packages on a monthly basis.

Traffic

In the last 12 months, the business got over 34,496 visits, 29,663 unique visits, and 67,478 total page views.

As you might expect, many of the visitors were from the United States (40.82%), while Germany (14.98%) and India (10.89%) were also represented.

As far as traffic sources, they are using Lead Forensic for tracking. Here the following 3 sources are leading the way in terms of traffic:

Direct - about 27% of traffic

Links - about 38% of traffic

Search - about 35% of traffic

Overall, the average number of visitors per month is more than 2000. This will spike as soon as they do a marketing campaign. They will see more visitors now as they started a social media campaign last June.

Revenue Sources

The primary revenue models of this business are Pay-As-You-Go (PAYG) and Software as a Service (SaaS), with fixed pricing structures designed to provide transparency and simplicity for their customers. Here are the key pricing details that they offer:

1. Enterprise Clients Pricing -  Enterprise clients are charged a fixed rate of $100,000 for their services. This pricing model is typically suitable for larger organizations with complex needs and higher usage requirements.

2. SMBs (Small and Medium-sized Businesses) Pricing - SMBs are charged a fixed rate of $10,000 for their services. This pricing model is designed to cater to smaller businesses with more modest requirements.

The fixed pricing ensures that customers know exactly what they will be paying, which can be particularly attractive for budget planning and cost control. It also simplifies the decision-making process for potential clients, as they don't have to navigate complex pricing structures or worry about unexpected charges.

By offering both PAYG and SaaS models, the business is providing flexibility to clients, allowing them to choose the pricing approach that best aligns with their needs and financial capabilities.

Financials

The revenue and net income have experienced a significant decline due to the impact of the COVID-19 pandemic. They lost nearly all onsite work during this period. The transition to SaaS software, while beneficial in the long run, has temporarily resulted in a reduction in revenue per customer, contributing to the downward trend. Their IT department was heavily occupied with setting up the remote workforce causing a temporary lapse in focus on installing the latest updates. As a result, packaging volume decreased.

The variations in their revenue and net income can be attributed to the cyclical nature of Windows migration activities. All sources of revenue are transferable, and the new owner can significantly impact its earnings potential.

For details, here is the summary of revenue and net income:

Sales (EUR) 

2018 - €4.500M

2019 - €4.530M

2020 - €3.397M

2021 - €2.478M

2022 - €2.534M

2023 (YTD) - €1.810M

Profit/SDE (EUR) 

2018 - €450k

2019 - €660k

2020 - €260k

2021 - €129k

2022 - €14k

2023 (YTD) - €144k

Operations

The business cloud-based software is available for purchase through leading platforms like Azure Marketplace or AWS. They have their own marketplace selling software fully automatically on a global basis. They leverage LinkedIn ads to attract potential customers and guide them to their landing page, the landing page serves as the gateway to starting a free trial of their software. They offer a seamless free trial experience, allowing prospects to get hands-on with their software. Payments are effortlessly processed via credit card transactions, providing a hassle-free experience for customers. Financial transactions and record-keeping are efficiently managed through Quickbooks. The automated process supported by their support team is designed to convert trial users into satisfied, paying customers.

This business invested significantly in developing technology that serves as a valuable asset in their quest to improve output. They have chat support for quick and convenient resolution of customer concerns. They also have small offices rented, all of which the new owner has the prerogative of keeping or not.

The business thrives on a lean and efficient model. They optimized their operations to eliminate unnecessary overhead.

Team

They have the industry’s most advanced technology, but the reason they’ve been able to stay at the forefront of a highly competitive sector is their people. The company has 42 Total Direct Headcount Subsidiaries. Here we summarize the exact breakdown of employees: 

1. CEO - 1 Person

2. CTO -1 Person

3. Managing Director - 2 People

4. Head of Service Delivery - 1 Person

5. Finance Manager - 1 Person

6. Marketing -  2 People

7. Development - 4 People

8. DevOps - 3 People

9. Packaging - 19 People

10. Delivery Manager -1 Person

11. Consultants- 9 People

All employees at this business are not owners, and the organization has the flexibility to reorganize them as needed.

Sales/Marketing

The main marketing channel for the business is Social Media, with LinkedIn as their primary marketing tool. They also utilize Facebook and Twitter to post blogs and engage with their audience. The business does not have available data on the cost to acquire customers, as well as their lifetime value.

As of June, their advertising spending has increased to approximately $10,000 per month on LinkedIn. Historically, they had spent very little on advertising. LinkedIn appears to be the primary advertising platform, where they are allocating the majority of their advertising budget. This increased spending on LinkedIn may indicate a shift in their marketing strategy to leverage this platform for greater reach and engagement.

They are your one-stop shop in the cloud, ensuring that no app is left behind. This business is the sole end-to-end cloud platform, encompassing every step from documenting and packaging to rigorous testing and seamless software deployment in the cloud.

The company empowers you with Microsoft technology, ensuring no vendor lock-in and seamless integration into your existing infrastructure. The bridge functionality bridges the gap between your on-premises and cloud initiatives, providing you with the flexibility and freedom to navigate your digital transformation with ease.

Partners

The company operates independently and does not rely on major operational or financial partners. They use Chargebee and Stripe as payment partners for products. For managed services, the company relies on a combination of traditional paper-based transactions, as well as different bank accounts in the respective countries where it operates to collect payments. This approach allows for flexibility and adaptability to various payment preferences and regional financial systems.

The company does not have any marketing agency or advertising company partnership.

Main Expenses

The company’s major expenses are as follows:

1. HR Costs (85%) -  This includes employee salaries, social taxes, and company car expenses.

2. Other Expenses - These are for office rent and third-party software utilized by the company.

The future owner will have the freedom and flexibility to adopt the existing cost structure or to create and integrate the teams in his current setup.

Work and Skills Required

The owners will help organize the redistribution of the working responsibilities as they'll not stay on. This will require a classical CEO and CTO knowledge for the new owner to run the business.

One of the current owners works full-time and serves as the CEO, CFO, CSO, and CMO. The other owner works part-time and serves as the company's CTO.

Who is the ideal buyer for this business?

The ideal strategic buyer for the company is a decent Managed Service Provider (MSP) who can integrate the company's setup into his existing setup and sell the product to his customer base.

An opportunity to scale the business through extra money for sales and marketing will also interest a private equity financial buyer.

What (if any) post-sale support is included with the sale?

The business has two owners and both will be available during the termination period. For 6 months, the CEO will work for 40 hours, while the CTO will work for 20 hours.

Valuation

The business is priced at about €14,000,000 EUR, about 5X ARR of its Sales (TTM) of 2,771,012 EUR. The business is growing at 100% per year so a 2.5X multiple by next year is expected.

SEO/ASO Analysis:

Web

Authority Score: 22

Backlinks: 359

Referring Domains: 32

Ranking Keywords: 190

Percentage of Links that “Do Follow”: 33%

App

App Ratings: 4.8/5.0 with 493 ratings

Social Media 

LinkedIn - 260 followers

Facebook - 83 followers; 93 likes

The company has 3186 leads in its CRM system.

Expansion Opportunities for New Owner

To further the opportunities of the company's platform, here are some of the owner's ideas on how to expand the business:

1. Having an existing customer base and salesforce.

2. Reducing Cost on People - the owner suggests cutting off the management team.

3. Pricing Flexibility - the company currently offers a fixed rate.

Barriers to Entry

Providing a unique end-to-end cloud platform and specific knowledge in the packaging space, the business does not have a lot of competitors in the cloud section. This protects the company from its competitors in taking market share.

Reason for Sale

Being in the business for 20 years, the owners would want to focus on their health.

They believe that for the company to grow and scale, they have to sell. With more capital directed towards proper sales and marketing, their low-cost structure cloud offering has a high margin in the global market.

Miscellaneous Details

The company’s preference is a stock sale.

The company has taken all necessary precautions to ensure that there is no risk of infringing on the rights of others.

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All Assets Included with Sale 

All assets used to run, maintain, and grow the business are included with the sale - including but not limited to: 

1. Domains and all IP brand assets

2. Website and all contents

3. Proprietary SaaS Software

4. All Customer information

5. All Partner Accounts

6. Monetization Accounts (AWS and Azure Marketplace)

7. Social Media and Marketing Accounts

8. Employee contracts

9. Physical assets

10. All distribution contracts

11. Bank accounts

12. Misc Accounts

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About the Agent 

FIH.com is a Manhattan-based M&A advisory firm specializing in the sale of remotely-run successful digital companies (around the world) from $1M-100M in revenue, including apps, marketplaces, freemium + enterprise SaaS, ecommerce, affiliate/advertising groups, and more! We are proud to work with the very best entrepreneurs and investors, so if that’s you and you are in the market to acquire or sell a relevant business, then we encourage you to reach out for a complimentary consultation.