Built to Sell Radio Ep 426 Inside the Mind of an Acquirer with Valsoft's Joe Khoubbieh
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Jan 26, 2024 Joe Khoubbieh, Chief Investment Officer at Valsoft, shares his insights as one of the leading acquirers of software companies. He discusses why niche vertical market software is a goldmine, and the importance of recurring revenue. Joe breaks down core acquisition criteria, including the significance of mission criticality and acceptable churn levels. He also emphasizes transparent communication with sellers, effective transition planning, and the pitfalls of leverage in deal-making. Learn how Valsoft's equity-funded approach stands out in the acquisition landscape.
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Why Vertical Market Software Is Valuable
- Vertical market software are narrow, mission-critical products serving niche industries and are highly resilient.
- Valsoft targets these because many lack exit options despite being essential to customers.
Measure Mission Criticality With Churn And Customers
- Calculate churn to measure mission criticality; low churn implies high customer reliance on the product.
- Interview customers to validate how embedded the product and team are in daily operations.
Prioritize Recurring Revenue And Team Quality
- Aim for at least 60% recurring revenue to make the business easier to own and invest in.
- Assess team quality because weak teams raise acquisition risk and can lower valuation.