The SaaS Podcast - AI, Growth & Product-Market Fit for SaaS Founders

Selling a SaaS Business: Buy at $500K, Sell 3x

Nov 30, 2021

Raj Sheth, CEO of Decalab, discusses acquiring and growing SaaS businesses, lessons from failed ventures, and the success of RecruiterBox. He shares insights on transitioning business models, acquiring companies like Fly Data, and entrepreneurial opportunities with Bupas.

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Introduction

00:00 • 3min

Exploring Decalab: A SaaS Factory Acquiring and Scaling B2B Software Companies

03:16 • 2min

Lessons from Failed Ventures and Success of Recruiter Box

04:48 • 24min

Entrepreneurial Opportunities with Bupas and Transition to Higher-Tier Products

28:26 • 2min

Navigating the Challenges of Business Model Transition

29:57 • 3min

From Selling to Acquiring: The Fly Data Story

32:41 • 16min

Acquiring Companies and Contact Details Discussed with Two Examples

48:51 • 2min

Raj Sheth bootstrapped RecruiterBox to $4M ARR, sold to private equity, and then built a SaaS factory focused on buying and selling SaaS businesses. His first SaaS acquisition returned 3x in 13 months.

Learn how Raj evaluates SaaS companies at $1-3M ARR, turns them around with a SaaS turnaround playbook, and positions each one for selling a SaaS business at a premium. His system targets 50% EBITDA before reinvesting.

Raj is the founder of Decalab, which specializes in buying SaaS companies and selling a SaaS business after optimizing operations. Before selling a SaaS business became his focus, he grew RecruiterBox using SEO, content marketing, and paid acquisition.

🔑 Key Lessons

🎯 Selling a SaaS business starts with buying right: Raj targets companies at $1-3M ARR with low churn but stalled growth, paying sub-3x multiples on net profit.
📉 Cut costs to 50% EBITDA before selling a SaaS business: After his first SaaS acquisition of FlyData, Raj removed the founder's salary and reinvested profits into growth.
🔄 Use Crunchbase to find SaaS businesses to buy: Raj searched for companies that raised money 4+ years ago with fewer than 10 employees, booking 22 Zoom calls in 3 days.
💰 Low churn makes buying SaaS companies safer: Resilient recurring revenue gave Raj time to learn the space before turning FlyData around and selling.
🛠️ Selling a SaaS business you've improved compounds returns: Decalab aggregates 5-10 companies, moving profits between them and sharing playbooks across the portfolio.

Chapters

Introduction
What is Decalab and the SaaS factory model
Two failed B2C startups before SaaS
Co-founding RecruiterBox
Growing RecruiterBox to $4M+ ARR
Early growth channels: Google Apps, HARO
SEO as the primary growth channel
Paid acquisition economics
Attempting the move upmarket
Buying SaaS companies through Decalab
Finding targets on Crunchbase
SaaS turnaround: FlyData sold for 3x
Building the selling a SaaS business thesis
Why acquiring beats building
Lightning round

Resources

Full show notes: https://saasclub.io/301
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