About this Video

• Video Title: 398: saas.group: Scaling Bootstrapped SaaS Startups Through Acquisitions - with Tim Schumacher
• Channel: SaaS Club
• Speakers: Tim Schumacher
• Duration: 00:38:12

Introduction

This SaaS Club video interviews Tim Schumacher, founder of SaaS Group, a holding company that acquires and operates small, innovative SaaS products. The interview explores SaaS Group's acquisition strategy, focusing on a founder-friendly approach, cultural fit, and the support provided to acquired companies. The purpose is to inform SaaS founders about the acquisition process and whether selling to a similar organization is a viable option.

Key Takeaways

• SaaS Group's Business Model: SaaS Group acquires and operates bootstrapped SaaS companies, offering founders an exit while maintaining the companies' original bootstrapped mindset.
• Acquisition Criteria: SaaS Group primarily targets profitable SaaS businesses with ARR between $1 million and $10 million, located in the US, Canada, or Western Europe, operating in general productivity, developer tools, or online marketing sectors. While a bootstrapped mindset is preferred, turnarounds and companies from VC-backed situations are considered.
• Founder-Friendly Approach: SaaS Group prioritizes cultural fit and autonomy for acquired companies. Founders can choose to stay or leave after acquisition, and support is offered à la carte, focusing on areas where acquired companies might need assistance (marketing, BI, etc.), while allowing them to retain their independent operations.
• Acquisition Process: The process begins with the founder's decision to sell. SaaS Group offers indicative offers early in the process, leading to a letter of intent and then due diligence. The entire process usually takes around three months.
• Valuation: Valuations vary, with multiples of ARR ranging from 0.5x to 10x, mostly in the 2x-3x range. Earn-outs are used to adjust pricing based on founder involvement and future performance.

Yes, several financial numbers were mentioned in the transcript:

• $60 million: SaaS Group's annual recurring revenue (ARR).
• 100%: Growth rate of ARR from 2022 to 2023.
• $1 million - $10 million: The ARR range of companies SaaS Group typically acquires.
• 2x - 3x: The most common multiple of ARR paid by SaaS Group in acquisitions (though it notes the range is wider, from 0.5x to 10x).
• $50 million: The approximate sale price of sex.com, mentioned as a fun fact.

The transcript also mentions that SaaS Group aims to acquire around $30 million in ARR in the coming year to support its growth targets.