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Ask HN: Where can I buy real software companies?
So I have a software company that is generating a good amount of cash. I'd like to buy another small software company and (ideally) optimize it and make some more money.
Problem - most of the sites, like flippa, have crap businesses for sale. Is there a real place that one can find $50k - $500k software businesses for sale? Side projects that people make money from but don't have the time for?
- deleted 11y ago[deleted]
- bluedevil2k 11y agoAnnual
- brucehart 11y agoYou will probably want to work with a business broker. These are two that I know of that have a listing of businesses for sale: http://feinternational.com/buy-a-website/ http://feinternational.com/buy-a-website/ http://empireflippers.com/marketplace/ http://empireflippers.com/marketplace/ It seems like the best deals come through old fashioned networking. Maybe look at several businesses that would compliment your existing product and get in touch with the owners?
- phkahler 11y agoI think this is going to be important now and in the future. Systems are getting so complex nobody can build something complete from scratch. I see people making high quality components and then merging or being acquired to create a whole end user product. Prior to that point, you'd have something that's not very profitable unless lots of companies license your component and do integration themselves.
- patio11 11y agoSystems are getting so complex nobody can build something complete from scratch. Come out to Microconf sometime. You can meet ~300 nobodies all at once!
- aculver 11y agoSo, an interesting thing I observed while building a SaaS company was that you can actually get off the ground with a very simple solution, you'll just end up serving smaller customers with relatively simple needs (say $50-100/mo.) These initial folks will pepper you with feature requests while still paying you money for what you've got, which can give you feedback about which complexities you're missing that you really need to implement. If you choose which things to implement carefully, you end up making your product more useful to larger customers and you'll start closing some larger deals. (E.g. $500/mo.) Rinse and repeat and before too long you've got a product with all the bells and whistles and you're closing enterprise deals. (E.g. $2,500+/mo.) The numbers here are all relative, but the point is that the smaller customers end up subsidizing the development of what becomes an enterprise product. (I think the advantage this approach has over the one you've suggested is that the product is always capable of making money even from the very beginning, just on a smaller scale at first. I think this is a critical feedback mechanism so that folks know whether what they're developing is actually useful to folks.)
- vram22 11y agoGreat comment. In a way, it's like what Geoffrey Moore talks about in his book "Crossing the Chasm", about the difference between early adopters and mainstream users.
- fsloth 11y ago"Systems are getting so complex nobody can build something complete from scratch." I would claim there is still a large chunk of areas that have very poor service from the software field and would find tremendous value of a trivial software product that is just applied correctly. So it's more about service design rather than hightech, if one is just looking to make a profit.
- omnipath 11y agoPlease forgive me if this presumissious of me, but you wouldn't happen to know of some of these areas that need more quality software? The only one that I'm aware of its medical, which usually has regulations and long leads before making money.
- fsloth 11y agoI'm mostly clueless. But I see the pattern all around me still that in established business processes there are so many places where lots of things are done as in pre digital ages. B As an example... Building and construction is still in infancy as what it comes to utilizing digital technology. The field is fragmented with long subcontractor chains. The digitalization that happened in e.g. car manufacturing is not yet complete. The field is dominated with clunky, expensive cad packages which, while some may be eatabslished standards, are never the less decades old piles of legacy software. Most of the data is still transmitted between parties in paper drawings.
- pmrd 11y agoA $500k business would mean you'll end paying on average between $3-5 million for it. May I ask your rationale behind chasing these deals? Why not split the $3-5 million into risk-based chunks and invest in startups instead? You only need 1 of them to hit 50x.
- bluedevil2k 11y agoI don't think that multiple is right - for a $500k rev software company, I wouldn't pay any more than 3x.
- tobltobs 11y agoThis 3x yearly earnings is mentioned quite often. But I can't believe anybody is selling for this. Maybe for 5x if you are in need of money. And in times of zero interest rates this 3x thing sounds even more unbelievable.
- jonknee 11y agoWell software isn't like a lot of businesses. A plumbing supply company will probably be just as successful in 3 years as it is now, but a software company might be worthless. Three years is a long time in software.
- antaviana 11y ago3x revenue, not 3x earnings. Revenue and earnings are two different beasts.
- ownagefool 11y agoIn a one man software company, there's often not a great of outgoings.
- pmrd 11y agoRevenue is largely a function of marketing effectiveness/marketing spend coupled with a minimum product/market fit. If someone has a legit internet software product bringing in $500k a year, they'd have to be pretty silly to sell it for $1.5M - unless they're really desperate for cash or hit a scale/product/market/ops ceiling they cant crack. Capital is free flowing at the moment and a legit revenue-generating, valuable, scalable business shouldn't have to cash out this early or this low.
- GFK_of_xmaspast 11y agoThis strikes me as one of those 'if you have to ask, you shouldn't do it' situations.
- genericone 11y agoCare to explain? The OP's question was not whether it was a good idea, but the specifics of how, where, and why a particular website marketplace.
- trimble-alum 11y agoI was confused as well. A market place is basically lead-gen into the funnel of deciding whom is worth further diligence (interviews, tours, IP review, finances, customer surveys, etc.)
- trimble-alum 11y agoI was confused as well. A market place is basically lead-gen into the funnel of deciding whom is worth further diligence (interviews, tours, IP review, finances, customer surveys, etc.)
- trimble-alum 11y agoI was confused as well. A market place is basically lead-gen into the funnel of deciding whom is worth further diligence (interviews, tours, IP review, finances, customer surveys, etc.)
- patio11 11y agoI sold Bingo Card Creator through FEI (http://feinternational.com http://feinternational.com) and have nothing but good things to say about them. Something like 20% of their listings are SaaS businesses. The going rate for a SaaS business is roughly 3X yearly SDC ("seller discretionary cashflow" -- revenue minus costs required to run the business as opposed to e.g. the owner's salary, distributions, interest expense, etc). It is closer to 2X for software businesses where the revenue is not by-nature recurring. (Naturally, these are guidelines -- businesses are, like all things, priced at where a buyer and a seller can mutually agree, and certain factors can make buyers very agreeable.)
- bcjordan 11y agoPatrick's talk at Microconf on selling Bingo Card Creator was fascinating—nice set of notes at http://doubleyouraudience.com/microconf/patio11/ http://doubleyouraudience.com/microconf/patio11/
- patio11 11y agoI'll write about this more in the near future -- don't want to step on a Starfighter announcement coming up though.
- sgallant 11y agoThe talk wasn't recorded, was it?
- patio11 11y agoRob Walling and Mike Taber have a more authoritative answer on that than I do. There was a videographer there but I'm not sure what got shot. Don't quote me on this, but I think the talks were recorded. They typically release them midway through the year as part of marketing the next conference.
- aerovistae 11y ago
- strooltz 11y agosend me an email (address is in my profile). we have something that might fit what you're looking for...
- greenwalls 11y agoFind apps you like then do some research and see if you can get a general idea of the revenue they are making. If it looks like you could afford to acquire them then email them and see what happens.
- callmeed 11y agoLike Patrick, I also sold my company through FEI (http://feinternational.com/ http://feinternational.com/) last Fall. Once we got all our information in place, the process went very quickly. We had several interested parties and due diligence calls almost immediately. After that, we had 3 offers. There were a few unexpected hiccups (I think there always are with acquisitions) but overall the process was very smooth and I'd use them again. I'd recommend registering with them and getting to know one of the brokers. They'll start sending you deals as they come in. A few recommendations based on my experience (YMMV): - Cash is king. While you should definitely structure the deal with a transition period, an all-cash offer carries more weight than a deal where you are financing some/all of the price. You'll need to show proof of funds too, so make sure you can do that easily. - Get your attorney on standby. You'll probably need help with offer letters and purchase agreements. Plan on going through a couple rounds of revisions for both. Feel free to email me if you have more questions.
- tbrooks 11y agoI've thought about selling my side business, but I want to sell it to the right person. I'm in Austin. Lemme know if you want to meet. My email is HN username + gmail.
- xfax 11y agoI work at Axial (http://www.axial.net http://www.axial.net) and this is what we do. Check us out and if it seems interesting, submit the form and someone will get back to you. (Caveat: the size of the business you're looking for is on the lower end of the deals on Axial)
- csomar 11y agoIf you are (or any other investor/buyer) interested in WordPress/Advertising and looking either to buy or invest, email me and maybe we can have a short-talk to exchange information, knowledge and who-knows.
- deleted 11y ago[deleted]
- rattray 11y agoWhile I'm not sure what I think of the policy myself, here it is: > Resist commenting about being downvoted. It never does any good, and it makes boring reading. From https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html EDIT: I'm not sure why your original comment would have been downvoted, but this is probably why your self-reply is getting downed.
- rexreed 11y agoI (had) a good ecommerce inventory management company going - if you want to buy it, drop me a note. I'm on to bigger / better things.
- justintocci 11y agoyou don't have any contact info on your profile
- rexreed 11y agofixed ;)
- deleted 11y ago[deleted]
- edbyrne 11y agoDrop me a note (email is in my profile) if you'd like to look at a SaaS business at the higher end of your revenue target.
- bluedevil2k 11y agoEmails not in the profile
- gknoy 11y agoNote: While HN's profile indeed shows an email field, that's not made public to people looking at your profile. You will need to put it (obfuscated) in your "About" section if you want other users to be able to see it.
- tomasien 11y agoCan you send me a note - tomasienrbc@gmail.com. I'd like to run something by you.
- lazyant 11y ago(slightly OT) I don't understand Flippa; I've search several times for a regular web site making a bit of money and all of them look like scams, even the ones that are sold, with no PageRank since all the incoming links are spam.
- deleted 11y ago[deleted]
- trimble-alum 11y agoAny decent marketplace for one-app or brand companies needs to prominently display intedependently-verifiable, evidence-based due-diligence metrics than can be dug into by your legal and forensic/tax accountant folks before a transaction. Saves lots of time. BTW: on apps, it is usually more profitable to license source code to games and similarly common apps (say for gyms, restaurants, etc.). If it's a FNAC app that you're bored of try to sell it, first, don't just throw out your work (or at least salvage the best parts business of assets/staff/knowlege)! Reduce, reuse, recycle. (Some, but not all, due-diligence is worry alleviation through hazing ritual business theatre.).
- binarray2000 11y agoGoogle search did't help, so I have to ask: What is a "FNAC app"? Thank you.
- gohrt 11y agoWhy are the answers here so coy? "Send me an email, we'll talk" Is it a secret to be shopping your website/product to a new management? Why?
- trimble-alum 11y agoPoker face and cordial until all the bodies are dug up and the figure and most importantly, terms and conditions of sale and transition plan are agreed and the check is deposited, because it's tire-kicking until the ink is dry. It's important to telegraph genuine admiration to suggest a shop might have a better home than competing bids. It's a hard thing to do, trade-in somwthing more precious than cash, labor, time and effort, life... so have a good time and aim make people consistently, insanely happy and always satisficed
- csomar 11y agoPersonally, it's kind of self-advertising. you can find my products/things if you fly over to my site. Otherwise, some people might be afraid of the competition and are gathering some low-hanging fruit that not a lot are aware of their worth.
- jacquesm 11y agoAdvertising your business is for sale may bring unwanted attention too.
- dennisgorelik 11y agoCould you give an example of such unwanted attention?
- shill 11y agoCustomers/users abandoning a product when they learn it is for sale.
- jacquesm 11y agoBargain hunters, brokers of ill repute, press and so on, it may also put a serious dent in your ability to do business development until the situation around the (potential) sale has stabilized which in turn will hamper your ability to negotiate.
- philjackson 11y agoWould you like to purchase yipgo.com? Feel free to email me.
- samstave 11y agoneeds more demo... the bubble screen shots should be clickable to see the whole thing.
- philjackson 11y agoYou're right, only laziness stops me. Thanks.
- quickpost 11y agoAgreed... let someone try it out by themselves. A screencast of someone using it would also be useful (think laracasts style screencast or similar). Being a user of this product really appeals to me (aligns with some stuff I already do), but the marketing is a bit light to convert me.
- tcgv 11y agoYour business seems interesting. May I suggest you use HTTPS in your login/registration forms? SSL certificates can be as cheap as US$ 9/year and your users will feel more secure while using your site.
- philjackson 11y agoOne of the many tweaks it needs.
- charleyramm 11y agois this a sort of web based emacs org-mode?
- philjackson 11y agoSort of, yes.
- pcunite 11y agoI would like to sell my business. You'll need to know C++ and care about the Windows desktop market. I get about 8K downloads every month. I want $225K which is 5x revenue. I don't know if I'm entirely serious. It just makes money and I don't work it properly. It should make $90K-$110K if someone cared about it.
- trimble-alum 11y agoAgain, if a side hobby/business is getting too time-sink, boring or unsure how to scale it, selling off the value, happiness of customers, employees, vendors, etc. created, is a rational act. Shutting down is only advisable if the business model cannot ever have hope of being monetized AND folks running it lack ideas (and asked around to advisors and such) how to adjust the consumer/producer relationship.
- Firegarden 11y agoHave you considered hiring a software developer? Some one extremely technical most likely can deliver on any business model you conceive of.
- bluedevil2k 11y agoIt's the opposite situation here - I have the technical and business skills but am looking to buy the idea.
- deleted 11y ago[deleted]
- ukaner 11y agoLove this thread. I've been looking to find answer to this question. I used to get more quality results from Flippa when I wanted to buy sites, back when they were Sitepoint. Now it's more or less for newbies to drop their money. For sales, Flippa offers a brokerage service as well. They don't charge, unless the site is sold. I've got an extension for a CMS that stably makes 6-figures profit for past 3 years. Last year I wanted to experience the process and test the market, but didn't find the right buyer. This year might try again. If interested, reach me on Twitter: @ugurkaner
- digvan 11y agoI am selling my fashion e-commerce website and app. Check my app at leposha.com
- digvan 11y agoI am selling my fashion e-commerce website and app. Check my app at leposha.com
- dennisgorelik 11y agoWhy buy another company (as opposing to focusing on your existing business)?
- cpayne 11y agoIt depends on what skills you bring to the table. (Personally) I know I can execute and grow. But I can't for the life of me find an idea to get started with. Also, if you already have an existing business (such as the OP), then you may be able to bring some cost savings (therefore more profit) than someone coming in cold. Or if you already have an existing client base, adding another business to the mix means you may be able to sell to them
- dennisgorelik 11y agoBuying your own customers is a very expensive way to increase sales...
- MicroBerto 11y agoTax write off? He's too profitable, perhaps!
- dennisgorelik 11y agoIf your business is too profitable, you may try to grow faster -- that guarantees to eat all extra profit (see Amazon).
- ukaner 11y agoYou might hit the plateau, or get into a decline state and use new products to grow your business
- hamhamed 11y agoI'm selling Zilyo https://zilyo.com/ https://zilyo.com/ for around 200k USD, which is a meta search for vacation rentals, big competiton in this space and it's currently the inudustry leader in terms of product quality and # of features and data. Many of its competition has raised millions and today it's running on it's own with a monthly burn rate of 30$. It does around 12,000$ a year. You can reach me at hamed@zilyo.com It also hosts one of the most active and fastest growing APIs in mashape, to leverage vacation rental data for developers and other businesses. Currently it hosts around 250 API consumers (most of them are businsess leeching it for free, so great oppurtunity in the B2B side of things) https://www.mashape.com/zilyo/zilyo/ https://www.mashape.com/zilyo/zilyo/
- qthrul 11y agoTake a look at http://exitround.com http://exitround.com
- bemmu 11y agoMost businesses are for sale if the price is right. I've sold an app before where I just got a phone call from an interested party (without it being listed for sale anywhere), agreed on a price and just a few weeks later the transfer was complete. If anyone wants to buy candyjapan.com for 4x profit, feel free to contact.
- oh_sigh 11y ago4x daily profit?
- veb 11y agoI'd love to buy Candy Japan! But it doesn't make much sense for me, and I don't have the money to pay for it - but I would honestly put in an offer if the contacts/network for supplying the candy and such was well set up and going from your blog posts about your journey so far, that probably is the case. Keep up the excellent work Bemmu! :-)
- digitalzombie 11y agoJust to clarified, I'm very new at this world of selling and buying companies. This is 4x the yearly profit? Cause a user asked if it was 4x daily profit which is absurd to me imo. edit: Whoa that website is awesome, too bad I'm poor but the idea is awesome. I wonder if I can sell horrible fake American chocolate lol.
- webappy 11y agoI don't think it's a good idea to buy a software company for the aim of making money. First, it'd be little difficult to understand the schema of a company which is already running and further it's even more difficult to analyse such company from outside or by just looking at the statistics. I must say, it's better to invest in a start-up because they are little bit flexible and simple at the beginning to understand. Also, you get more chance to hit the jackpot. Any good already running software company might be not interested to sell unless there's some problem. So, just stick to the start-ups.
- layble 11y agoExitRound (http://exitround.com/ http://exitround.com/)
- marissamary 11y agohttp://sideprojectsforsale.com http://sideprojectsforsale.com - I had the same thought last year and made this working prototype for these types of businesses. It's pretty straightforward and mostly for the purpose of putting people in touch.
- carbocation 11y agoIt's a two-sided market, and seeing only 1 side project listed there (from August 2014) makes me think the marketplace is dead. Two thoughts: 1. If there are prior successful sales, show those! 2. If possible, try to show more (even if this means linking out to projects for sale on different sites until you get some traction).
- cookiecaper 11y agoI just want to say this thread is awesome. I have a side project that makes real, substantial revenue that I've been wanting to offload for a while. I don't think it's quite in condition to be listed with a broker yet, but it's great to hear about these resources and read about other hacker-entrepreneurs experiences offloading their own side projects.
- jfccohen 11y agoAsk Patrick McKenzie!
- ryanjm33 11y agoYou do see he already responded, right? (patio11, first comment above) :)
- jfccohen 11y agoAsk Patrick McKenzie!
- forestcall 11y agoI own Peaceofcode.com a PAAS with a focus on remote software development. Think Freelancer/Elance but with project manager/project owner/developer roles and business process flow to reduce risk (scrum/git/unit testing). In the past we focused on creating features that greatly reduce the risk of loss for the customer and development people. This last year we moved toward scrum and extreme programming features throughout the platform. We want to create a API and integrate 50+ 3rd party tools such as (codio.com Online IDE). A big feature-set we want to complete is based around opening the platform so the members can actively steer the features we release. Another endeavor we want to move forward is a "non-profit foundation" that focuses on Online Remote Software Development and identifying a "standard". We want to give away up to 50% of the company in exchange for working capital and business expertise. We do not want to sell the company but we dont mind giving up majority ownership so long as we can stay on as key executives. I currently own the company 50/50 with another American. Any ideas how we might find such partners? Sorry if I am way off topic.....
- maxsavin 11y agoWe're selling one called Flutter - http://flutter-app.com http://flutter-app.com We're about to close it down, its got customers and MRR
- karl_gluck 11y agoAlso FYI to anyone trying this out -- this app gives you no warning or prompt before following hundreds of accounts on your behalf. I went through the FTUE and the first thing I saw was "You followed <rapidly increasing number> of Tweeter's [sic] today".
- maxsavin 11y agoWrong - every action has to be initiated by the user. Nothing is automatic.
- carbocation 11y agoFYI, I couldn't see your login button until I disabled µBlock (a Chrome plugin like AdBlock).
- maxsavin 11y agoWow, thanks for the tip.
- clarky07 11y agoI'm planning to refocus my mobile app business, and while I had planned on just continuing on cashing the checks from my other apps, lately I've considered the idea of selling them and really concentrating 100% on the main one. A few questions: 1. What kind of cost do the popular escrow services charge? I assume it's percentage based, only on successful sale? 2. Do places like FEI sell apps, or just websites? 3. If not, any recommendations on places to sell an app or bundle of apps?
- justincooke 11y agoHere's a company that focuses on buying/selling apps specifically: http://www.appbusinessbrokers.com/ http://www.appbusinessbrokers.com/
- clarky07 11y agohadn't seen them before, looks pretty good. thanks a lot.
- dpweb 11y agoNeed to sell my chrome extension, 130k users.
- wusatiuk 11y agowhere are the 130k from? which countries?
- justjimmy 11y agoI run www.hearthstoneplayers.com It's a profitable site (making enough profit the equivalent of a 2nd job), minimal upkeep - just managing/scheduling content/writers. If anyone is interested in taking it and scaling it or even automating it (it's about 2 years in and I don't mind letting it go and moving on to bigger stuff), I'm open to contact!
- tempestn 11y agoI have no interest in selling in the near future, but I'm curious whether anyone in this thread has a sense of what kind of multiple an ad- and affiliate-supported site like www.autotempest.com would bring. It's not recurring revenue in terms of recurring billing like a SaaS, but revenue and user base are very highly correlated.
- bvc1000 11y agoWe've got a profitable Bitcoin casino for sale... https://bitcoinvideocasino.com https://bitcoinvideocasino.com
- dutchbrit 11y agoTo be honest, you'd be better off starting from scratch. Buying something already existing will take a while to make back the revenue.
- raasdnil 11y agoOn this thread, services like the reinteractive Operations as a Service (https://reinteractive.net/service/sentinel https://reinteractive.net/service/sentinel) can help with a SaaS sale. Getting operations and deployment outsourced means one less thing for the buyer to worry about and one big less thing for the seller to handle. Disclaimer: I work for reinteractive
- arikrak 11y agoThere are many startups with 1 or 2-person teams who fail to raise funding since investors are looking for companies that can become worth $20M+. They might be interested in a cheap sale to someone who would be happy with a solid long-term revenue stream.
- cyberjar09 11y agowww.greenfossil.com <= crazy about engineering good software
- nicogevers 11y agoWe've just decided to sell our company. Squire.io give us a shout if it's something you're interested in.
- hughstephens 11y agono email address in your profile :(