If I handed you a blank check and a portfolio of five software companies and asked you to acquire one of them by the end of the day… how would you feel?
Would you panic?
Would you know exactly what to look for to pick a winner?
Or would you go off a hunch and risk picking a dud?
Evaluating a SaaS company for acquisition is a stressful and intimidating process if you don’t know what you’re looking for.
But after exiting three of my own companies, and being on both sides of the acquisition table hundreds of times as an advisor, I’ve distilled the first level filters into 4 simple criteria.
Using this criteria in the early stages of evaluating a company can help you spot a dud BEFORE plunging into an expensive and time-consuming due diligence period.
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At a high level, you want to be evaluating potential acquisitions based off of:
The last one is totally underrated as an evaluation tool, and one you need to pay VERY close attention to whether you’re considering acquiring a company or hoping to be acquired yourself someday.
If the support metrics are tanking (ie. volume of issues, time to respond, unanswered tickets, etc.)…
… then even if all the other metrics look favorable, the company could be in line for a mass customer exodus the moment you take it over.
A thorough audit of how well a company takes care of its customers is a critical evaluation criteria I would never risk doing without.
Watch the episode for a complete breakdown, and then let me know in the comments if you’ve ever planned on acquiring a SaaS company (and if so, what you look for when evaluating).