Omer (00:09.760)
Welcome to another episode of the SaaS Podcast.
I'm your host Omer Khan and this is a show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business.
In this episode, I talk to Juan Ignacio Garcia, the founder and CEO of bupos, the number one platform for buying and selling profitable online businesses with built in financing for qualified buyers.
Now, buying an established SaaS business can be an attractive alternative to starting one from scratch.
You get to skip the initial stages of finding product market fit and you start with paying customers and revenue.
On the flip side, selling your SaaS business can be an exciting and potentially life changing event, letting you cash out and move on to new adventures.
But the process can be complex and daunting, especially for first time buyers.
In this episode, Juan shares his expertise on how to successfully navigate buying or selling a SaaS business on a marketplace.
You'll learn the key steps to prepare your SaaS business for sale and maximize its value in the eyes of potential buyers.
What savvy buyers look for when evaluating a SaaS business for acquisition so you can position yours accordingly.
We also talk about the most common mistakes that trip up both buyers and sellers and how to avoid them.
We'll give you an overview of the different financing options that are available for acquiring a SaaS business, along with their pros and cons.
And Juan shares his top tips and tactics for finding the right business to acquire and negotiating a favorable deal.
So whether you are thinking of buying a SaaS business on a marketplace or preparing to sell yours, this episode will give you the knowledge and guidance to approach the process with more confidence.
So I hope you enjoy it.
Juan, welcome to the show.
Juan Ignacio Garcia (01:56.450)
Thank you.
Thank you for hosting me.
Omer (01:58.130)
My pleasure.
So today we're going to be talking about buying and selling a SaaS business on marketplaces.
So you are the founder and CEO of BUPOS, so why don't we start there?
Why don't you tell us about, you know, what does the business do, who is it for and what's the main problem you're helping to solve?
Juan Ignacio Garcia (02:17.410)
Sure.
So we run platform for buying and selling small businesses.
The main difference with acquire.com or other platforms out there being is that we offer the financing.
So if you go to our platform and start searching for businesses to buy, for example, you will find out that for every opportunity that is posted there, you will get a term sheet, a financing term sheet for around half of the ask price.
So that is essentially a tool for completing the Acquisition, which from our understanding is a clear bottleneck if you want to buy a small business.
Actually, if you look at the businesses that are listed there, many of them come from marketplaces and platforms that don't have this financing option.
So we help them close deals as well.
So in the end, the problem or the main issue that we're solving here is helping people acquire businesses, but providing financing by leveraging their cash availability, their equity, so that they complete a bigger acquisition or just the deal that they want to complete.
Omer (03:29.780)
Great.
So the financing obviously makes the process that much more easier because that's obviously one of the biggest hurdles to being able to buy a business.
The bupass marketplace is for all types of recurring revenue businesses.
But obviously we have a lot of people listening to the show who are B2B SaaS founders.
So specifically, when it comes to SaaS, what type of businesses do typically well on bupos?
Juan Ignacio Garcia (04:07.440)
So we're looking for businesses.
We have obviously criteria that are related to the fact that we are financing the acquisitions.
So that means that we're looking for profit.
That's very important.
At least 24 months of track record, good customer retention, and that's generally found on B2B SaaS businesses.
That's not to say that B2C businesses are ineligible, but generally they are.
They have more issues passing the retention test.
We're seeking for generally niche products that serve a specific audience and that have a high switching cost for customers to change to other platforms.
So high stickiness and the like.
In general, we're seeking a revenue stream that will be sustained through the course of the years, and that's highly related to how the product is and how the customer base engages with that product.
Omer (05:05.490)
Okay, so I think the general format of what we're going to do here is we'll talk about, first of all, the process of selling a SaaS business on Marketplace, and just the general do's and don'ts and mistakes to avoid and how to be successful with that.
Then we'll talk about how to go about buying a SaaS business on a marketplace, and, and then we'll talk about financing options that are available to founders.
Now, obviously you run bupos, and that's one marketplace.
But as you and I were talking before we recorded, the goal really here is for us to try and educate people.
Regardless of whether you use bupos or any other marketplace, how can we educate them to really feel confident about the buying and, or selling process and, and to feel like, you know, they understand what are the common mistakes they they should avoid making and how they can get a successful outcome, whatever that is for them.
So why don't we start with, you know, the process of selling a business on the marketplace.
What are the sort of essential steps for a founder, you know, who wants to know, get ready to sell their business?
Like how do they prepare for that?
Juan Ignacio Garcia (06:24.250)
I think that the first initial steps that they need to take is first of all making sure that the P and L is in place.
They have all the data and info that a potential buyer will want to see.
And that's generally the financial statements in SaaS businesses.
Monthly P and LS are very important.
So people will want to see at least 24 month months of track record and they will want to see how that P and L has evolved over the course of those 24 months.
And that's useful for spotting growth trends, for spotting seasonality perhaps and understanding more how the whole business works.
They will most likely want to see customer retention, customer cohorts, how customers are behaving, whether they are taking monthly subscriptions or quarterly, annually subscriptions.
That's the type of thing that a buyer will want to see.
And other than that, making sure that all the legals are in place.
I think that's also very important because sometimes there are occasions in which you can't transfer the business because all the documents are not there and there's no way to migrate to a new buyer.
So first of all, that's something that you have to get right and make sure that you're prepared for answering the questions and obviously getting everything right for the buyer to assess the business.
That's one thing.
And then the other thing I think is obviously understanding what the value of the business is.
You don't want to start a process if you are not sure that you're getting the value that you expect.
So in a sense you have to understand what's the market out there and get into a good understanding of what the value of your business is, which is, by the way, something that marketplaces, brokers can help with.
Omer (08:16.880)
So yeah, I mean, obviously valuation is a hugely important topic.
If someone is thinking of selling their business, is there in terms of using a marketplace or going some other route to sell their business, is there any difference in a potential valuation or is it generally about the same?
Juan Ignacio Garcia (08:35.680)
I think generally engaging with an advisor and that could be a marketplace, it could be a broker will help you maximize the opportunities of selling.
So sometimes when you're selling a business, you might think that there's a buyer that you know well because you're familiar with him.
Maybe he's a customer, maybe it's a supplier, maybe it's a competitor.
But if you just engage in one on one conversations with those people, you might end up not optimizing the value of your business.
Whereas if you engage with a broker or post it on a marketplace in which you have access to a much broader buyer base, you might have the chances of optimizing the value of your business and learning more about how the market is valuing that business.
And even if you end up selling to that same guy or that same buyer that you thought was the most likely buyer for your business, perhaps you will get more by generating that competitive tension.
So I think it's good to at least explore what's out there and asking questions about what valuation of your business is.
Omer (09:40.700)
And typically like just ballpark, like what kind of multiples are we talking about here for a SaaS business?
And also what are the factors that might improve that or make kind of potentially hurt the business?
Juan Ignacio Garcia (09:57.420)
That's a very good question.
And it depends a lot on the business itself.
We've seen multiples as low as 3x and perhaps that's not super compelling.
But if it's a business that is down trending or, or has some specific issues of transferability, et cetera, it might be a good solution for the seller to sell.
But generally the market is offering anywhere between four and six times profit, or if you want to price it as revenue, slightly lower multiples, 2, 3, 4 times revenue.
That's what we're seeing right now.
That doesn't mean that perhaps a business that is growing quite fast, that has very good customer retention, shouldn't deserve an 8 times profit multiple?
But yeah, generally the market is offering between four and six times.
Omer (10:46.100)
Great.
Okay, so if I'm a founder and I'm thinking, okay, great, I want to sell my business, obviously I want to get the best valuation that I can.
What are some of the most important factors that you think make the difference between a business that would be priced at like a 4x versus a 7.8x valuation?
Juan Ignacio Garcia (11:10.580)
I think the first thing that you have to assess is the product.
So is the product something that is solving a problem that no one else is solving?
Do you have a captive user base or customer base that benefits from your product and has high switching costs can't move to a similar solution?
So that's very important.
Is it a product that can perhaps evolve over time or that you can easily work on and improve?
That's also something that is important you might have to make sure that it's transferable to a new developer that will take over the code.
And that's something that's going to work going forward more or less easily.
That's one thing.
And then I guess that as I said before, we provide the financing for these businesses as well.
And what we look for is what most of the equity buyers look for as well, which is very strong customer retention, very strong profitability, very steady revenue flow, not something that is declining.
And if that's a reality, and on top of that you're in a very hot segment that's getting a lot of attention from investors, roll up companies and so on, you might end up securing a 6x multiple or even higher than that.
Omer (12:39.170)
Just to recap, in terms of preparing, we're saying number one, you want to make sure your financials are in good shape.
And the main thing you said there was, the most important thing was having a monthly P and L that goes back, you know, at least 24 months that people can look at obviously just in terms of, you know, the operational aspects of the business and somebody be able to understand how well it's doing and functioning and so on, the legal stuff.
And then typically, you know, you understand, you go in and you understand your valuation.
You chat with somebody, you know, whether it's a broker or an advisor, you know, place like bupos.
And then I guess the next step is, you know, you, you go out there and you, you list it.
So number one, I would say like beyond Bupos, you, you talked about the, you know, what you offer and the benefits of that in terms of, you know, specifically the financing.
But if somebody's saying okay, great, that's one option.
I also want to think about, you know, a couple of other places.
How would they, what's, how do they go about like deciding where to list, you know, their, their business?
Juan Ignacio Garcia (13:54.250)
That's a good question as well.
I think there should be a feed between your advisor, your marketplace and your business.
So perhaps you might want to go to FE International who are very good at selling such businesses, but if your business is too small for them, they won't take the mandate.
And even if they would take it, they wouldn't do it as well as they would do with a 5 to 10 million business, which is where the focus.
Now if you want very detailed advice from the broker and a really hands on process, then that's something that you might want to consider versus having a more, less managed or more marketplace style type of thing.
So for example, flippa is generally very good at having a lot of deals and a lot of buyers, but it's mostly self service.
Acquire.com has a hybrid model in which you can have like the managed deals, which is where the broker engages with the seller and provides a hands on experience.
But at the same time they have a broad marketplace.
And then if you're seeking something slightly different, which is what we are offering, what we have is a very curated selection of buyers.
And these buyers have been pre approved by us as well.
So they have the funds, they have a good credit score and they have a strong operational track record.
So they have everything that's needed for succeeding in buying a business.
Plus we offer the financing as well.
So that means that generally that increases the chances of closing a deal.
So I'm not saying there's a unique solution for each customer, but I generally feel that you have to find which advisor or which platform is best suited to your specific business.
Omer (15:45.500)
Let's talk about listing the business.
Depending on how busy the marketplace can be, It may be easy or hard to get noticed or found by the right buyer.
So when someone is thinking about listing, what are some of the factors that they should be thinking about to increase their chances of getting found by the right buyer?
Juan Ignacio Garcia (16:18.680)
That's again a good question.
I think that if you're looking to be highlighted in the middle of a huge marketplace, getting advice or getting a managed deal as Acquire calls them, or an advisor as we provide is something that is very important because in the end these advisors will send custom alerts to buyers that have a very good fit with your business and that's the way to get noticed.
If you have a business that is perhaps smaller or you don't want to spend so much in fees, then and it's okay to be just part of the marketplace and then obviously there's a lot of viewership and audience looking at that and at some point in time someone will end up making a match.
But if you want to accelerate that match and make it happen, having an advisor involved is a very important, a very important step.
Again, we curate buyers so we make sure that we get all the info from the perspective of obviously making sure that they can acquire a business.
But at the same time we get all the info on what type of business they can and they want to acquire so that, that makes the much easier.
Omer (17:34.360)
So I think that's a really important distinction that you just laid out there.
So it sounds like you have to be, you have to understand the type of marketplace that you're going to be listing your business in.
And if it's more of a self serve type business like Flippa, as you mentioned, then you're really on your own in terms of you've got to make sure that you are doing all the right things to maximize the discoverability of that listing and the types of buyers that you might be getting contacted by, maybe I don't know how vetted they are on places like Flippa.
On the other hand, if you're going to more of a, a curated experience, you're working with an advisor, I guess, then it becomes less about kind of the optimization of the listing or discoverability because you're going to be having that advisor, as you said, going out and reaching out to the right types of buyers who've already been pre vetted to try and make that connection.
So ultimately, is that a good way to think about it in terms of, you know, what a self serve experience might be like versus what more of a, an advisor type experience would.
Juan Ignacio Garcia (18:56.950)
That's exactly.
Yeah, that's exactly how I see it.
And actually it's an interesting development that we're seeing in the world of small M and A in the past few years, which is generally marketplaces are getting into the advisory space and on the other hand you get advisors trying to build marketplace like experience.
So in the end it's just a matter of deciding which way you want to go.
Right.
I think generally, and that's why we tend to provide advice is it's good to have someone who has understood what your business is and has a good idea of which buyers will be a good fit for your business so that they can push in the right directions.
But that doesn't mean that a marketplace experience is a bad thing in some cases.
Omer (19:49.900)
Okay, so we get listed, we get connected with buyers or ideally the perfect buyer and then we have to start to think about how do we negotiate and close on this deal.
And I guess that when you start thinking about negotiating on selling a business, it can sound pretty stressful.
Again, it would be helpful if you maybe just tell us about, okay, what, what are some tips that you can offer founders to, you know, to sort of navigate through this process and, and get the best possible deal in terms of selling their business and then maybe how you know that, as you sort of described earlier with the marketplaces, how that experience may vary depending on, on where they're selling the business and how much they have to do versus what an advisor can help them with?
Juan Ignacio Garcia (20:40.500)
Yes, that's a very good question because in the end this is where the advisor starts providing a lot of value through the process.
So I think in general, the first advice I would give to someone who's talking to customers, sorry to talking to potential buyers, is securing a first offer loi or even email proposal as early as possible because that will generate additional traction that will attract more buyers because they will find like they will have a sense of urgency.
They will want to perhaps improve the offer that someone else has made.
And obviously, when you're buying a home, if someone else is interested, that probably means that the home is good.
Well, same thing with the business.
If someone else is interested in that business, it's because there's something good behind it.
Or at least that's the psychology that buyers have.
So that first offer is very important.
It doesn't have to be the best offer.
Generally, the first proposals that you're going to get are not the ones that fulfill your expectations in terms of price, but that gives you an upper hand in terms of attracting additional buyers, in terms of negotiating with with additional buyers.
So, yeah, getting that one is super important.
Omer (22:05.520)
So just to clarify there, so even if you.
The first offer you get is something that is not a great offer, you wouldn't seriously consider it, but are you saying there's still value in not shutting down negotiations right away and asking for that letter of intent or that email proposal?
Because at least it keeps the door open to maybe future negotiation and it gives you more leverage with other potential buyers.
Juan Ignacio Garcia (22:34.180)
Exactly.
If you just dismiss it straight away, you won't get that leverage for engaging with other buyers.
So if you go to another buyer, you can tell him, look, I have an offer, and if you're quick enough in putting together a proposal, perhaps I can go with you for whatever reason.
Whereas if you just have dismissed the previous offer, you can't say that because in the end that would be outright lying, obviously.
Omer (22:59.870)
Right, Right.
Yeah.
Okay, so let's talk about, you know, let's assume you've got, you know, you did well.
You've got multiple offers.
There's.
You find a great buyer and it looks like, you know, a good deal for both sides.
What happens next?
What's the general process in terms of getting to a point where you close the sale, transition the business over, and typically, how long does something like that take?
Juan Ignacio Garcia (23:31.590)
So once you've signed a letter of intent, then it's a matter of the buyer putting together the due diligence process.
So you will be in the hands of a buyer.
Obviously, you can control the scope.
You can let them know that you don't want to run through a very lengthy due diligence process and that's something that, that you perhaps have discussed prior to signing the letter of intent.
But yeah, you generally will have to be responsive so that the buyer doesn't see red flags in the way you behave, not only in the info that you provide, but also in the way you behave.
Because that's a very important signal of how the transition or the migration of the business is going to look like.
They will provide an asset partnership.
Either you can draft an asset purchase agreement with council or the buyer will produce that first draft of asset purchase agreement.
In my experience, generally it's the buyer who produced the first draft.
So you will have to be patient, you have to be responsive, you will have to make sure that you're helping the buyer understand the good things of the business.
And once that done, once that's done, it's just a matter of signing and migrating and transferring all the assets.
Omer (24:48.650)
How long does that process typically take?
Juan Ignacio Garcia (24:51.130)
Generally you want to select buyers that are experienced or have been through that before.
So maybe not experience buying a business, but at least they know what they want to find.
Perhaps they run another business and their due diligence will be more targeted towards finding the first or the key things that they need to understand in the business.
So first of all, if you work with an experienced buyer, the due diligence will be much shorter and much quicker.
But I would say ballpark anywhere between 30 and 60 days.
Omer (25:25.180)
If I'm founder and I've got that offer and I'm going through this period for, let's say the next 60 days or so, like, is that going to be like a huge part of my time?
Am I just going to be like spending most of the day, like answering questions from this, you know, this buyer?
Or do you think it's a fairly streamlined process if they're using a marketplace like bupos?
Juan Ignacio Garcia (25:48.200)
I think the answer is it depends if you have prepared everything.
Well, if you're working with an advisor that has given you some guidance or what the buyer will typically want to see, it shouldn't be an overkill.
If you haven't prepared, if you don't have all the documents handy, if you don't have, I don't know, IP titles or domain registrations and all those things that a buyer will want to see handy, then obviously it will be more challenging and that might end up giving a poor impression to the buyer.
Generally, brokers, advisors try to engage with you early on and they try to warn you about what you need to do, etc.
So if you have done that preparation before, ahead of time, it shouldn't be, again, an overkill.
It should be something that's bearable and you can manage the business.
Omer (26:45.450)
At the same time, let's kind of switch gears and talk about the other side of the marketplace and actually being a buyer.
So many people I talk to who want to get into running a SaaS business decide, you know, I don't want to build this thing from scratch.
I'd prefer to find a business that, you know, already, you know, is up and running, has some customers, maybe, you know, maybe, maybe it's not really realizing its potential today.
And, you know, I could buy that business and with the right, you know, the right strategy, the right execution, you know, I could turn that into, you know, something, you know, far more successful.
So if we, if we can kind of go through that, that process and I'm thinking about using a marketplace, let's kind of, you know, where do I start again?
Is it just a matter of, you know, I'm going to do some research, like, what does that look like?
Juan Ignacio Garcia (27:47.660)
Obviously I'm biased because not only because I started bupos and I ran bupos, but because before starting bubos, I tried to acquire three businesses.
I was unable to secure financing, and that's why bupos is here.
Omer (28:01.660)
Is that right?
Wow.
So it was from your own personal
Juan Ignacio Garcia (28:03.860)
experience that I'm a firm believer that buying a business sometimes is much more valuable than starting one because you skip the initial stages of finding product, market fit, especially business that has been running for a couple of years already and has customers that are generating revenue.
So, yeah, I'm a very strong believer of the value of M and A, but obviously that has a price that comes with a price.
So that means that you have to pay, you have to find financing for acquiring a business.
So I think that it all depends on whether you have a very clear, I would say, entrepreneurial spirit.
Some people have that and they like to start things from scratch and have.
And go through all that discovery process.
It's like very personal rather than a financial decision.
I think it's a very personal decision of whether you want to go through those initial stages, whether you enjoy finding a business model and generating your first revenue, etc.
Because financially, honestly, I think it doesn't really make sense to go through that.
You know, I started the business I was a co founder with on a previous business as well.
I was really lucky that both scale well.
But there's a lot of risk in that process.
Omer (29:22.570)
You talked earlier about when we were talking about selling a business, what buyers look for.
So we've kind of already covered that.
In terms of what are the sort of things that you should be looking for in terms of finding a great business with great potential?
Maybe.
Can you share maybe some of the mistakes that you've seen buyers make when they're trying to look for a business?
Juan Ignacio Garcia (29:48.720)
I think you have to buy a business that you can relate to.
In the end, if you're buying something that's way out of your comfort zone, chances are you're going to make a lot of mistakes.
So, for example, I've seen very smart people with a finance background in investment banking, consulting, etc.
Buying SaaS businesses, and they have never worked with development teams, with developers.
They're not developers themselves.
So they will have to take care of the code and all that.
You have to solve that piece.
If you want to get into SaaS, you have to be familiar with what's under the hood or at least work with people that are familiar and can help you take over it.
So in the end, again, at least some degree of connection with the business that you want to buy, a little understanding of what's going on with that business is something that you need to do.
That's probably the first mistake that people do is when finding a business.
Omer (30:52.570)
Okay, great.
So let's say we've identified a business and now the foot's on the other shoe.
We're the person who's, who's writing a letter of intent or, you know, sending a, you know, a proposal or whatever that is.
Again, we talked about, you know, some of the due diligence that you would want to make sure that you're handling when, you know, you're selling a business.
But from the buyer's perspective, you know, if someone's listening to this and they're so far they're kind of following along and they're saying, okay, I like the sound of this.
I like the idea of, of buying a SaaS business.
What are some, you know, some red flags that they want to make sure that they're looking out for?
Like, what are some of the signs of a business that, you know, may not be as, as interesting or have as much potential as they, you know, as it appears to have.
Juan Ignacio Garcia (31:57.890)
I think the first red flag that you have to, I mean, you have to get along with the seller very well because you will work on a transition with him or her over the course of a few months.
It's not just migrating and, and that's it.
So you will have to make sure that you're partnering with someone with whom you can work and with whom you can, you can engage.
The reason I'm saying this is because sometimes you will see that the business is just not transferable because the seller won't cooperate or won't cooperate to the, to the scale that they should.
I guess that again, and I'm talking about bupos again, but the fact that we are curating sellers and underwriting sellers reduces that risk a lot.
But still, that's something that the buyer needs to clear up because it's also somehow personal.
So if you see, I don't know, a seller that is hiding info or not engaging properly, that's definitely a red flag that you need to raise.
Omer (33:07.190)
Would you say that's the main one?
Like, you know, obviously we talked about the.
Making sure that the, you know, what aspects of the financials and, and general health of the business to look at.
But beyond that, would you say that's the main red flag in terms of, you know, if you feel like, you know, if, if it's this hard to complete basically a transaction, like, how hard is it going to be to work with this person for four months?
Juan Ignacio Garcia (33:34.380)
I think that's a very important red flag.
Other than that, obviously you have to audit.
That's something that we do as well for our financing.
You have to audit all the revenues and make, make sure because sometimes these small businesses have, I would say, a lower quality of information.
And again, if you work with a reputable marketplace or broker, you will reduce the risk a lot.
But still you have to run your own audit and review.
That's something that we also tell buyers.
We obviously run our own due diligence for approving financing and that's.
And for onboarding people to the marketplace.
But you also have to verify that the revenues are there, that everything is there, and that all the legals and the ownership titles and everything are there.
And that's.
If you find something that just doesn't click, you should perhaps rethink whether you want to buy a business or not.
Again, working with a reputable broker will mean that those risks will be much lower.
Omer (34:42.650)
Okay, great.
So I think in terms of the negotiation and closing, I kind of feel like we covered that when we were talking about selling the business.
Is there anything else that you'd add to that from a buyer's perspective, or do you think we already covered that?
Juan Ignacio Garcia (35:00.170)
Well, I think we covered a lot of topics.
Obviously, the devil's in the details.
I mean, and what once you get into it, you will find out that there's a lot of things that you haven't contemplated.
Every acquisition is a learning process.
Even if you have acquired like 30 businesses, the 31st one will be a learning process again because you will find new things.
So that's what exciting about it, but at the same time that's what makes it challenging.
Omer (35:26.950)
Okay, I want to talk about financing.
Obviously that's a big part of what you do with bupos.
But whether they're using Bluepost or they're going somewhere else to get financing, obviously founders familiar with angels VC funding, but there's also loans and revenue based financing and so on.
So in this type of marketplace situation, what were the most relevant types of financing?
What type of financing do you provide?
And maybe just give us some of the pros and cons of some of the different options that are available.
Juan Ignacio Garcia (36:00.680)
I think generally when it comes to acquisition financing, there aren't that many options available.
Because you mentioned revenue based financing.
Revenue based financing is great for SaaS businesses, but more like for working capital for growth.
So platforms like Capchase, Founderpath, all these people that are providing funding to SaaS businesses will provide funding for growth rather than foreign acquisition.
So if you want to narrow it down to who is providing acquisition financing, I think many people go the SBA route.
And SBA is good because the cost of financing is lower, the payback term is long and in general they provide a high part of the high percentage of the acquisition price.
But at the same time it's a very slow process.
They will request a personal guarantee, which means your rewards risking your own personal assets.
And sometimes they won't understand such businesses because they will seek their SBA in general work with banks and they will seek for some type of tangible assets which obviously SaaS businesses don't have.
And that's actually how BUBO started.
The inability of finding financing options for acquiring businesses.
We as an alternative lender work in providing term loans.
Acquisition financing loans generally run between 40 and 70% of the of the acquisition price.
That's the typical advantage rate that we give and terms of around four years.
It's a good acquisition if you want to complete an acquisition as soon as possible and complete your capital stack with your own cash and external financing.
So you don't have to use that much of your cash.
So that's one thing that you can also use.
And I think that the third option, and I always like to say that bupos competes with Cash buyers, people who end up just buying it with their own equity because they don't want to leverage the business because they perhaps will leverage the business at a later stage or maybe on the second acquisition.
So that's also another option.
And for that you can find, you know, raise money from family and friends, from small family offices.
VCs are generally not there because VCs will want to find a very steep growth pattern and acquisition is not the way you're going to get that.
These are generally more mature businesses.
So yeah, I like to say that we are pretty unique in this acquisition financing space.
But yeah, there's other options, as I mentioned.
Omer (38:46.400)
Okay, so basically you've either got a, you know, you're the SBA option, you know, acquisition financing through, you know, some, something like Bupos, or clear out your savings.
Right.
Or whatever you're bringing to go and buy that business.
If someone is financing through you, does a personal guarantee still apply?
Are they still having to do that?
Juan Ignacio Garcia (39:10.740)
We don't request personal guarantees.
And again, that's one of the reasons why people go with us instead of going the SBA route.
Actually, what happens in many cases is that people acquire a business with us and after a couple of years they switch to SBA once they are confident that they have stabilized the business and they have de risked it.
And so they're willing to take that personal guarantee in exchange of perhaps a lower interest rate or in general a cheaper cost of financing.
So yeah, we don't and we actually facilitate that process.
In the end, what we want to make sure is that the business has the capital stack that it needs at every stage of maturity.
Omer (39:53.679)
Okay, so this acquisition financing that you provide, are there a lot of people out there doing that today?
Juan Ignacio Garcia (40:02.640)
As far as I know, I don't think so.
I haven't seen, especially in this small or micro cap space in which deals range anywhere from 100k to 2,3 million.
I haven't seen many lenders doing this, but I would love to see more people coming into the space.
Actually.
I think it would be good for the industry.
Omer (40:25.620)
Okay.
So, you know, I'm a potential buyer, you know, I decide that.
Okay.
Yeah, I think, you know, what you guys are doing in terms of the acquisition based financing, that kind of makes sense for me.
What's the process like?
How easy or hard is it to get approved and what are the things that you look for?
Juan Ignacio Garcia (40:48.780)
I think that one of the things that you would first do is come to our platform and see what's on the marketplace because those Deals have been pre approved and if there's something that clicks for you, you've walked half of the path already because it's pre approved.
And we looked at the business, we know that it's a good fit for our financing.
So you only have to complete the buyer side, which we'll get to now.
If you can't find anything compelling there, you will probably look into marketplaces like acquire.com, flippa, perhaps brokers like FE International, or you will have your own proprietary deal flow and you will come to us seeking an approval for the business.
It's a very simple application.
We look for cohorts, user cohorts, revenue cohorts.
We look for that 24 month P& L split on a monthly basis and with that we can issue a pre approval for the business.
And then in terms of the owner, we will also ask for, we will want to see the credit score.
That's a soft pull, so you don't have to worry about your credit score being impacted.
We will want to see what your operational experience is.
So we will request that you give us your LinkedIn profile so we can understand more where you're coming from and why you want to buy a business.
That's the other thing that we look into.
And the third one is given that we're going to co invest and we're going to finance up to 70% of the acquisition, we want to see that you have the funds for funding the equity portion of the of the acquisition.
So we will request for a proof of funds.
Other than that, generally the process is very quick and under one week we can provide an answer of whether it's a go or a no go.
Omer (42:38.960)
So yeah, I mean, because basically it just kind of clicked to me that not only are you investing in the business that someone is planning to buy, you're also basically investing in the buyer.
And so you need to make sure that both sides of that look good and they have the potential and they're going to be set up for success.
Kind of got me thinking, like if I wanted to list my business, let's say on bupos, and maybe you look at that and say, this is not the kind of business that we'd ever invest in, would I still be able to list on your marketplace?
Or do you kind of gate that to a point where it's like, no, there's a certain criteria that we look for before we even list you on our marketplace.
Juan Ignacio Garcia (43:29.040)
So we have two sets of criteria.
One of them is underwriting criteria, which is criteria for providing the financing.
And we have listing criteria or onboarding criteria which is a little bit more open.
But obviously there's still accuration in the type of businesses that we, we want to list on our platform out of transparency.
I must say if we can't provide financing for your business, your chances of selling with us are going to be lower.
So perhaps you will want to figure out whether you want to sell with other marketplace.
In general you have marketplaces that are very open in terms of vertical.
So other than SaaS, businesses will they will list, I don't know, lead generation platforms and other types of business models.
That's not something that we typically do.
So in the end, I strongly advise to try to go through both the listing process and the underwriting process to understand whether you get a pre approval for financing as well.
Omer (44:31.960)
One other question about the financing going back to sba, the acquisition based and being a cash buyer, does the type of financing that you choose have any impact on negotiations or the structure of the deal?
Like for example, if someone says, you know, I like the SBA option, great, there's benefits to that.
But does that mean, you know, by the time you actually get approved, the business may have been sold to somebody else?
Juan Ignacio Garcia (45:02.470)
That's one of the reasons why people engage with us because we're very quick and we're not a bottleneck.
So sellers want in the then SBA is very slow and that means that at some point in time through the process, the seller might just want to seek other opportunities.
If you got a patient seller, then perhaps you can structure an SBA loan from the beginning or since inception.
But that's again why many people end up buying with us.
And after a couple of years they refinance with sba.
Omer (45:33.170)
Okay, great.
So we covered the general process of selling your SaaS business.
We talked about buying a business and you know, some of the do's and don'ts with that and we've covered the different revenue, sorry, the different financing options that are available to you if you're thinking of buying a business.
I also appreciated that you mentioned, you know, a bunch of other options that are out there, like you know, acquire.com and Flippa and Fe International and so on.
So there are some options out there that people can go and research.
Let's say if someone decides they want to go for bupos, like you know, either as a buyer or seller, you know, what are the next steps?
What would I do?
Juan Ignacio Garcia (46:20.289)
Yeah, well, first of all, I mentioned a few other people because I think they are doing A great job.
I think one of the things is that this ecosystem is really healthy because you have many different options and you will just have to find the most suited for you.
But, but if you want to work with Bubos, you have to just go to bubos.com, b, double O P O S dot com and sign up.
And then the app will direct you to whether you're a buyer or a seller.
And it's a very simple onboarding process for both sides of the marketplace.
And then at some point in time, you will be contacted by one of our advisors which can handhold you through the process and can work with you in understanding your objectives and achieving your goals.
So I think it's a very straightforward process.
Just go there and get going.
Omer (47:12.750)
Great.
Is there any sort of vetting that happens?
If I wanted to think about buying a business, can I just go up and sign up today and start looking in the marketplace or do I have to get vetted before I can even look at what's available?
Juan Ignacio Garcia (47:26.110)
You can start looking at businesses, you will see a list of businesses, but you won't be able to interact with sellers unless you go and complete the qualification process or the vetting process.
Omer (47:36.830)
Okay, great.
Well, Juan, thank you so much.
It's been, it's been really helpful to go through this.
I hope we did a great job in helping founders, you know, just to educate them in terms of the buying and selling process on marketplaces.
As I said, we've given them some options in terms to think about in terms of where they go and look to buy and sell some of the different, albeit slightly limited financing options that are available if you're going to go and acquire a business and any parting words, any kind of advice or anything you'd leave, you know, people with.
Juan Ignacio Garcia (48:19.740)
I think buying or selling your business is very exciting.
So I would, you know, definitely recommend the experience.
I think it might be a life changing experience either because you cash out and you can move on to something else or because you're embarking in a new adventure.
So I would definitely, I would definitely encourage people to explore that route.
Omer (48:44.100)
Okay, great.
So if folks want to check out bupos, they can go to bupos.com and if folks want to get in touch with you, what's the best way for them to do that?
Juan Ignacio Garcia (48:52.740)
They can find me on LinkedIn.
Jord Ignaciogarcia BUPOS so it's an easy find.
Yeah.
Omer (48:59.380)
We'll include a link to your LinkedIn profile in the show notes as well so people can find you.
Great.
Thank you so much.
Appreciate your time.
And thank you for educating us on the process of buying and selling a SaaS business.
Juan Ignacio Garcia (49:12.940)
My pleasure.
Aman.
Thank you.
Omer (49:14.540)
All the best.
Cheers.
