Anatomy Of A Micro Acquisition - Screenshotapi
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Ultra-limited digital status collectibles with private tier-based communities — worth exploring?
Ultra-limited digital status collectibles with private tier-based communities — worth exploring?
Congrats on the acquistion, and the growth it's had so far! I am curious, since you rewrote the entire architecture, what do you think you got the most value out of in the acquisition?
Tangibles: Customers, existing cashflow, functioning product (i.e. we knew exactly what to build)
Intangibles: The 4 of us in the acquisition group committing to work on a small app that solves a very specific problem over a long time horizon. This is a superpower. I can't emphasize this enough.
That was a nice article. 🚀
Thank you!
Wow, I have really enjoyed reading this.
I like the appropriate eloquence coupled with details explained in just the right places. And perfect length to read. Quickly to get into and not worried that it will take too much of my day.
You have the perfect IH content.
I'm looking forward to reading more of it!
Thanks for the kind words. Going to be putting new stuff out every friday!
Sign up not working for me.
ok should be fixed now. hopefully! https://acquire.so
dang what the heck! on the home page? Or the article page?
Thank you for sharing this! Though midway, I was like 'Why would someone pay $23K for this', glad to hear you're already growing it quite steadily!
Looking forward to more of your acquisition stories.
Here's the logic for all this stuff:
You're buying a cash generating asset. So you buy something making let's say $1k MRR for $24,000. Each month you're making ~90% margin so in just over two years, you make your money back (assuming zero growth). Every month after this is profit.
If there's any growth at all, then you're $1k MRR product grows over time, and when you go to sell it, you sell it for $50k (let's say you double it).
Think of this stuff like buying a house. You buy it, you get appreciation, you can rent it out and collect rental income.
Incredibly well explained, Andrew!!
Makes a lot of sense, why the current trend of micro acquisitons is on the rise...
Great thinking!
Thanks for the insight, interesting to see the process behind a micro-acquisition. I wish there were more resources available like this with numbers and explanation of the process.
On a side note, I tried subscribing to your newsletter but it said “Failed to sign up, please try again”.
what?! noooo! Let me see what's up. so sorry. It's just a ghost site out of the box!
No stress, let me know when its sorted and I’ll subscribe!
should be good now! https://acquire.so
Worked!
Great article. One question, how did you decide on this?
"We took his highest month, carried that forward 12 months, and applied a multiple of 3.5."
At the low end of the market where we can't buy exclusively based on MRR/SDE/EBITDA often times there's a minimum number in the founder's mind they're willing to let the product go for.
Practically speaking, it means you slightly over-pay on smaller acquisitions. But in 3 years what's the different in $2k?
So the logic here is slightly backwards. We came up with a justification for the price we had in mind and had to back into math that made sense. It also ended up being a decent point of negotiation because we could point at it and say "look at what a great deal you're getting mr founder!"
"We...found an amazing JR developer for $10 an hour" Really? It's mind boggling that people are willing to work for so little.
It's a dev in Lat Am. He's pretty junior so not quite at market rate for where his skill is but still tremendously helpful.
That makes more sense. Not a knock against you, I just hadn't considered non-US.
I'm guessing this is not a developer in the United States. It's also the reason most US developers won't touch a lot of freelancing sites, because they are competing against developers worldwide who will work for that amount or lower.
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