What due diligence should I do when acquiring a Micro SAAS?

Hi everyone,

I am considering purchasing a micro saas in the website performance space. If it goes well, this would be my first acquisition and first indie project. I was wondering what kind of due diligence I need to do as the project only has 5 non paying users? Are there any resources that anyone can point me to that would explain the due diligence process step by step?

The codebase of the project is in Python which I only understand at a beginner level so I am not too sure if that's something I should be concerned about as I am familiar with other languages. Additionally, there are other successful competitors(some totally free) so I'm not sure whether I should consider that to be a validated market or whether I should be worried about competition?

  1. 2

    Hi Sameer,
    You can check this https://resources.microacquire.com/churn-code-and-customers-3-signs-a-saas-business-is-worth-acquiring/.

    Questions I would ask is what exactly you are acquiring for the money? Intellectual property (IP) or customers/business. Since they have no paying customers, I am assuming you are looking to acquire the IP. In that case, do you have access to the target customers which you can easily convert them to paid customers?

    Following are some of the questions, I ask and evaluate based on it.

    1. Is there a product-market fit?
    2. How big is the market?
    3. How competitive is the market?
    4. Are there people willing to pay for the product?
    5. What is the competitive advantage?
    6. What is the customer churn and customer lifetime value?
    7. How old is the business?
    8. How are people finding this business and customer acquisition channels?
    9. What is the strategy to acquire new customers and cost for customer acquisition?
    1. 1

      Thanks a lot, these questions have definitely given me a good framework to think about!

  2. 1

    Hey Sameer,

    Many of the items below may not be relevant for your particular deal, but here is some check-list information that may be helpful:

    1. check domain age / history
    2. check analytics

    referral traffic, dig deep into where exactly traffic is coming from, down to city/state. Why, because you want to avoid getting scammed. Read this article for details.

    1. check copyscape <-probably not applicable
    2. check > http://flippaleaderboard.com/duplicates.php
    3. get proof of domain ownership (via screensharen or video)
    4. use Escrow.com
    5. use website sales contract
    6. if there is revenue, get proof of revenue (via screenshare or video)
    7. if buying software or SaaS, it might be a good idea to have someone review the code who knows the language it was written in

    Here's due diligence checklist from @Dealsflow

    Maybe Alex from Dealsflow has other ideas.


    If the deal is rather small, you may not need to do much, but hopefully the above information will help you navigate the process some.

    1. 1

      Thanks a ton Mike! This is all super helpful!

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