December 16, 2019

I got $100K acquisition offer for Visa List

HaKr @1hakr

After my Visa List launch on ProductHunt, i posted a gist of my journey on Reddit and what do you know, i got a message from a some guy who said he was willing to buy Visa List for $100K.

This is not the first time i got an offer to sell Visa List, in fact i think this is the 7th time in a year. It made me think what is actually the value of Visa List and how can i decide that irrespective of whether i want to sell or not. So i did some math based on Visa List stats

  • MAU : 310K
  • Monthly Page Views : 650K
  • Monthly Revenue : $5,000
  • Growth Rate: 10%
  • Yearly Revenue w/o Growth: $60,000
  • Yearly Revenue w/ Growth: $106,921

Selling for $10000 would mean a loss of $6000 on the face of it but you are actually losing a lot more revenue. Usually you have to consider the lifetime value, let's say you 5 years, you can potentially make $0.5M or may be more so you are actually losing a lot.

On the other hand cash flow is more risky and there is no guarantee if it will actually survive for that long and keep the growth rate. Having said that, these acquisition offers rarely close, so 95% of the time someone is just wasting yours and their time at the same time.

I'm not saying you shouldn't sell, you can if you need cash very badly and/or you don't believe in your microstartup very strongly. No shame in admitting that, not every idea can be successful. I have more than 10 ideas didn't see the light of the day.

I believe in Visa List and wouldn't sell it for money any day but thats just me. What do you guys think?

  1. 18

    From a purely economic point of view, the average price for this kind of saas is between 20x of current monthly free cashflow and 2x-3x of current annual earnings. So the offer is closer to the lower end but not unreasonable. But if you think you can sustainably growth it with joy you should indeed do that instead of selling it. As soon as you can emotionally detach yourself from the project you can ready to sell. Good luck, a good milestone to have!

    1. 3

      I just sold a company this year and I can second what szferi is telling you. This isn't a mind-blowing offer but it's definitely reasonable.

      If you're interested in selling, you can negotiate the closing terms too. A product as simple as yours shouldn't be hard to do due diligence on. Ask them for a 30-day closing process. $100k is a decent amount of money but it's not so much that a buyer should have trouble securing it to make a purchase.

      Best of luck.

      1. 1

        Thanks for the advice, I would actually want to Keep growing it. Btw what was the product that you sold?

        1. 2

          Awesome. If I was in your shoes I don't think I'd sell either. You've already done a lot of the hard things with launching a business (product + revenue).

          The product we sold is in my Twitter bio and starts with a "D" (https://twitter.com/LeviNunnink) ;-) . Can't say much more than that, unfortunately, due to the terms of the deal. But I can say that your offer seems to be the market rate as far as multiples for a SaaS business go.

          Josh at Baremetrics recently did a great series on (almost) selling his company that has a lot of good info in it too: https://baremetrics.com/blog/5-things-i-learned-failing-to-sell-baremetrics-for-5m

          1. 1

            Got it 😉

    2. 1

      Interesting, have you sold any of your products before?

      1. 2

        Yep

        1. 1

          How much did you sell and what was the product?

          1. 3

            I'm not allowed to discuss that here.

            1. 6

              Ah the good old "I could tell you, but then I'd have to kill you"

              1. 5

                NDAs is a bitch, but they still exist ;)

            2. 3

              Cool!

  2. 7

    Well, if you have an other idea in mind, and you need cash to make it, could be a good opportunity

  3. 5
    • 100K although is nice, it doesn't sound like life changing money.
    • unless you need a large capital infusion right for another idea, and you enjoy what your working, I'd just hold off.
    • You own your time right now, and set your schedule. Once you sell, you're going to start a timer for another idea that you think of to work and make cash to fill that void. Not always a bad risk to take, but just something to consider.
    1. 1

      Thanks for your suggestions mate! I have decided not to sell.

  4. 3

    If the offer is interesting to you, I would suggest you reach out to a broker for a free valuation.

    I have worked with FEI (feinternational.com), and I had a great experience with them. The valuation will give you an idea of what the business is actually worth, based on them seeing hundreds of transactions. Their estimate will probably be better than all of us here on IH extrapolating from a smaller # of datapoints.

    My gut says this is a lowball offer. My mental model for your business would be to assume profit ~= revenue and then assume it's worth 2.5x profit as a hard floor. But your business is growing and you are still beginning to exploit the opportunity, so it could quite easily be that the market for your business is closer to 4x profit or higher.

    Basically, reach out to one of the reputable Web company brokers and get their valuation range. It's free and will only take a little of your time.

    1. 1

      Thanks, will check it out

  5. 3

    As others have mentioned, and you also pointed out, there is more money to be made long term. These potential earnings comes down to whether you can sustain growth or not. With $60,000 a year, I would double down on growth for now. Devise a solid marketing/content plan. Invest in ever-green type of content for travelers. Create a newsletter. Heck, maybe get some influencers involved.

    1. 1

      Thanks, that's a good suggestion

  6. 2

    I'd suggest to keep the business simply because I feel like the whole travelling/nomad lifestyle is growing FAST and your product is inside this domain. As long as you do the right thing your business will keep growing fast.

    1. 1

      Yap not selling

  7. 2

    Selling it is a risk too, because then you'd be expecting for one of your other 10 ideas to be successful within a specific timeframe. It seems like you just got started with this project and you have a passion for it, so why not keep growing it for another year or two, and then find ways to automate as much of it and start another project on the side?

    1. 2

      PS I was looking around your website and found somewhat of a correction needed. For Americans traveling to Mexico, they do need a visa, but it's something that's given to them on the spot when they cross the border. The website implies that no visa is required, when in reality it is, but no application is needed.

      And that's only if they plan to stay less than 180 days. If they want to stay more than that, there are two different types of visas they can apply for :)

      1. 1

        Yes that is present in the tips section.

  8. 2

    Definitely keep it :) I usually try to buy below 24x free cash flow. That would be considered a good deal for me :) Because you're the founder you're confident you can keep growing this. By this time next year you'll have tripled the value.

    I checked your open stats. Revenue jumped quite a bit last 2 months. If you can keep growing with the same pace as the last two months you'll quadruple in value.

    If you look at your entire year, 100k wouldn't be that unreasonable. I'd take the last 2 months as a risk for me as a buyer. Who knows revenue will stay at that level?

    1. 1

      Thanks, good insights.

  9. 2

    Off topic, have you considered partnering with GetYourGuide to offer tickets and tours in destinations? Seemed like it could fit your model along with Skyscanner.

    1. 1

      That's a nice suggestion. Will look into it.

  10. 2

    I wouldn't sell it unless you really need the money. Otherwise, this is a great opportunity and journey to make a lot more partnerships and gain new networking chances building a product so valued by its target market.

    1. 1

      That's my plan

  11. 2

    Sounds great. Selling makes sense if you don't have any resources to continue growing the product anymore or have other priorities.
    Do you think you will prefer to sell under any other circumstances?

    1. 1

      Nope I don't think so.

    2. 1

      Nope I don't think so.

  12. 2

    Just don't! You will hit $12-$15k MRR by the end of 2020.

    1. 1

      Hopefully 🤞

  13. 2

    A profitable software business can be sold for 20 to 100 times what your profits are.

    A profitable service business will be sold for three times what your profits are.

    1. 1

      Interesting, could you give some examples?

    2. 1

      This comment was deleted 9 months ago.

    3. 1

      This comment was deleted 9 months ago.

  14. 2

    Congratulations! This a huge achievement. I know how hard it is in the early days to get things rolling and a real validation point that someone is willing to spend that amount of cash on your tool - well done!

    1. 1

      Thanks mate!

  15. 2

    Either you sell it or not, It's a cool milestone to have on any project.

  16. 2

    Ask them to give $1000k.😆

    There is no other tool exist like visalist. You will easily triple from $5k in 2020.

    1. 1

      Let's hope so! 😁

  17. 2

    I’ve never sold or been offered money for a business, but in terms of a fairly low offer like this and no other pressure, I would do the same.

    If you keep running the business there’s a risk that it’s going to crash and burn, but there’s also a chance that it will grow way beyond the acquisition offer (the buyer surely hopes so).

    If I still enjoy working on the thing and the offer isn’t a life-changing sum, personally, I’d probably want to see for myself whether I can reap the upside of my investment instead of bailing and being reimbursed basically only for the time that I’ve spent working on it.

    1. 1

      Today agree with you. I love building Visa List and will be doing for atleast few years.