Thomas Smale, co-founder of FE International, a company with seven-figure revenues that specialises in brokering the sale of online businesses. Listen as Nathan and Thomas talk about valuing SaaS companies, brokerage models, and the importance of focus.
Famous 5
Favorite Book? \u2013 The Tipping Point
What CEO do you follow? \u2014Elon Musk
What is your favorite online tool? \u2014 SEMrush
Do you get 8 hours of sleep?\u2014 No
If you could let your 20 year old self know one thing, what would it be? \u2014 Focus. I used to jump from idea to idea - it\u2019s far better to focus on one thing.
Time Stamped Show Notes:
01:06 \u2013 Nathan\u2019s introduction
01:50 \u2013 Welcoming Thomas to the show
02:00 \u2013 FE International started at university when Thomas was 22
02:30 \u2013 Completed just over 300 deals
02:50 \u2013 Last deal was a SaaS business
03:20 \u2013 Model: FE will value a business, put together a package, and look for buyers
04:10 \u2013 How do you value a SaaS business?
The amount of time the owner spends on a business: more time = less valuable
The growth prospects of a business
A multiplier of 4-6 times on annual net revenue
06:10 \u2013 Why use net?
06:30 \u2013 When valuing smaller businesses, it makes more sense to use net revenue
07:05 \u2013 Business in last deal had around $200k net revenue
08:11 \u2013 Recent public deal was with PlanScope - around $100k
09:10 \u2013 The buyer was a developer looking for a safe investment project
11:00 \u2013 7-12% churn rate is normal for businesses they deal with
11:30 \u2013 FE International charges 15% brokerage on each deal
12:00 \u2013 Currently have a team of 12 people
12:30 \u2013 Made $1.5 million in commissions in 2015
16:00 \u2013 Famous Five
3 Key Points:
Focus on one thing. It\u2019s tempting to jump from plan to plan - but focus leads to success.
Small businesses need a different valuation model to large ones. Make sure you\u2019re looking at the right numbers.
Always be looking for opportunities - a start-up can expand incredibly fast with the right input
Resources Mentioned:
Freshbooks - The site Nathan uses to manage his invoices and accounts.
Host Gator \u2013 The site Nathan uses to buy his domain names and hosting for cheapest price possible.
Leadpages \u2013 The drag and drop tool Nathan uses to quickly create his webinar landing pages which convert at 35%+
Audible \u2013 Nathan uses Audible when he's driving from Austin to San Antonio (1.5 hour drive) to listen to audio books.
Show Notes provided by Mallard Creatives
The Top is FOR YOU if you are:
A STUDENT who wants to become the CEO of a $10m company in under 24 months (episode #4)
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The Software as a Service (SaaS) entrepreneur who wants to grow to a $100m+ valuation (episode #14).
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