Build to Solve a Problem, not to get acquired. Solve a problem well enough and a lot of opportunities will come your way.

We’ve sold 4 micro-saas products – AI Pick Up Lines, VisualizeAI, HeadlinesAI and Spark Social. This section is based on our learnings from those acquisitions.

Why are Micro-SaaS businesses Acquired?

SaaS or Micro SaaS can be a very attractive investment or acquisition opportunity for four broader reasons:

1. Cashflows
   • SaaS companies typically operate on a subscription-based model, providing a predictable, recurring revenue stream. This financial stability is attractive to potential acquirers looking for businesses with proven revenue models.
     • Buyers may get enticed into buying SaaS businesses when they see a greater than market rate of return on their investment.
     • Buyers may also get enticed when they think they can distribute the product to more number of people and essentially bet on the growth as scaling SaaS is perhaps easier than anything else.
     • ⚡️ Morise was acquired for ~$100K when it was at $2000 MRR
2. Traffic
   • Traffic is one of the most important metrics for any product. At the end of it, it all boils down to traffic. If you have traffic, you can drive sign ups whom you can convert into paid users. And, building traffic is hard. For that reason, a lot of acquisitions happen when the buyer sees an opportunity to leverage your app/tool/website’s traffic to drive traffic to their product.
   • ⚡️ AI Pick Up lines was acquired because we had 60-70K organic visitors per month, the buyer wanted to divert that traffic to their website.
3. Strategic Fit
   • Your product may become a good extension to an existing product or your user persona may fit that of the buyer’s product.
   • ⚡️ Danny Postma bought HaistyleAI (an ai hairstyling app) because he already had HeadshotsPro (an ai headshots generator)
4. Consolidation
   • Generally, Acquisitions happen because of a combination of these factors. It may not be solely because of a single factor.

Where do you find Buyers for your Micro-SaaS?

Micro-Acquisitions largely happen in three ways:

1. Marketplaces – Marketplaces such as Flippa, Acquire, Microns etc have a decent pool of buyers looking for SaaS and various other kind of products. We sold AI Pick Up Lines via Acquire, HeadlinesAI via Microns and Spark Social via Tiny Acquisitions.
2. Inbound – If your tool is popular enough, you may get inbound as we did with VisualizeAI.
3. Outbound – You can also reach out to folks such as Damon Chan, Danny Postma, Dev Shah, Founder Kyle who publicly buy Micro SaaS product

The Micro Acquisition Process

Micro Acquisitions are generally IP Sales and not Corporate Sales so these conclude fairly quickly without much of legal personnel involvement.

Step 1: Buyer shows interest

Step 2: Both the parties sign an NDA

Step 3: Seller shares the Data Room with the Buyers The Data room has all the financials and analytics data regarding the product

Step 4: The Buyer may ask for further details based on the data available in the Data Room

Step 5: The Buyer and Seller negotiate and lock in on a price

Step 6: Both the Parties Discuss and Sign the APA (Asset Purchase Agreement) All the terms of the purchase including assets, value of the sale, payment schedule and methods, post sale support etc are listed in the APA. The APA is the binding document.

Step 7: Transfer process begins and Money is generally put into an escrow account

Step 8: Assets and Money both are Transferred

Step 9: Announce the acquisition on Twitter and write a blog about it 😛

Micro SaaS Valuations

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References and Readings

https://blog.acquire.com