Familiarity with web-based business deals?

by a searcher from Carnegie Mellon University - Tepper School of Business

3 years ago

For most of the past year, I have been looking at pretty traditional search-fund type businesses: HVAC, plumbing, professional services, etc.

However, I have recently been looking at and running across more web-based businesses. You know the type: a few years old, 50%+ margins, SaaS-type analytics businesses or e-commerce, owner only spends 4hrs a week running it, 0-5 employees, <$1M revenue, etc. 

Do people have experience with vetting these types of businesses? It would be great to hear how you approach the limited history, rapid growth, and figuring out whether it's real or some sort of hoax. I'd also be interested to hear your approach to speaking with SBA lenders about these businesses: limited historical revenue but opportunity in rapidly expanding niches.

Thanks!

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searcher from Temple University - The Fox School of Business

In my experience, you'd likely want at least 3 years of operation, but like all deals, you want to put together a framework about what makes these deals good. Are they relying on any platform like Facebook/Amazon, how big is the email list, what is the customer churn and LTV, where they hosted, what does the codebase look like (do you need a developer), etc. Happy to talk in greater detail or meet (I believe you're in Philly too).

3 years ago | like reply | 0 likes

searcher from University of Pennsylvania - The Wharton School

Following. I've been looking at these as well. Many of the ones listed out there are only a couple of years old (at that). I'd be interested in what other folks here think.

3 years ago | like reply | 1 like

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