with Project Gavel · Project Gavel
LenderHawk analysis. Not affiliated with or endorsed by Acquisitions Anonymous.
A business can be labeled recurring revenue without being sticky if customers can cancel easily and the service is simple to replicate.
Adjusted EBITDA deserves extra scrutiny when a software-heavy business may be capitalizing development costs or burying support expenses in add-backs.
A platform business with courtroom coverage and remote deposition services may still be operationally people-intensive.
Professional banker processes tend to maximize price by creating broad buyer funnels, deadlines, and auction dynamics.
Search-fund-style buyers may be better suited to complex, operationally messy businesses than institutional buyers seeking easy rollups.
If the product is easy to imitate, a high revenue figure does not automatically justify a premium multiple.
A strong teaser can make a mediocre moat look like a premium asset, so the real work is testing defensibility and customer retention.
Value creation is more likely in off-market or lightly marketed deals than in fully run auction processes.
A buyer should identify the main operational headache in a business and decide whether that specific pain is tolerable before pursuing the deal. The point is not to find a perfect company but to know which ugly reality you are signing up for.
When to use: Use this when evaluating any business whose attractiveness depends on whether the operator can absorb a persistent operational burden.
Project Gavel’s teaser described about $7 million of 2022 revenue and roughly $2.4 million of adjusted EBITDA.
The hosts cite the banker materials while debating valuation and quality of earnings.
The business was said to be about 64% recurring revenue and 36% non-recurring revenue.
This split was used to argue that recurring revenue is not the same as sticky SaaS revenue.
Remote services reportedly hosted nearly 1 million participants since January 2021.
The teaser used this to signal scale and platform activity.
The platform had recorded more than 60 terabytes of remote deposition data in total.
The hosts discussed this as part of the business description in the teaser.
The global legal tech market was shown as a $25 billion market in 2025 with a 6.4% CAGR.
The teaser used the TAM slide to support a growth narrative.
The hosts estimated the business could trade around 7x to 9x EBITDA in a competitive process.
This was presented as a likely outcome if multiple jam-bog buyers bid.
Press hard on the definition of adjusted EBITDA before underwriting the deal.
Why: In a legal-tech business, software development, support staffing, and platform upkeep can hide inside add-backs and materially change true cash flow.
Treat recurring revenue as weak unless switching costs are clearly embedded in workflows or contracts.
Why: Low-friction, credit-card-style renewals can disappear much faster than contractual software revenue.
Assume a fully marketed banker process will price to the top of the range and focus your effort on less auctioned opportunities.
Why: Broad distribution and deadlines tend to flush out bidders willing to pay up.
Match the buyer profile to the operating burden, not just the revenue quality.
Why: Businesses with lots of people coordination and field execution can fit owner-operators better than passive institutional capital.
Ask whether the business is really software or a service with software attached.
Why: That distinction changes the moat, scaling profile, and valuation multiple.
Michael contrasted buyers who say they will do deals with his software company Dura, which has actually completed 11 acquisitions. He said seller confidence changed once they could point to at least one closed transaction, because execution matters more than slide decks.
Lesson: Demonstrated execution credibility can materially improve seller trust and deal access.
Michael’s father-in-law, a classic-car collector, refuses auction channels because auctions reliably attract more bidders and push prices above value. He used that to explain why highly marketed banker processes often leave little room for buyer advantage.
Lesson: The more competitive and well-marketed the process, the less likely a buyer is to find a bargain.