with Florida SaaS listing · Real estate transaction management SaaS
LenderHawk analysis. Not affiliated with or endorsed by Acquisitions Anonymous.
A 4.1x EBITDA price can still be unattractive if revenue is declining 17% year over year.
Monthly churn of 1% to 3% can be tolerable in SaaS, but it becomes alarming when net revenue is still shrinking.
Point solutions face extra pressure when a bundled competitor like Zillow can give away adjacent functionality to defend its ecosystem.
A business with a huge TAM still fails if it lacks a repeatable customer acquisition engine.
Diligence should test the growth thesis before closing, not just verify that the books are clean.
A buyer should not rely on a seller's stated stickiness if the actual revenue trend contradicts it.
If the last month's run rate is materially better than TTM, the decline may have been driven by one lost customer rather than a permanent collapse.
A diligence approach that tries to prove the buyer's acquisition and growth assumptions before closing, instead of only hunting for fraud, accounting errors, or legal problems.
When to use: Use it when the deal value depends on whether a specific marketing or sales channel can scale after acquisition.
The listing asked $2.5 million for the business at 4.1x profit and 1.8x revenue.
Michael reads the teaser economics from Acquire.com.
Trailing twelve-month revenue was $1.4 million and profit was $617,000.
The hosts use these figures to judge valuation and margin quality.
The business had 100 to 250 customers, implying roughly $8,000 in annual revenue per customer.
Bill estimates the average contract size from the customer count and revenue.
Revenue was down 17% year over year.
This is the core reason the hosts become cautious on the listing.
The listing said churn was 1% to 3% per month.
The hosts translate that into an annualized retention problem.
There are about 360,000 real estate brokerage firms in the United States.
Bill uses this to argue the TAM is large enough to support a scalable go-to-market motion.
DotLoop is owned by Zillow.
The hosts use this to show the competitive threat from a bundled platform.
Test the growth thesis during diligence by spending real money on ads or landing pages before closing.
Why: If customer acquisition does not work at the first dollar, the buyer may be paying for a business whose growth engine is broken.
Push for metrics like gross revenue retention, net revenue retention, logo retention, and NPS before treating churn as acceptable.
Why: Monthly churn alone does not tell you whether the business is healthy or just masking deeper retention problems.
Treat a shrinking SaaS listing as a pricing and underwriting problem, not a normal recurring-revenue story.
Why: A declining revenue trend can overwhelm otherwise attractive margins.
Compare the last-month run rate against TTM to see whether the decline is structural or caused by a one-off customer loss.
Why: A stabilized current run rate may mean the TTM decline is less alarming than it first appears.
Michael described a prior restaurant software business that churned heavily because restaurants fail for reasons outside the software's control. The example was used to show that some customer categories naturally produce high churn regardless of product quality.
Lesson: High churn may reflect the underlying customer base, not just product weakness.