SaaS Interviews with CEOs, Startups, Founders
How he sold his $2.3m SaaS with approx $500k EBITDA for $6m+ Cash
01 Dec 2022
Chapter 1: What insights does Adrian share about scaling a SaaS company?
The easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Clearview Social launched in 2013. They scaled up to 2021 to over 2 million bucks in ARR and ultimately were generating real EBITDA, 400 to 700K per year. They sold for 13X EBITDA in 2021.
Adrian owns 60% of the business. Employees owned about 9% of a 15% option pool. So they celebrated. There are about 15 folks in that option pool as well.
Chapter 2: How did Adrian's company reach a $2 million ARR before selling?
And again, at the exit, Adrian then said, okay, 70% of the cash came up front, 20% in year two. And then the last in year three, or sorry, in year two, which he's just finishing out now moving on to his next thing, which is helping and consulting companies hit that first million dollar mark. Hey, folks, my guest today is Adrian day and his passion is helping companies scale.
He learned this by accident. Three years ago, he's asked to volunteer as a coach for a group of young entrepreneurs as part of EO accelerator in Utah. He was hesitant because he was building his own SaaS company. But then he agreed. In his first year, he helped multiple young companies grow and reach a million bucks in revenue.
In the process, he actually ended up selling his own company, Clearview Social. At the time of sale, they had over 60,000 users in 12 countries.
Chapter 3: What factors influenced Adrian's decision to sell Clearview Social?
We had the pleasure of interviewing him back in 2020 pre-sale. Now we're going to get an update. Adrian, you ready to take us to the top? Let's go. All right. So for folks who missed that article, I'm going to give a quick summary, right? You had scaled about 180 customers. You were effectively HootSuite for lawyers. You had passed about a $2 million run rate.
And I believe you have to correct me on this one.
Chapter 4: How did Adrian prepare his company for the sale process?
I think you were bootstrapped, right?
We took, we took a small amount of angel funding, you know, so it was kind of 50, 50.
Yeah. Like, but, but like under 500. Yeah.
Yeah. We said we took about a million.
Yeah. Okay. Okay.
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Chapter 5: What was the structure of the deal when selling the company?
I still call that capital. You took less than one X, your ARR.
Yeah, that's right.
That's right. Okay. Fair enough. Okay. So I love for the next 15 minutes to effectively be a crash course on the head of how to sell your sub $5 million SaaS company. Right. So let's start backwards.
Chapter 6: How did Adrian calculate the EBITDA for the sale?
What was the date that you guys announced the closing?
Like the sale of the company?
Sale of the company.
Yeah. Yeah. So March 22nd, 2021.
And you launched in what year? December 20th of 2013. That's an eight-year journey here. Okay.
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Chapter 7: What role did employee ownership play in the sale process?
So again, people, this is what it takes, right? It's the long, slow journey, right? So eight years. Now talk to me about why you decided to sell and how you met the buyer.
Yeah, absolutely. So I kind of got to this point where I had put my team in place. We had a great product and we kind of hit up against a TAM problem. So the industry just wasn't that big and we'd eaten most of the market. And after trying to pivot into other sectors, I just realized I just wasn't having fun anymore. And it was so much fun building it that it just kind of was time, right?
Chapter 8: What is Adrian's new venture after selling his SaaS company?
So that's kind of what made me decide to sell. And also, we had turned the corner in terms of positive EBITDA. And so it was like, not only am I kind of feeling like I'm ready to sell, we have something that someone might buy. So how did you do that?
I mean, you were bored, so you wanted to sell, but you don't want everyone to think you want to sell because you get a bad price.
Yeah. You don't want to think it's a fire sell, right? So honestly, what I did is I reached out to a few friends that had sold their companies just to get advice. And one of those people said to me, told me their whole story. And they're like, by the way, I think our platform might want to buy your company after I told them my numbers. And I said, okay, that's great.
And then at the same time, I had a follow-up podcast with you where you said, what's your EBITDA? And you said, I think someone would write you a check for your company right now. And I was like, let's go. And I came on your program. and you lined up three buyers and actually, so this, I haven't told you this, but it was like a perfect storm.
So this other friend who had sold their company, his private equity firm was interested in us, but they were kind of dragging their feet. And then you brought to the table, another buyer who right on the program made an offer. They sent over a term sheet. We had another term sheet from these guys. And, and the crazy thing is the buyer you introduced me to, um,
Their numbers, their terms were terrible, but the other guys didn't know that, right? Yeah, it gets the ball going. It doesn't matter if it's terrible. That's right. And they didn't know all the terms. They just knew the price, right? So they had much better terms and they bumped up the price and structured a two-year earn out so that I could get all the money I wanted for the company.
And yeah, we had a deal.
That's amazing. So- If I had to sum that up, if you're listening right now, and you're also tired, and you've been working for eight years, and you're doing two and a half million bucks of AR and you want to sell, but you want to look desperate. The trick is really to get your numbers out there in a way that is enticing that doesn't say, hey, we're for sale. Here's our numbers.
It's more like, hey, here's our numbers. We're on a podcast like Nathan's or some other reason. Hey, we're I'm catching up with old friends sort of thing.
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