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Profitable from Day One : How a Bootstrapped SaaS Found a Successful Exit
“My key priority was securing a buyer capable of both shaping a long-term strategic vision for DropFunnels and seamlessly transitioning ownership. The team at FE International had already identified the perfect buyer within their extensive network, ensuring a perfect match for the company’s future growth. ”
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Patrick McKenzie
The team at FE International works extremely hard to exceed expectations at every turn. Over the past decade, our team has adapted and fine-tuned the marketing and acquisition process to create a proven and efficient model that gets results for buyers and sellers alike. In this video, Patrick McKenzie shares his experience selling multiple businesses with award-winning global M&A Advisor, FE International.
Salesforce to Acquire Mulesoft, G20 “Crypto Assets”, US Trade War and Google’s New VPN Service: Newsletter March 23, 2018
Salesforce announced on Tuesday that it would be acquiring Mulesoft, an integration platform for enterprise cloud networks, for $5.90 billion. Valued at $6.5 billion using a 21x multiple (including debt), Mulesoft will be acquired in a combination cash and stock deal after only a year of having been listed on the NYSE. The SaaS company grew 58% in 2017 and generated $297 million in revenue with a 73% gross margin, making it the second fastest-growing software company at the time of acquisition. The two SaaS businesses have a history of partnership, as Salesforce Ventures had previously invested $128 million in Mulesoft in 2015. Steve Koenig, an analyst at Wedbush Securities, observes that “It is really a natural fit for Salesforce to own Mule,” since the two services work in tandem to facilitate customers’ operations of their CRM with as few interruptions as possible. Bank of America Merrill Lynch advised Salesforce on the deal, while Goldman Sachs served as Mulesoft’s financial advisor.
Salesforce Launches Software for Small Businesses: Newsletter March 16, 2018
Salesforce continues to dominate global SaaS headlines this week with the release of its new Essentials product, a new sales and customer service software aimed specifically at the lucrative small business market. Having previously seen limited success in the SMB space, Salesforce intends the new software to target smaller teams requiring less functionality and more affordable pricing. With products that can be used “out-of-the-box”, Essentials eliminates functions that small businesses have complained are too complex and too expensive for their needs. According to Forrester Research analyst Kate Legget, Salesforce may run into trouble getting SMBs to choose Essentials over competitors. Along with the release, Salesforce announced they will discontinue Salesforce IQ and Desk.com, two products aimed at small businesses, in March 2020.
WeWork Acquires Conductor: Newsletter March 9, 2018
WeWork has this week announced their acquisition of Conductor. Specializing in the improvement of SEO for brands’ online presence, Conductor will leverage this acquisition to invest in their platform and move into the enterprise content marketing and distribution space. With plans to release its own marketing cloud, the digital marketing subsidiary will continue to operate as its own business but will partner with WeWork to bundle the two companies’ services for enterprise partners. Conductor raised over $60 million in funding from investors such as Matrix Partners, FirstMark, Investor Growth Capital, Blue Cloud Ventures and Catalyst Investors, however the financial terms of the acquisition were left undisclosed. According to Conductor CEO Besmertnik, existing customers should only expect the product to improve as they continue to invest in the platform’s development.
Spotify Officially Files for IPO: Newsletter March 2, 2018
Spotify has this week officially announced its plans to go public. Targeting a c.$1 billion IPO, the Swedish music-streaming platform does not plan on fundraising ahead of the exit, but instead will undergo a direct listing wherein existing shareholders will sell shares to investors on the public market. Currently trading between $90 and $132.50 per share off-market, the company is valued at $23.4 billion in the top range, but is not certain this valuation will necessarily pertain to public listing. Documents filed for the IPO show that 2017 revenue came close to $5 billion, up more than 38% from the year before, while reported losses of $1.46 billion nearly doubled compared to $657 million the previous year. Both ad-supported and paying monthly active users for the streaming company have grown consistently over the last three years, with paying subscribers having grown at a faster rate.
Walmart Comes Up Short in Q4’17 Earnings: Newsletter February 23, 2018
Walmart’s shares fell more than 9% on Tuesday following lower-than expected holiday sales. Gross margins suffered due to the amount of promotional spending Walmart invested in competing with Amazon over the period, as well as investments in inventory that they hoped would resonate with consumers. It wasn’t all bad news, however: while e-commerce sales suffered—23% growth during the period compared to +50% last year—total revenue surpassed analysts’ predictions of $134.9 billion at $136.3 billion. Earnings per share were only $1.33 adjusted, however, compared to analysts’ expected $1.37, and net income fell 42.3% YoY to $2.17 billion due to Walmart’s heavy investments.
Market Confidence in Salesforce Prompts Shares to Rise: Newsletter February 16, 2018
Salesforce’s shares rose 3.76% on Thursday after Jeffries to upgrade the stock to “buy”. The report increased the target price to $132 per share, representing a 21% upside over the next 12 months. In its anticipation of Salesforce’s improved performance, the report considers robust new subscription annualized contractual value, as well as the company winning back customer favor over Microsoft. Salesforce’s stock is up 38.5% over the last 12 months, and the company’s full earnings report is set to release on February 28.
Brian Casel
“I couldn’t be happier with my experience working with FE. As a first-time seller, they guided the process brilliantly. The initial consult and valuation was spot on with the final sale price. Their responsiveness was outstanding. The whole process went smoothly. ”
EBay Drops PayPal as Default Payments Processor: Newsletter February 9, 2018
PayPal and eBay have announced another milestone in the ending of their partnership this week. Since 2015, PayPal has been strategically extricating itself from eBay and it has now been announced that eBay will be using a new default payment processor, Adyen, over PayPal. From a user perspective, the main benefit of Adyen on eBay is that it allows users to stay on eBay’s website while checking out, unlike PayPal, which redirects the user. This announcement comes after PayPal’s Q4’17 earnings report showed an increase in income to $620 million, up from $390 million a year earlier, but a rather underwhelming outlook for the first quarter of the new year. PayPal has made several strategic shifts in line with their divergence from eBay in the last several years, as they have prioritized the acquisition of small companies like Swift Financial and moved into B2C functions like facilitating payments between family and friends, as well as strategic partnerships with big names like Apple, Google and Mastercard.
