In this deal analysis, I looked at a more expensive listing than my normal $10m cutoff. It was for a cold email infrastructure SaaS that was founded recently (2024) and had high growth and high margins.
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Deal Snapshot- Final Score: 83.1
- Financial Score: 81.8
- Quality Score: 85.8
- Risk / Downside Score: 82.0
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Is it too good to be true? Well, the $24m price tag is justified if the revenue and margins can be validated. There was extreme growth on the top line (reported to be 9% month-over-month) and big EBITDA margins (40% from the data I read, but reported to be 50%) and not sure how they were arriving at 50%.
Right off the bat I would want to know if the seller means their ARR is $8m or if their trailing 12-month revenue was $8m. That is a big difference when trying to underwrite. Some of the terms in the listing were not clear in this regard.
The rule of 40 was blown away and if you add the annual growth rate plus the EBITDA margin, you were north of 200%. This is rare for an early-stage company that is high-growth. Usually that takes high marketing spend and the scaling costs make it hard (justifiably so) to be extremely profitable. I'm not saying it is not possible, but would need to diligence the deal further in order to understand the situation fully.
Their customer concentration figures were good with no customer over 2% of revenue and top 10 customers accounting for 11% of total revenue.
When looking at stated MRR of $660k and 3,100 active subscribers, you get about ~$212/mo. in ARPU. This isn't enterprise, I'd call it B2B and your main customers are providers of sales and marketing services. You would be providing the underlying infrastructure for a fee.
Like all these deals, I would need further diligence to give any more of an opinion on the quality of the deal and what price is justified. Mainly, validate the EBITDA and revenue as well as customer data. Running some retention pattern for historical customers is also a priority. It is vital to understand LTV to CaC and CAC payback.
