May 2022, Karl Hughes and Manuel Weiss
We are currently looking to acquire to acquire a service business that meets as many of the following criteria as possible:
- B2B service business with a clearly defined niche - The business should service a defined type of business customer with very specific deliverable(s). The more productized, the better.
- Low client concentration - No more than 15% of revenue derived from any one client.
- $500k - $1mm annual revenue - With 3+ years of financial history.
- Profitable - After paying the founders market-rate salaries, the business should be operating at 5-15% EBITDA. We’re not looking for a turnaround opportunity.
- Recurring/ongoing service - At least a component of the revenue should be ongoing or recurring.
- Strong branding - A strong brand reflects the company’s knowledge and expertise in its target market.
Bonus Criteria
- Digital marketing or sales focus - Our B2B SaaS marketing backgrounds will make revenue-focused service businesses the best fit.
- Cross-selling opportunities - One of the partners also runs a content writing agency focused on the developer tools market (Draft.dev). Opportunities to cross-sell to our 90 existing clients will be a big plus.
- Founder-independent sales channels - While referrals are a great sign, we’d like to see sales and marketing channels that don’t rely on the founders.
- Documented processes and operations - This will help ensure the seller is able to step away as soon as possible and that the handover is smooth.
- Primarily contract employees/freelancers - Lower fixed employee costs allow the business to expand and contract as needed. We prefer businesses with 75%+ contract employees.
Deal Structure
We’re willing to offer a combination of cash, earnout, and/or seller financing depending on the financial and operational strength of the business.
About Us
Karl is the founder and CEO of Draft.dev, where he scaled a niche content writing service from $0 to $220k in monthly revenue in just 18 months with no outside investment. Before that, he led engineering teams at two Chicago startups: The Graide Network and Packback.