All the replies so far are making me envious of when my weekends were my own (or just me and my girlfriend, now wife). Weekends now revolve around the sports and activities of our children. It's a choice we make and there are a lot of positive aspects, but that doesn't mean I don't miss being able to prioritize myself a bit more :)
We went the other way and I'm so happy we did. Some think we're bad parents but we work all week and don't want our weekends working as chauffeur so we don't allow our three kids to play spring/summer sports. We have a few friend who do and it just looks miserable.
Congratulations on building something of value and successfully selling it. It's quite the achievement and most don't get to this level.
I do have to say, I was somewhat surprised by the low multiple on the valuation, but perhaps that's just what the range is for a business of this nature. We're spoiled in the world of software and recurring revenue.
What about the tax implications of the sale. Have you figured out how much of the sale you'll be able to put in your pocket?
>I do have to say, I was somewhat surprised by the low multiple on the valuation, but perhaps that's just what the range is for a business of this nature. We're spoiled in the world of software and recurring revenue.
Yeah, from what I've heard, SaaS businesses sell for a much higher multiple, often selling as a multiple of revenue rather than earnings.
The other thing that's really reduced valuations is interest rates. When interest rates were <1%, private equity was bidding up prices of businesses because it was a decent place to park money, but now that you can get 5.3% from a money market, the additional return from buying a business isn't worth the risk.
>What about the tax implications of the sale. Have you figured out how much of the sale you'll be able to put in your pocket?
Still working out the exact figure with my accountant. His expectation was that I'll keep a pretty large percentage after taxes because of Section 174. I had a large amount of expenses each year in software development from overseas contractors, and with Section 174 changes that went into effect in 2022, I had to amortize them over 15 years.[0] But with the liquidation of the company, I can count those expenses immediately, and they offset the income from the sale. So Section 174 is still a bad deal for software founders, but at least when you liquidate the company, you don't have to wait out the full 15 years of amortized expenses.
> Yeah, from what I've heard, SaaS businesses sell for a much higher multiple, often selling as a multiple of revenue rather than earnings.
Adding some color as I have been through the process of selling a SaaS. Based on what you have written, at that stage of development, multiple on SDE is most common. 2.4x is on the low side for growing SaaS businesses, but this business is hardware with real COGS so the economics and buyers will be different. We also don't know the growth rate of the business, which is important in assigning a multiple.
Additionally, full cash payment at closing is a reasonable ask but can lower the overall sale price. (I don't know if it did in this case.)
Again, congratulations in taking this big step on your journey!
From the Quiet Light site, the SaaS multiples are in the 4 to 4.5x income range, which is still incredibly low. They have one for sale that involves 5 hr a week work for just over 4x multiple. Not really worth selling for that amount unless desperate or wanting to retire.
It really depends on where a person is in their career and life. And as OP indicated, there are real benefits to putting a business behind you, taking a win, and moving on to the next thing (with a wad of cash!). For a lot of people, booking the next 4-5 years of income is a meaningful thing.
Valuation also depends heavily on components of a particular business, so it's not useful to just use one range. Does the business require the owner to run, or is a management team in place? Does it generate its revenue from 1,000 paying customers or 25? What is churn like? How fast is it growing? And bigger companies tend to have less risk in general than very small companies. FEI guides to a range of 7x - 10x for SaaS > $2m valuation (yes, this is somewhat recursive). The high end of that range is about a third the multiple Microsoft gets, but then again these are small businesses without Microsoft's competitive moats.
FE International[1] and Acquire.com[2] routinely publish excellent valuation guides for SaaS companies. I highly recommend to anyone looking to build or buy a SaaS.
I also have first-hand experience with this scenario (shared here: https://news.ycombinator.com/item?id=39043885) and if we had followed that line of thinking we would have unnecessarily lost a valuable life. It turns out that, just like our judges and juries convict innocent people in our justice system, our doctors can give terminal or non-improving prognoses to people who will, to a meaningful extent, recover.
I'm truly sorry for this event, OP. As a father, I cannot fathom how this feels, but I have had a taste of it when my young brother-in-law was in a catastrophic car accident. I hesitate to share this story, because it may again bring hope, and I agree that hope is pain in these situations. I do not know the details of your situation and how confident the medical team is in their prognosis. If you are certain in their judgment, then please do not read the rest, because it is hopeful. I share it here, if not for you, then for others. Apologies again if this is overstepping. I will delete it if this is out of bounds.
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My BIL was in a head-on collision with a semi (he was in a Honda Civic) on a snowy day when he was in his early 20s. He was on his way to go snowboarding.
My wife, his only sibling, got the news immediately and we both got on a 5 hr flight to the hospital where he was. My wife was heavily pregnant.
While he was initially conscious after the accident, soon an embolism formed and resulted in a blockage in his brain. As I understand it, the embolism actually should have ended up in his lungs and killed him, but due to an unknown hole in his heart, it ended up in his brain and instead caused a severe brain injury. He lost consciousness and slipped into a coma. His physical body was battered (many broken bones) and now he also had no brain function. Non-responsive.
While grieving the accident, and his loss, we met with several Drs. at the hospital and their prognosis was bleak. Even on the slim chance that he would survive, he would not ever walk, or talk, or do much of anything ever again. I also remember the dire moment when the brain MRI came back and it looked like one big cloud of fog. I had spent a career at that time in medical imaging and while I was on the engineering side, I knew this was a horrible sign and the doctors confirmed that. One doctor matter of factly and without mincing words told us we'd be best off pulling the plug soon, so that his organs could be used. We could not bring ourselves to make that decision at the time (I often wish I could remember that Doctor's name to update him on what has transpired since, but alas that whole period of time was a grief-filled haze).
He stayed in that coma for 5 months, slowly showing signs of responsiveness. Eye movement, for example. Eventually, he "woke" up, but could not speak, still not walking or even able to sit up. Over years of intense therapy and effort by him and his team (and my wife supporting all of the above), he slowly improved. All of us spent so much time talking to him, while getting little to no response back. Eventually, you could get to the point where you told a joke and he would muster a smile, maybe with his eyes at first, and then with his mouth. I still remember the day the hospital called and the nurse put him on the phone to my wife with shock to say that he had said a word and he said "I love you" to his sister. Mind you, it was very hard to understand him (and he still is a bit difficult to understand, to this day).
I don't want to write a novel about this (I could easily), but his progression continued, over years and years. Physical therapy, speech therapy, occupational therapy and more. Today, a decade later, he can walk, talk, play video games, go to the movies, he does activities like swimming and skiing with assistance from equipment and aides. He lives in an apartment that has care aides around when he needs them, but can do many things for himself. He has the mentality of roughly a 10 year old, in some ways, but he has memories of his life before the accident and maintains his old sense of humour and love for his family. He is still with us and big pieces of the "old" him are there. He is a wonderful uncle to our children, the oldest of which was weeks away from being born when his Uncle's life changed forever.
Animal Crossing: New Horizons was an unfortunate exception to this rule. Seeing them drip-feed features already present in the previous games doesn't bode well for the future of the franchise.
VPS have been around for longer than “cloud” computing. In layman’s terms, yes cloud means someone else’s computer, but here and in other tech focused circles it usually means some kind of software defined compute services. A VPS where you login and install your stack and patch it I wouldn’t consider as cloud.
The main point I was making was figure out hosting later after figuring out the product/market fit.
Are you only looking for huge unicorn-like examples?
I founded and bootstrapped a startup the year my 3rd child was born and exited it (for a life-changing amount) about 4 years later.
Doing something before you have kids may mean that you have more actual time, but once you have kids you are also older, with more relevant industry experience and wisdom. Also, becoming a parent often makes a person more efficient, better at time management and prioritization. Parenting is the ultimate crash-course in adulting.
