Why I Walked Away From a $12M Acquisition Offer 18 Months After Our Launch

Re:Why I Walked Away From a $12M Acquisition Offer 18 Months... by softdev12 on Thursday November 13, 2014 @11:30AM (#8602385)

"Our monthly revenue was around $70K at the time, making $11.8M a 14x multiple on our annual revenue. Even in SaaS, that’s on the very high end of the norm, and a multiple generally reserved for highly profitable companies (or ones with massive user bases)."

Congratulations to the company for the growth after only a handful of months. Very impressive.

Using multiples always seems a bit odd for me in super high growth early stage companies. If a product really takes off the early small numbers can really skew things in comparison to later big ones. It's like seeing a 10,000 percent growth rate in the first month on a tiny base.

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Re:Why I Walked Away From a $12M Acquisition Offer 18 Months... by mattzito on Thursday November 13, 2014 @11:38AM (#8602438)

Multiples are a convenient way of benchmarking deal performance, and it tends to work out very well for typical deals. Successful series B startup with a consistent growth rate? ~10x trailing 12 months revenue. High-growth series A startup? ~15x. Mature post-series C startup with large customer and revenue base? ~8x.

Obviously, the excitement in the market, the competitive landscape, bidding wars, etc. can all screw with those points, but time and time again you see those general ranges for acquisitions.

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Re:Why I Walked Away From a $12M Acquisition Offer 18 Months... by WillieBKevin on Thursday November 13, 2014 @11:57AM (#8602544)

Good points. Keep in mind the OP is talking about a 14x multiple of annual run rate, rather than trailing 12. He's calculating annual run rate as 12x his most recent month. Considering it's a quickly growing company, if he were calculating his multiple as a multiple of trailing 12, it would be higher than 14.

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