The Exchanges

Q Which two did you buy to bankruptcy? And how does that work?

A Cross Talon out of French bankruptcy and Zen Lube out of German bankruptcy. Um, and, uh, well, it's, it usually works that there's an administrator in the U S it's chapter 11 in Germany, France, other European countries have similar, uh, similar types. Um, and then there's an administrator and that person is charged, uh, for, for selling, selling off the assets. Um, And then you just negotiated with that person, not with the founder. It's obviously a very different style, a lot more formalities. Um, but it's, uh, it's great because, you know, you preserve a company, preserve your team. Uh, it has its own challenges, but it's, um, it's a worthwhile exercise. And in both cases, it worked really well. We have, um, in one case, the founder is still operating it across the law. In the other case, we found a new management and, and in both cases, the companies are super strong now. They're profitable. They're growing again. Um, and they're building on the product, um, and, um, they, they just, they just were mismanaged before, and they were, they were overspending.

AI assessment note: “Cross Talon out of French bankruptcy and Zen Lube out of German bankruptcy.”

Q And, and, and, and why go that route? You're obviously individually wealthy yourself. Were these like really strategic people that you wanted aligned with SaaS group or why do the deal?

A Yeah. Yeah, exactly that. So we, um, I, uh, I can't name them, but they're like a bunch of super successful entrepreneurs who are really, they're all in the SaaS field. They're super smart people. Also, I always love people partner, partnering with people who are a few years advanced. So for example, there's one guy, Who does a roll up, not in a competing space, but software. And he's just kind of this three, four years ahead of us, uh, in terms of with 300 people, he's like a thousand people. Revenue is also threefold. It's like he, he, he went through all the stuff we, we, we still have to go through. That's the type of people we really want to align ourselves with. And, um, uh, and yeah, so it was a small dilution, but just getting great people on board has always helped.

AI assessment note: “Yeah. Yeah, exactly that. So we, um, I, uh, I can't name them”

Q Okay. And, and, oh, people might be hearing you say, okay, we sold single digit percentage for twenty five million, but they might be thinking of what he's got 20 companies. Can you explain sort of GP LP structure, like how that works? You basically sold a GP state.

A It's not like, yeah, no, we're not a fund. We're not a fund. Uh, we're a company. Um, our, our big, uh, Uh, our big role model is Constellation Software in, uh, in Canada, public company. We're just a company like any other company in Evergreen. Um, uh, yes, we, we have a few small investors, but first and foremost, yeah, we're just kind of a going concern. Also, we don't flip our companies. I think it's really important. If someone sells a business to SaaS Group, we intend to run this business indefinitely. Uh, we want to preserve the legacy of the founder. We want to preserve the name. Uh, preserve what made the company strong. Sure. We're going to improve on a lot of things where we think, um, there are some holes to fill, but, um, we really, uh, we really cherish those individual small companies, which are filling a niche, which, which most SaaS founders provide. Um, and we don't intend to sell the company. So also there's no, there's no fund lifetime of, Hey, within seven, seven to 10 years, we have to sell the companies again, those sorts of things. Um, we're just happy keeping the companies.

AI assessment note: “we're not a fund. We're not a fund. Uh, we're a company.”

Q Yeah. They were really proud of the fact that their paid marketing was working. They were spending about 50,000 bucks a month on paid. Uh, what did you see when you looked at that business and why'd you end up doing the deal?

A Well, it's a great business. First of all, we like online marketing as a category. We, we know it well. Uh, we're all in the space, uh, and we, we love to be comfortable with our own category. We love the founder team, um, or the, the team that runs it is actually not the original founder, uh, anymore, but Antoine, CEO and his team, they're great. They're really, really doing well. Um, they also have a, a nice product, low churn, really serving a, a nice niche with which agencies, but, you know, and that, that's a great example where, where SaaS group was adding a lot of value. Yeah, they were doing a lot of paid marketing, but also, um, we could add a ton of value when we came in. One of the first things were we slashed their Google paid accounts in half. Uh, so we basically slashed the budget in half, but we doubled the output. So essentially we forex, uh, the lead gen, uh, just on that Google, Google paid account. And, and that's exactly some of those, those value ads we bring at SAS group. We have some super specialized, super smart people for different disciplines, in this case, pay-per-click. Um, and we were able to help and, um, make a strong business. We love Dashdisc, it's a strong business, but we can make it even stronger.

AI assessment note: “we like online marketing as a category... nice product, low churn”

Q in a short amount of time. Unfortunately, that can happen with a large group of more than 40, more than 40 shareholders. So when you, a couple of quick questions here, I know Dirk leads your originations, but do you have any databases you look for to get notified when things go into bankruptcy like this, or is it really just you and Dirk picking up the phones, calling people?

A Yeah, we're not, we're not sophisticated yet when it comes to monitoring bankruptcy. Also, we have to, like, we have to admit bankruptcies are pretty rare in SaaS because, um, if you manage the SaaS well, it's almost impossible to get into bankruptcy. It usually only happens if there's a VC pouring too much money. Um, founders go crazy. The, the environment tanks. That's exactly what happened in those two cases. And yeah, the founder said that he couldn't secure the funding, but also the fact is he just spent a little too much. And so, um, that is essentially what that happens. But other than that, it's, it's very rare to see SaaS companies go bankrupt. Different e-commerce companies, for example, it's much easier to get an e-commerce company bankrupt than a SaaS company.

AI assessment note: “we're not sophisticated yet when it comes to monitoring bankruptcy”

Q So that's how you, that's how you do the deal. You close the deal. And then obviously you want to grow the business. Which of your companies have grown the fastest after you acquired it in terms of revenue?

A So, Scraper API has been great. The scraping service, it's a really great product. Rewardful.com is great. It's a, is a super simple affiliate program management tool for, for companies operating on Stripe and Paddle. Um, so yeah, Rewardful probably is the, the fastest growing ever. Pre-render is great. It's a pre-rendering software. Um, a bunch of them are really kind of, Growing four or five X since we've acquired them in the last three years or something. So we've also had some, which are flat. I think that's the nature of the game. It always depends on kind of, you, you, you also get what you pay for. If we're buying a flat business is like, usually, yeah, we can improve it a little bit, but we also know magicians. Um, but then that's reflected in the price, but we always try our best. I think with every company.

AI assessment note: “Rewardful probably is the, the fastest growing ever.”

Q And what was that valuation? Was that like a one X?

A No, no, no. It wasn't, it wasn't that bad. It was in this case, for example, there was low low return. It was a low complexity software. We just put some other guy on this. Continued in maintenance mode, uh, before we, we let the growth, the product grow again. Uh, so that's doable, but we also have founders who are still with us three, three years after the deal, um, and anything in between. And then of course, um, uh, if, if the founders want to commit to this and they, they also want to commit to their business plan, then an earn out is really great because it shares risk. We can pay more. Um, but it's also kind of this put your money where your mouth is Towards the founders. And it's, it's, it's generally the more attractive deal because it puts us on the same page, but we can also do all cash deals. It really depends on a lot of factors. No deal is really unique. There's other components like seller financing. So for example, it could be guaranteed payment, but it comes next year or two years after. And for us, um, of course we're saving on interest rates. So, so we can pay a little bit more. So, uh, every deal has lots of components, different complexities. And, um, sure we, We have different building blocks, but we can, we can work with all of that, and it's important that the founder is happy with it, um, at the end of the day, um, and, uh, that's, that's what we're try…

AI assessment note: “No, no, no. It wasn't, it wasn't that bad.”