Hauser: Small acquisitions are riskier because high revenue cushions operational mistakes
David Hauser · Details behind David Hauser Selling Grasshopper for $176m and how he acquires companies today · Oct 15, 2022 · at 8:43
Grasshopper co-founder David Hauser shares his acquisition evaluation matrix at Founder 500, explaining why acquirers penalize smaller revenue and EBITDA targets.
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“So revenue, the higher the revenue, more importantly, and it's not just because it's the number, it's because it gives us cushion, right? It means if we make mistakes after we acquire things, we have more chances to make another mistake to correct it or kind of go through that process again, right? So that's why the smaller the company, The higher the risk, right? EBITDA the same, right? It kind of translates through. If I'm looking at a company that has a million dollars of EBITDA, that's much more risky than a company that has four, right? It's pretty easy to lose a million dollars in a mistake, right? So again, it's about comfort and cushion, right?”
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