Why This $12M SaaS Might Be a Massive Broker Trick

0:00Hey, Michael here. Welcome to Acquisitions Anonymous, Internet's number one podcast about buying and selling small businesses. today's deal was a fascinating one myself heather enderson of iso capital and travis jameson of capital pad we went through and talked about a deal that may have been a software business but maybe something else and it's in the self-storage space so super interesting and we dug into it and here's the episode We'll start Acquisitions Anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100 % ears anymore. And thumbs down on just the plus inventory alone.

0:36Hey everyone, it's Bill. And I want to tell you about maybe the most exciting sponsor we've had in a long time on the pod. It's called CapitalPad. And it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So CapitalPad is a marketplace for acquisition entrepreneurs, that is people who want to buy a business and need capital, to list their deals and solicit capital from other people who want to invest in acquisition deals. So if you want to back somebody buying a small business, CapitalPad is the place to do it. And if you want to buy a business and need capital, you can go on CapitalPad to be introduced to investors.

1:19So the really great thing too from the investor side is that CapitalPad takes care of all of the details that can get hairy with small business acquisitions. They handle standardized terms, standardized governance, standardized distributions all up front in black and white. Basically, CapitalPad professionalizes investing in small businesses and the returns can be really, really good. I'm so stoked they exist. It's founded by my friend Travis, who is a phenomenal entrepreneur in his own right. so if this sounds like something that's appealing to you if you want to buy a small business and need capital or if you want to invest in small businesses go check out capitalpad.com and tell them that acquisitions anonymous sent you travis how are you my friend fantastic mr girly how are you my friend i'm doing well doing well uh what's new in in jameson world uh nothing just looking at deals all day, every day, hunting for a good one.

2:17Yeah. When you guys look at CapitalPad, what is kind of your North Star number? Are you looking at total dollars transacted, total deals on platform? Like what are your kind of, do you have an individual number or numbers that you're focused on? Well, we have those things. We have total allocations, investors, like, you know, searchers, sponsors on the platform. But really, we're just kind of focused on like how many good deals do we get out there um yeah so so not as much focus on like platform growth um although we are growing more platform more focus on just like quality coming out like what can we get out of there nothing else matters yeah is it quality just at this point kind of your estimation of whether you think it's a quality deal or not or how are you thinking about it yeah yeah absolutely um i'd love to be able to like give you a blueprint i'd love to be able to say this is the checklist we have a pretty strong checklist of things that steer us away but But it's just kind of opinion, really, of what's a quality deal.

3:15And again, it's why we say no to the vast majority of deals that are coming on the platform. But I really wish we could have more. We just haven't seen enough that crossed the threshold of being awesome for us to put it on there. Yeah. What is the main way people are sending stuff to CapitalPad? It's probably an almost 50-50 mix. A lot of people just come direct, submitting their entire deal on the platform. Other people are coming through connections and basically people we've gotten to know over time, or they've heard about us at different places. Maybe we've had a conversation at a conference.

3:50They're like, hey, here's the deal. We're finally ready. Let's take a look. They give us the teaser and prospectus and stuff like that. Nice. Well, it seems like something will be a big flywheel over time. The bigger the platform gets, the more... That's kind of the idea. Again, we have more capital than deals right now. So again, if you're a searcher or a sponsor and you got a deal, please, come pitch us. We would love to find some things that are a good fit right now. I have a deal. I'll maybe send it to you. We'll see what you think. All right. It's kind of crazy. So that's what you'd expect.

4:21Fitting. Well, I got nothing else. I'm creative. Okay. Speaking of creativity, I have a deal that I think is right up your alley that I ran across. I think it's super interesting. So it is from Synergy Business Brokers and is a self-storage SaaS and marketing services company with$3 million in ARR. Unfortunately, it has an accepted offer currently, but it's still worth talking about. So it's listed for$12 million, annual revenue is$4.3 million, and net cash flow is$970 ,000. So they're asking 12 times cash flow, but don't worry about that part. It's fine. Just go with it. Just go with it. This business has an accepted offer.

5:09Please view our other tech companies for sale. But we're going to talk about it anyway. Founded over a decade ago, this company is a leading SaaS and digital marketing solutions provider for the self-storage industry. With a team of 44 employees, as of 2025, it delivers website design, SEO, PPC, AI-powered rental tools, and proprietary software that enhance storage facility operations. The company serves approximately 750 unique customers across 1 ,700 locations, with the largest single customer operating over 100 locations. 2024 revenue was$4.3 million, up 21 % year-over-year, driven entirely by ARR growth.

5:472024 ARR is expected to be$3.01 million and 70 % of total revenue. 2024 SDE, seller's discretionary earnings, is$970 ,000, expected to reach$1.3 million in 2025. This year, for 2025, they expect to do$5.1 million in total revenue, $3.6 million of which is annual recurring revenue for a 27 % SDE margin. Gross retention is at 90%, and net retention is at 110%. Recurring SaaS revenues account for 70 % of total revenue, providing essential tools such as multilingual support, AI-driven pricing, 3D unit visualization, ID verification, and lead conversion capabilities tailored for self-storage facilities.

6:31The remaining 30 % comes from SEO and digital marketing services, including PPC management, SEO optimization, Google business profile handling, and reputation tracking. These services work in synergy with the company's SaaS offerings and enhance clients' digital presence and revenue generation. They stand out in the service industry with AI-powered software offering a seamless rental experience and automated move-in solutions that drive higher conversions. It has developed proprietary APIs and data tools that provide deep insights into pricing trends and customer behavior, enabling storage operators to make data-driven decisions.

7:01It has digital marketing services, high retention rate, blah, blah, blah. They think that you could grow the business more with outbound sales and exploring hiring regional sales managers to target middle market ownership groups in key markets. It's also investing more in AI-driven automation and stuff like that. The owners are committed to support a smooth transition post-sale and are open to providing guidance as needed. In addition, you could elevate one of their internal candidates to be your CEO to lead the company going forward. So I'll pause there. Travis, do you have a good idea what these guys are doing?

7:32I mean, it seems like a SaaS for self-storage units and then a little marketing company tacked on. I mean, I would almost bet it was a marketing company that decided to build a little SaaS to fix it, and that probably outgrew it. I did like to see that because so many of the deals like this, they're like, oh, we're software and services and the services are really like the meat of it all. This looks like it's the opposite. It's kind of nice to see. Yeah, I'm really confused. And maybe Heather, I don't know if you read it in this, like how much of this is like actual software revenue versus how much of it is marketing.

8:07Like, yeah, marketing agencies stuff. It felt like they described a lot more marketing services in this teaser than they did, you know, what the software, I mean, I would assume it's maybe like a CRM with all these marketing capabilities sort of tagged on, but it felt more marketing heavy in the description to me. Hey everybody, if you've listened to the show, you've probably heard us talk about franchises. While franchises can be a great path to business ownership for the right person, like there's a lot of pitfalls and it's important to be really careful as there are certainly good franchises to be in and bad franchises that you don't want to be in.

8:43Conor Gross is a friend of the pod and a resident expert on franchises. And Conor not only owns and operates his portfolio of multiple franchises, but he's also a franchise consultant and helps others work through while picking the right franchise for them. So as he's sponsoring today's episode, everyone should totally click in the show notes below to join Conor's newsletter and attend one of his Gateway to Franchise Ownership workshops. If you're ready to move and move quickly, schedule a call with Conor and his team today. I see 70 % total revenues from SaaS. Okay. Tools such as multilingual support, AI-driven pricing.

9:16That's interesting. 3D unit visualization, ID verification, lead conversion. I wonder how much of this is really software SaaS revenue. Because the kind of thing that's a little sketchy here, and Travis, I think you have a feel for this, but they're doing$4.3 million in revenue with 44 employees. Yeah, what are they doing? But what was the company? Was it like Builder AI or something that recently? Some like AI platform that came out, which is like 700 Indians behind it all. That was actually a company called Gurdly.ai. It was actually all Iranians, or I mean, Indians just doing the work.

10:01Just kidding. But yeah, that makes me wonder if this is really, how SaaS this really is, right? It feels marketing to me. Yeah, three times revenue for a fast-growing SaaS business is not insane. Because the idea is always you could just turn off growth and get$3 million a year out of the thing, right? And it pays for itself pretty quickly. The problem is this smells like it's not actually a software business. Or is it like IT MSP, like IT managed services, like they're managing the CRM and the marketing services for this industry? They do some implementations and then they, you know, get the servicing of it afterwards.

10:49Could be that. Yeah, I wish we knew what the SaaS actually did. And what platform it's on, because that would matter a lot to me. If this is truly SaaS, is it home-developed SaaS, truly their own, with their own code? Or is this like on a platform like Salesforce or something like that where it's customized? When I worked at Live Oak Bank, there's a company, a publicly traded company called Encino that was developed at Live Oak. And it's basically just a CRM for small loans at a bank built on Salesforce. That's what Encino is. So it could be a company like that. Ooh, ooh. uh this is proprietary all of a sudden oh i don't know uh yeah we just got to this part so i don't know oh it says proprietary coding enables clients to monitor real-time competitor pricing while their effective seo strategies drive increased web traffic enhancing revenue potential proprietary so that second part the seo sounds like the digital agency stuff um whereas the proprietary coding sounds like they might have a pricing engine a little bit involved in this upside this sounds like it might be a little sticky, which is nice.

11:58Especially if they are using proprietary pricing and whatnot. And then the SEO for local companies like this tends to be pretty effective. So they could probably get pretty good results assuming they're not terrible. Which is a coin flip, really. Yeah. This is one of those businesses where the listing is just really confusing because it's not... I think we saw this in one of the listings, Heather, we looked at the past couple weeks where it's just like, oh, this is a med spa and a… Urgent care. It's an urgent care med spa and children's services as well. It was great. So the more I read of this, it reads kind of like the software is…

12:44Or someone interested can just take a tour. It's like you can book the whole thing remote. You don't have to go there to book it. It's what it seems like. You're uploading your ID. so that you can get the paperwork started. You can take a 3D tour of it, see what it would look like moved in. Yeah, they say eliminating the need for human interaction during rentals. Yeah, I mean, if you look at kind of Nick Huber and a lot of these other folks, they historically went and bought these old, I would say stuck in the 90s kind of self-storage places and then went and put modern technology on them. And what I understand is Nick and his team have had to go assemble all those pieces of modern technology themselves and then put them into their places after they buy them.

13:32This appears to be somebody who just brings that all as a package, which is like, hey, we'll bring you into the 21st century for your old school self-storage that's out in the middle of nowhere and you just pay us to do it for you. Could this be a big operator of self-storage? Is it built it like a Nick Huber and then is spinning off the software company? Maybe it's Huber. Right. Maybe it's him. That's what I'm thinking. Okay. Well, what do you guys think about this one? So let's start with Heather, 12 times cash flow. Since I don't know whether this is really SaaS or not, that feels rich. But if I knew more, maybe it's 8 or 10, but not 12, I don't think.

14:13Yeah. Travis, where's your head on this one? I'm never really comfortable with evaluating software products anyway. I like it just based on cash flow multiples. It makes me sleep better at night. Because then you have to make the evaluation work out. You have to actually turn off growth. Because I don't like to assume that I can grow my way out of this with a software like this. This isn't some high growth potential thing. You're not going to triple this next year. They're storage units. right the SaaS multiples work if it's just like this scalable model where you can add multiples of your revenue pretty quickly and I'm not convinced it's possible here especially with 44 employees are you going to have 100 employees to react to this?

15:00This to me smells totally like an agency masquerading as a SaaS business and I bet you get in here and the ARR is mostly them like doing labor arbitrage with people in Argentina, India, Philippines that sort of thing. So I would be curious enough about it to get the SIM, but this, in its core, I think is a digital agency that the broker is just packaging in order to try to get a make me move style asking price. So, yeah. Maybe that's a good hack for agency owners. Just like, you know, the last year, throw some middling software up there and try to get an extra turn on your purchase multiple. Yeah.

15:37On software. Yeah, yeah. I think we've seen that over and over again. it's the number one broker trick. Like, take something that is, you know, not a hot category and try to cram it into a hot category so people like it. Oh, this isn't, you know, a dev shop. This is MSP. Like, oh, we're going to recast the whole thing. So more power to them. But you end up with deals that don't transact, I think, when you fall into that trap. All right, on that note, sounds like Heather, thumbs up. Going to make an offer. Travis, thumbs down. Just kidding, Heather hates it. I hate everything though that's okay I do too Heather it's alright Heather did like the worm farm Travis I did you wanna know why?

16:22I'll tell you why horses horses there were horses involved that's all it takes right? so if this self-sword sass had a horse a horse barn in the back it would have worked what if this was sass for horses? then I would love it like I said easy on that note if you a listener happen to have a business that involves horses please send it to us we'll do it so heather will buy it no no no price too high no deal too crappy if there's horses involved this is the way to go that's right all right we'll get you next time thanks