Why you should not sell your SaaS company

For a long time, I thought that the only reason to sell a SaaS business was to get a ton of money quickly.

But I realized that doing so is often a stupid choice.

‍

One of the most important elements of success in business is seizing the right opportunity.

And the only way to spot a good business opportunity is to be in business.

‍

Let me explain:

If I ask you how many red cars you’ve seen today, will you be able to answer me precisely?

I bet not.

‍

But, if I tell you I’ll give you $100 for each red car you see tomorrow, you’ll be way more attentive to your surroundings.

Because you now understand that there is a business opportunity.

‍

The reality is that you have hundreds of opportunities all around you. Yet, if you’re not looking for them, you won’t spot them.

‍

The main reason I was able to buy 2 other SaaS last year for multi-million dollars is because I sold a business prior to that.

‍

Back in 2019, while lemlist was growing 30% month over month, I decided to start a side project: lempod.

When it reached $600k in ARR, I decided to sell it.

Thanks to that, I learned about M&A (or mergers and acquisitions) and, most importantly, how to design deals in a creative way.

I wrote an article documenting the process, which made Tibo reach out to me because he wanted tips on how to sell his own company.

I had been using his products, Taplio, and Tweet Hunter, to grow my company for a few months - and to me, they had a huge potential.

So I decided to acquire his company - because I knew the potential.

‍

Why you shouldn’t sell your SaaS

‍

When I asked some founders who sold their businesses why they did it, they gave me 3 main reasons:

1- they had an offer they couldn’t say no to

2- they wanted to start something new, BUT they didn’t know what

3- they were tired of building their business

‍

Why your reasons for selling a business have some limitations

‍

The first limitation is that when they sell, most founders have no clue what they want to do afterward.

And let’s be honest, saying you’re gonna sell your company to take a break is BS.

If you sell a business without a plan, you’ll be happy for about 5 seconds, and then you’ll ask yourself, “What the f*ck am I gonna do now?”

‍

The second limitation is that there are very few investments that can give you the same return as your own company.

I’ve invested in 10s of startups, crypto, real estate, startups, etc., and in the end, my SaaS is still the best investment.

‍

With the SaaS market expanding each year, growing 30% year over year is extremely doable with a SaaS.

‍

Do you know many investments that could give you such return?

Why would you sell your most precious investment and the one that’s bringing you the most money each year?

‍

The alternatives to selling

‍

I know that it can be super tiring to run a business and also to keep working on the same topic, but I believe there are a lot of alternative options to consider when you want to work on something new.

‍

Here’s an example:

A few weeks ago, I had lunch with a billionaire who gave me great advice on how to make your SaaS company grow forever while also enjoying new projects.

‍

Basically, a few years ago, he successfully grew his company to millions of dollars in ARR.

But at some point, he reached a glass ceiling, and his company wasn’t growing as much as anymore.

BUT his company was profitable. And that’s the most crucial part.

‍

Because being profitable gives you optionality, and optionality gives you freedom.

Instead of selling, he used the profit he was generating with his first company to buy smaller businesses that could bring additional growth.

This way, while his first company was still generating millions, he was able to make even more money with new ones.

‍

Building step by step a whole SaaS empire.

‍

Sometimes, the smartest decision is about waiting a bit longer to sell your company and be creative on how to grow it even further.

‍

Peace love & profit! 💰

G.

‍