My SaaS acquisition checklist
A detailed checklist of what I look for when acquiring a new SaaS
Hey friends,
Since I started my journey acquiring SaaS back in 2022, people have asked me what I look for when searching for a possible SaaS to acquire.
In this detailed post I answer this question by sharing my acquisition checklist. It’s a long read so make sure you have a strong cup of coffee on hand.
This will also be the first post I publish specifically for paid subscribers of my Substack.
Why did I get into the game of acquiring SaaS?
Before I jump in I think it will be helpful to provide some background.
My first real experience with SaaS was back in 2013 when I joined as the 12th employee of Yotpo, a product reviews solution for eCommerce businesses. I spent 4.5 years at Yotpo before becoming a freelancer helping early stage SaaS businesses implement data infrastructure and custom reporting. Since 2018 I’ve worked with about 30 SaaS businesses helping them become more data driven.
In addition to working with SaaS, I’ve also spent significant time building SaaS. At the time of writing this post I can name 4 SaaS products that I’ve been responsible for. They would be, Bmark (shut down), Feedio, Project Echo and Project Sparrow (not yet publicly available).
Around the middle of covid I decided to move from the freelance model to the agency model. projectBI was born.
The issue with an agency is that it’s a business vehicle which is tough to scale with capital. In other words, I didn’t have a good way to utilize the profits of the agency. Scaling an agency is a dance between supply and demand and since most of the leverage is from human capital, cash can start to pile up.
I was fortunate to stumble across Andrew Wilkinson who became a billionaire through acquiring digital businesses, and guess how he started… as an agency owner.
Andrew’s story helped me see a roadmap to building wealth by leveraging my agency’s positive cash flow to acquire SaaS.
My acquisition experience so far
I made my first SaaS acquisition in October 2022. I acquired PulseBanner ($1.7k MRR at the time of the acquisition) which I found on Acquire.com. I acquired PulseBanner for $45,750 (all cash deal) and unfortunately it hasn’t been a great investment. In short, the change in the policies around the Twitter APIs after Elon Musk’s acquisition hurt the app significantly.
My second acquisition was Meet Slack ($2.3k MRR at the time of the acquisition) which I acquired in June 2023.
I also found Meet Slack via Acquire.com. The acquisition of Meet Slack has been a massive success. I acquired Meet Slack for $97k (half upfront, half as seller financing) and since June 2023 it’s generated 61.8k in revenue after fees, with almost 40k of that generated in 2024. I expect to make my money back on the app this year, less than two and a half years since acquiring it.
I closed my 3rd acquisition, Translate Channels, in December 2024. I wrote about the Translate Channels acquisition in this post.
In addition to the experience of acquiring these three SaaS, I’ve also looked at hundreds of listings on Acquire and engaged with a few dozen listings.
My acquisition strategy
If you had to put a dozen experienced stock market investors in a room and asked them to list what they look for in a good stock you’ll get a wide range of answers.
To fully understand what I look for in a SaaS and why, you first need to understand my acquisition strategy.
At this stage in my journey, my acquisition strategy is to aquire good investments that allow me to build more and more positive cash flow. At a certain point the profit generated from my SaaS will allow me the option to do the following:
Make larger acquisitions
Go all-in on SaaS (shut down my agency)
Build a dedicated team for running, maintaining and building SaaS
Build my wealth at an ever increasing pace
Since I’m still in the small leagues it’s critical the deals I make provide a high return so I can start the “snowball” rolling. Each failure in the early days will set me back significantly.
The ideal acquisition would:
Make money on auto-pilot and provide a great return (>30% a year), while requiring little to no resources to maintain.
In other words, I want great cash cows that can help me build up more and more cash over time until I’m at the point where I can make large bets.
It’s kind of like real-estate investing. You start with a single unit and then leverage the cash flow from that unit to make another purchase, and build an ever growing stream of cash flow. At a certain point you have enough built up that you can buy apartment buildings.
The starting point: Why do you want to acquire a SaaS?
The first obvious question you need to answer clearly is why do you want to acquire a SaaS. There are many reasons you might want to acquire a SaaS:
Build your wealth.
Learn a new technology.
Remove a competitor from the market.
Enhance an existing SaaS offering by acquiring the technology of an adjacent solution.
To flip for a quick profit.