What serial acquirers are looking for in SaaS businesses in 2025 with Tim Schumacher @saas.group

saas.unbound is a podcast for and about founders who are working on scaling inspiring products that people love, brought to you by https://saas.group/, a serial acquirer of B2B SaaS companies.

In episode #50, Anna Nadeina talks with Tim Schumacher, founder and CEO of saas.group, a serial acquirer of wonderful B2B SaaS companies with a bootstrapper mindset.

At saas.group, company culture is paramount. After returning from an annual retreat in Morocco, Tim reflects on the magic of bringing together 300 people for real connections. While remote work has its perks, many employees still thrive in traditional office environments. Tim emphasizes that there’s no right or wrong setup; it depends on individual preferences and company needs.

For those who flourish in an office setting, the social interactions and even the daily commute are integral to their work-life balance. However, remote work offers flexibility and opportunities for those who prefer it. Tim suggests that companies must put in the effort to create a culture that supports both remote and office workers, ensuring that everyone feels included and valued.

Diversity in leadership and company culture

Diversity is another critical area of focus for saas.group. Tim acknowledges that while the company has always prided itself on being diverse, there’s still work to be done, especially regarding gender representation in leadership roles. Currently, women make up 30% of the leadership team, and the goal is to increase this number to 40%.

This commitment to diversity isn’t just about meeting quotas; it’s about strengthening the company. A diverse leadership team brings different perspectives and ideas, which ultimately leads to better decision-making and innovation. Tim encourages female founders to reach out to saas.group, as they are eager to bring more diversity into their acquisitions.

The role of AI in business operations

As the SaaS landscape rapidly transforms, integrating AI into business operations has become essential. Tim outlines three levels of AI integration that saas.group is focusing on:

1. Level one: basic AI integration – This involves using AI in everyday tasks like accounting and customer service, improving efficiency and productivity.
2. Level two: AI in products – Here, AI is embedded within the products themselves, enhancing user experience and providing valuable insights.
3. Level three: becoming an AI player – This level focuses on acquiring companies that are already leveraging AI or developing AI-based business models.

With the surge in AI capabilities, saas.group is keen on acquiring companies that harness AI to deliver innovative solutions. Tim believes that AI can significantly enhance customer interactions and streamline operations, making it a crucial factor in acquisition decisions.

Evaluating companies for acquisition

When it comes to evaluating potential acquisitions, saas.group looks for companies with a product-led growth (PLG) model, modest growth rates, and a strong customer base. Tim highlights that while they prefer companies with $2 to $10 million in annual recurring revenue (ARR), they are open to exploring younger companies if they demonstrate strong growth potential.

Profitability and growth are both essential metrics. Saas.group considers the “Rule of 40,” which balances growth and profitability, as well as the emerging “Rule of 50.” Tim emphasizes that while high-growth companies are attractive, they also need to ensure that the acquisition aligns with the company’s long-term vision and strategy.

Accelerating growth in acquired companies

Once a company is acquired, saas.group focuses on accelerating its growth. The central team plays a significant role in this process, offering support in areas like marketing, pricing, and international expansion. Tim shares that they have successfully revitalized companies that were previously stagnant, leading to impressive growth post-acquisition.

Tim believes in the importance of maintaining a lean structure and avoiding bureaucracy. By leveraging central services, saas.group can help smaller companies access top-notch resources without the overhead costs that come with larger organizations.

Personal insights from Tim’s entrepreneurial journey

Tim’s own entrepreneurial journey has shaped his approach to building saas.group. Drawing from his experiences with previous companies, he aims to create a founder-friendly environment where acquired companies can thrive. He emphasizes the significance of empathy and understanding in the acquisition process, as he knows firsthand what it feels like to be on the other side.

Tim’s story is one of resilience and adaptability. After successfully selling his first company, he learned valuable lessons about the importance of culture and leadership. These insights have guided him in establishing saas.group as a supportive and growth-oriented organization.

Reflections on wins and losses in 2024

As 2024 comes to a close, Tim reflects on the biggest wins and challenges faced by saas.group. One significant win was the successful implementation of a system that allows for better central support across acquired companies. This has enabled saas.group to scale its efforts effectively, providing the right resources to the right teams.

However, Tim also acknowledges that there were acquisitions that didn’t go as planned. He emphasizes the importance of listening to one’s instincts during the acquisition process. If there are any red flags, it’s crucial to take a step back and reassess the situation rather than rushing into a deal.

Best AI tools for productivity

Tim shares his top recommendations for AI tools that enhance productivity:

• Jamie: A meeting notetaker that operates discreetly, allowing users to record meetings without disrupting the flow. Jamie’s ability to transcribe and summarize discussions has proven invaluable for Tim.
• Fixer: An AI tool that pre-writes emails based on past correspondence, saving time and streamlining communication. Tim reports that it has cut his email response time significantly, allowing him to focus on more critical tasks.

These tools exemplify how AI can be harnessed to improve workflows and enhance overall productivity in the SaaS space.

Looking ahead: the future of SaaS acquisitions

As saas.group looks towards 2025, Tim is optimistic about the future. The focus remains on acquiring 7 to 10 companies annually, particularly those that align with their vision of fostering innovation and growth. The ideal acquisition targets will have a strong product-market fit, a lean operational structure, and a commitment to leveraging AI for enhanced customer experiences.