Beyond valuations: human side of selling SaaS businesses with Juan Ignacio García Braschi @Boopos

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 #3 of season 5, Anna Nadeina talks with Juan, CEO of Boopos, a global investment bank for profitable software companies and marketplaces, providing M&A services, powered by a unique data infrastructure.

Juan’s extensive background in M&A began straight out of school at Merrill Lynch, where he honed his skills for several years. He then transitioned to private equity, focusing on traditional businesses. His journey took an exciting turn when he co-founded Cabify, a ride-hailing service similar to Uber, in Spain and Latin America. This experience equipped him with operational insights and technological expertise.

In 2020, Juan pivoted towards founding Boopos, aiming initially to roll up e-commerce businesses. However, after facing funding challenges, he shifted focus to lending for acquisitions, partnering with brokers to help buyers finance their purchases. Over four years, Boopos has built a portfolio primarily of small SaaS businesses, now transitioning into M&A advisory services.

The Importance of Having an Advisor in M&A

One of the most crucial elements of selling a SaaS business is having a knowledgeable advisor by your side. Selling your business is often a once-in-a-lifetime event, and the intricacies of the M&A process can be daunting. An expert advisor not only helps optimize pricing and create competitive tension but also guides you through potential pitfalls.

Juan emphasizes that crossing the M&A minefield without an experienced hand can lead to disastrous outcomes. Even seasoned private equity firms hire advisors for their expertise, underscoring the value of having a specialist to navigate the complexities of the process.

Choosing the Right Advisor for Your Business

Finding the right advisor is essential for a successful sale. Juan outlines three key factors to consider:

• Sector Expertise: Ensure your advisor has experience in your specific industry or sub-sector. This knowledge will facilitate connections with potential buyers.
• Size Compatibility: Match the advisor’s capabilities with the size of your business. A small business may not need a large firm like Morgan Stanley, while a larger business wouldn’t fare well with a marketplace advisor.
• Personal Rapport: Since the advisory relationship can last several months, it’s vital to work with someone you trust and enjoy collaborating with.

Common Questions and Misunderstandings in M&A

Founders often come with numerous questions, especially those who haven’t sold a business before. Juan notes that many founders are eager to learn and are generally coachable. Here are some common queries:

• Incorporation Concerns: Founders often worry whether their country of incorporation will impact their ability to sell to foreign buyers.
• Advisor Selection: There’s often confusion about whether to choose an advisor like Boopos or pursue a strategic buyer directly.

When is the Right Time to Sell Your Business?

Timing is a nuanced decision that blends market conditions with personal readiness. Juan advises that while market trends provide context, the emotional aspect of selling cannot be overlooked. Founders need to assess their own attachment to the business and readiness to move on.

Most founders approach Boopos when they have potential buyers lined up, but Juan also works with those who are years away from selling yet want to understand the process. Emotional readiness plays a significant role in this decision.

Market Trends and Predictions for 2025

Looking ahead, Juan shares insights on market trends for 2025. He highlights that the SaaS sector will continue to thrive, particularly in areas such as:

• Online Marketing Agencies: Increasing demand is expected in this niche.
• E-commerce Assets: Distressed assets will continue to change hands, presenting opportunities for savvy investors.
• B2B SaaS: The demand for B2B solutions remains strong, with special interest in mobile apps.

Juan predicts a seller’s market in 2025, driven by increasing competition among strategic buyers looking to enhance their offerings through acquisitions.

Rebranding and Moving Upmarket

As Boopos evolves, Juan and his team are rebranding to focus more on M&A advisory. They aim to serve larger deals, leveraging their experience and operational insights. This shift will allow them to provide a more personalized advisory service, moving away from merely operating a lending platform.

AI in M&A: Current Trends and Future Prospects

AI’s role in M&A is a hot topic. While there’s significant interest in AI companies, Juan suggests that M&A activity in this sector is still cautious. The businesses maturing now often lack an AI component, and the implications of AI on existing products are still being assessed.

Juan mentions that while AI could enhance the M&A process, its current application is still experimental. The nuances of M&A require a human touch that AI has yet to fully replicate.

Biggest Wins and Failures with Boopos

Reflecting on his journey, Juan celebrates the many small businesses that have successfully acquired funding and found new homes. However, he acknowledges the challenges of raising capital in a restrictive market, which hindered their growth potential.