Crush your M&A workout in our Software Gym!

Disclaimer: Unless noted otherwise, views and analysis expressed here are the author's own and based on public sources. The article is intended for informational and entertainment purposes only. This is not financial advice. Please consult a professional for investment decisions.

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Today, we are launching the Software Gym 🏋🏻. Like any decent gym, ours offers a variety of workouts aimed at making you a better acquirer - and a better owner of software businesses.   

Choose between 3 types of workouts:

1. “How-to” primers. Deferred revenue liability. Translating off-the-cuff CTO remarks like “spaghetti code” into deal terms. Stress-free M&A in France. If you have a question, we probably have an answer!  

2. Ace your fundraising game. Here, you will find everything you need to succeed in getting your rollup off the ground, funding-wise. Investor directory. Check. Insights on rollup structures. Check. Structuring incentive equity. You bet!    

3. Consolidator deep dives. Why is Constellation Software worth $100B+? Why are the rich and famous piling into Chapters Group? And why not into Upland Software? 

We are committed to regularly updating the Gym with new “workouts”. Also, look out for in-person and online seminars and workshops. The next one will be in London on 6 May. Register here. 

Looking for a tailored programme? Drop an email on [email protected], and we will connect you with verified partners across capital introductions / debt broking; recruitment; fractional CFO - and more.      

This week’s post is about revenue concentration. Problem statement: most niche, defensive software businesses have one major vulnerability. A small number of clients represent a disproportionate % of revenue. As an acquirer, how can you mitigate this risk? Tune in for Pavel’s battle-tested advice.    

1. “How-to” primers

• Why is Vertical Market Software so appealing? We explain

• Codebase giving you Reagan vibes? A dealmaker’s guide to technical debt in software M&A

• Tips on sourcing deals like a boss:

  • How to win intellectual arguments with sellers - without upsetting them. Always Be Closing: How to Resolve Key Seller Pushbacks

  • Deal sourcing primer from the world's most successful software aggregators. Inside: What kind of people succeed in M&A origination. How to run an effective origination team. Origination KPIs at different senior levels

• Dealing with accrual vs. cash accounting and deferred revenue liability 

• How to squeeze cash from VMS, Constellation style. If they can do it, you can do it!

• How to ace Product and Technical Due Diligence, presented by Techminers (bonus: horror stories 🧟‍♂️)

• Are you focusing on the right SaaS metrics? Why TAM, "Rule of 40" and synergies are at best misleading metrics, and why you should focus on Invested capital, ROIC and hurdle rate instead. 

• Lots of VC-backed software businesses are for sale. Here’s a checklist to determine which ones are worth salvaging: "Stranded" Software: Great Opportunity or a Fool's Bargain?

• Is revenue concentration a show-stopper in SaaS M&A? Not with our DD guide!

• Shopping for software businesses in France? 🇫🇷 Here’s all you need to know - Part 1 & Part 2: Losing headcount without losing your mind

2. Ace your fundraising game

• RollUpEurope databases - 3 for the price of 1 annual subscription:

  • A directory of technology serial acquirers: 360+ companies (70%+ software)

  • Rollup investors: 400+ names from 30+ rollups. Industries represented: software, Youtube channels, mobile apps, MSPs…you name it. Free preview here

  • KPIs commonly tracked by Scandinavian serial acquirers

• What on earth are “permanent equity” backed acquirers like Arcadea - and are they better than everyone else? We have a go at answering this question

• What type of software acquirers are out there? Who’s backing them? The patient capital writing big checks into software HoldCos

• Maximise fundraising success with these 3 tips

• How to structure your rollup? Minimise dilution or maximise capital raised / flexibility? No bargains on your equity Part 1 & Part 2 

• Time to exit? Then read this: What’s a scaled-up serial acquirer worth? Insights from 11 x $1B+ rollup exits

3. Consolidator deep dives

Companies profiled:

• Adaptavist (UK, private): the world’s largest rollup of Atlassian partners. $7M to $400M revenue in 10 years, 16 deals & STILL bootstrapped: Adaptavist’s incredible story

• Aries (UK, private): a rollup of Microsoft Dynamics apps. Azure, Google & AWS cloud commits at $400 billion. 2 ways rollups can play this mega-trend

• AscendX (UK, private): a rollup of Salesforce applications (Unaric’s frenemy 😁). No Sponsor? No Problem! Learnings from 2 non PE backed aggregators

• Balio (UAE / UK, private): a HoldCo of PLG SaaS businesses. Hush-hush! Upliift and Balio: the under-the-radar aggregators

• Carbon6 (Canada, subsidiary of a listed company): a HoldCo for Amazon SaaS and recovery businesses. Who said miracles don’t happen in ecommerce? Inside Carbon6’s stunning $210M exit to SPS Commerce

• Chapters Group (Germany, listed): a VMS HoldCo. Chapters Group revenues have topped $100M. What does it actually do?

• Clearcourse (UK, PE owned): an acquirer of transaction-heavy vertical software businesses. What can we learn from ClearCourse’s deal hangover?

• Constellation Software (Canada, listed): the world’s largest VMS aggregator

  • Does your rollup deserve a Constellation Software multiple?

  • How to squeeze cash from VMS, Constellation style

  • Constellation Software is a hyped-up M&A machine. Is it good for your career?

• Everfield (UK, PE owned): an industry agnostic HoldCo of European enterprise software businesses. Do it like Everfield: how PE firms structure software serial acquirers

• group.one (Sweden/Germany, PE owned): a web hosting rollup. Euro Hosting Wars Vol.3. Can group.one catch up to team.blue?

• Idera (US, PE owned): a rollup of database and developer tools. Idera Inc.: a 10-bagger for TA Associates

• Nuvini (Brazil / US, listed): a HoldCo of Brazilian software businesses. Nuvini was supposed to be Brazil’s Constellation Software. What happened?

• team.blue (Belgium, PE owned): a web hosting rollup. Will team.blue end up dominating European web hosting?

• Therapy Brands (US, PE owned): a rollup of software providers to mental health and rehabilitation practices

  • Part 1: Hell of a therapy session! Why did KKR pay $1.25B for Therapy Brands?

  • Part 2: A rollup in rehab. Who's to blame for Therapy Brands’ descent from unicorn to sub investment grade?

• Totalmobile : a buy & build in the Field Service Management software space

  • Horizon Capital clinched a 5-bagger with TotalMobile. Here's how

  • It wasn't all smooth sailing apparently: Always Be Rolling? 30 million reasons sellers should roll over equity in PE buy & builds

• Upland Software (US, listed): a rollup of enterprise work management software tools. 300%+ up, 90%+ down: the rollercoaster journey of Upland Software (UPLD)

• Upliift (UK, private): a HoldCo of VMS businesses. Hush-hush! Upliift and Balio: the under-the-radar aggregators

• Unaric (UK, private): a rollup of Salesforce applications. No Sponsor? No Problem! Learnings from 2 non PE backed aggregators

• Visma (Norway, PE owned): a HoldCo of accounting, HR and payroll software. What can we glean from Visma's €4B M&A spree?