It’s Always A Good Time to Buy…or Sell

Big Band had a busy month in June!

We kicked things off with a few great days in Austin, TX, where we met with dozens of founders at SaaStock USA. We had some fascinating conversations about the challenges and opportunities of building and scaling SaaS businesses - and of course we enjoyed good BBQ and live music as well!

After a quick trip home to see our families, we headed back East to Boston for an Intensive event with Dan Martell and the SaaS Academy crew. We were there to network and meet Founders but also took in the content and learned a lot about scaling SaaS businesses through sales and marketing tactics that we can take back to our own portfolio.

We were also inspired by the many founders we met at both events and the quality of their businesses and products. They are all passionate about solving real problems and making a difference in their industries.

IT’S ALWAYS A GOOD TIME TO BUY…OR SELL

We formed Big Band at the end of 2022, though we didn’t launch publicly until spring of this year. It was fun to start telling friends, advisors, and mentors about the plan. Q4 of 2022 was a bit of a mess from an economic standpoint: interest rates had tripled in a very short period of time, public stocks were getting hammered, and tech especially looked like a bloodbath with giant companies laying people off by the thousands. Some might say that’s a scary time to start a business. Others told me, “It should be a good time to be buying businesses.” I think the reality is that both things can be true at the same time.

It is always a little scary to launch a new business. We have a great plan, an amazing team, and the ideal investors to be backing us. We are buying with all cash, so debt rates aren’t an issue (in fact, that can be a differentiator in our favor against other buyers who are using debt). But whatever the economic climate was, we couldn’t not launch Big Band, and that’s the best sign that we made the right decision.

This is usually the part of the dialogue (recognizing this is a blog/monologue and not a discussion) where someone chimes in with “think about all of the amazing businesses that launched during the GFC in 2008!” and they cite Uber, AirBNB, etc.. Well first of all, we’re not trying to build a VC-backed unicorn, so the comparison is probably moot. Secondly, people who chime in with that usually are ignoring the fact that the iPhone was launched in 2008, which was a much bigger contributor to the success of several businesses (and business models) than the GFC was a detractor.

Here’s my point: it is always a good time to launch a business if you believe in the business. The economy is going to do what it is going to do, and we have no control over it nor any real visibility into the future (anyone who tells you that they predicted the chaos of the last twelve months is lying to you…or to themselves…or both).

It is also always a good time to buy a business. My friends and advisors were thinking that a down economy would result in less expensive deals and, while that has proven to be true to some extent (the crazy software multiples of late ‘21 and ‘22 are a thing of the past), good businesses still command a premium because there are still a ton of people that want them and a ton of cash on the sidelines. So it’s a good time to be buying businesses, but not because they are ‘cheap’. We’re trying to buy businesses that we want to own for decades. When you apply that long of a lens to decision making, the economy of the last quarter or the next quarter starts to seem pretty irrelevant.

For those Founders out there reading this (*whispers* don’t tell the others…but we started this newsletter for YOU!), it’s also always a good time to be selling a business. Here’s what I mean. The decision to sell is deeply personal. I’ve said this so often…but there are 100 reasons why people sell a business and only 1 of them is money. Yes, the economy is still a little chaotic, but good businesses are still going for good prices. If your deeply personal reason to sell tells you that now is the right time, don’t delay or defer thinking that you can ‘time the market when things rebound’. Nobody knows what that even looks like or when it will happen.

Entrepreneurship is risky and takes guts…and not just at the start. That’s true throughout the journey. That journey eventually ends with an exit, oftentimes selling. I’m tuning out external and distracting factors that don’t have an impact on my world and keeping my head down and my eyes focused on our strategy. You should too.

- Kevin McArdle

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• The Bootstrapped Founder Podcast- Kevin sat down with a good friend of the Band, Arvid Kahl, to talk about all things acquisition. They discuss the importance of planning an exit for your business well before you’re even ready to sell.

• I sold my 2 years old business for only $128k - Tony Dinh provides a brutally honest take on selling his business for a fraction of the valuation he previously commanded due to Twitter shutting down their free API. It’s a cautionary tale of platform risk and a great read.

• Sparktoro Year 3 Retrospective - Speaking of platform risk, Rand Fishkin breaks down how Sparktoro has had to evolve their product and thinking following the Twitter API change. He also provides some great lessons learned while building these past few years.

UPCOMING IRL GIGS

• The team is taking a break from the road in July but always available for an in-person meet up @ their home bases in MN and AZ!

JOIN THE BAND

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