E145: Dirk Sahlmer Discusses SaaS Group's Acquisition Strategy And Growth Plans - Watch Here

Here is what my team and I learned from this interview: (These are notes from team members, writers, sometimes AI, and even listeners who submitted what i learned loosely edited and shared here) - If it seems a bit unrefined, you're reading our notes, so. yeah. -Ron

Sponsor:

Reconciled provides industry-leading virtual bookkeeping and accounting services for busy business owners and entrepreneurs across the US. Their team is experienced in M&A, and they hire the best talent available. Reconciled sets the standard for consistency and quality that you can count on.

Visit https://www.reconciled.com/

___________________________________________________________________________________________

About The Guest(s): Dirk Sahlmer is the Head of Origination for SaaS Group. He has a background in mechanical engineering and entrepreneurship, and he joined SaaS Group in 2020. Dirk is responsible for deal origination and works closely with founders of SaaS companies to explore acquisition opportunities.

Summary: Dirk Sahlmer, the Head of Origination for SaaS Group, shares his journey from being a mechanical engineer to working in the SaaS industry. He discusses how SaaS Group acquires and integrates SaaS companies, their focus on horizontal businesses, and their plans for future acquisitions. Dirk also talks about the challenges of deal origination and the importance of building relationships with founders. He mentions an interesting idea he had to create a second LinkedIn profile with AI-generated content to see if it would make a difference in standing out. Ronald Skelton, the host, shares his experience as a virtual assistant to an AI and the incredible capabilities of AI in content creation. Dirk provides sourcing tips, emphasizing the use of automation tools and AI to generate M&A opportunities before building a big team. He also explains SaaS Group's acquisition target, focusing on companies with revenues above 1 million AR, close to profitability, and preferably in the horizontal product growth space. Dirk invites founders to reach out to him via email or LinkedIn for a chat.

Key Takeaways:

• Dirk emphasizes the importance of building relationships with founders and staying on top of their minds when they are considering an exit.
• Automation tools, email campaigns, AI, and machine learning functionalities can be used to generate M&A opportunities before building a big team.
• SaaS Group's acquisition target includes companies with revenues above 1 million AR, close to profitability, and preferably in the horizontal product growth space.
• Dirk can be reached via email (dirk@saas.group), LinkedIn, or the SaaS Group website form.

Quotes:

• "The best companies I've seen are not on LinkedIn at all. They are not really active. The founders are flying under the radar." - Dirk Sahlmer
• "We are trying to show that we know what we're doing. It's not just some ex McKinsey guys that thought, 'Hey, let's just acquire businesses.' It's very hands-on, very entrepreneurial." - Dirk Sahlmer

Article:

The Art of Acquiring SaaS Companies: Insights from Dirk Sahlmer

Introduction

In the fast-paced world of software as a service (SaaS), the acquisition of successful companies can be a strategic move to drive growth and expand market presence. Dirk Sahlmer, Head of Origination at SaaS Group, shares his journey from mechanical engineering to the world of entrepreneurship and SaaS acquisitions. In this thought-provoking article, we delve into the key themes discussed in the interview transcript, exploring the strategies and insights that have made SaaS Group a successful player in the industry.

Exploring the Acquisition Landscape

Sahlmer highlights the importance of a well-defined acquisition strategy, focusing on self-funded, capital-efficient SaaS companies with revenues ranging from 1 to 10 million. The goal is to acquire companies that are profitable or at least break-even, with a team size of up to 50 full-time employees. While SaaS Group initially focused on indie hacker-type businesses, they have become more flexible over time, considering VC-funded companies and those with more complex deal structures.

According to Sahlmer, "Unless the company is growing significantly, we would focus on targets pulling north of 1 million AR. It should be close to profitability or profitable already. Horizontal, preferably product like growth, but we're also open to more enterprising products."

Building an Effective Origination Machine

To source potential acquisitions, Sahlmer employs a combination of inbound and outbound strategies. He utilizes LinkedIn, email campaigns, and Twitter to reach out to founders directly, while also leveraging data platforms and M&A marketplaces to identify suitable targets. By building direct relationships with founders, SaaS Group can bypass competitive broker processes and establish a more personal connection.

Sahlmer emphasizes the importance of staying on top of founders' minds, following up regularly, and building relationships to convert conversations into deals. He states, "I'm a big fan of my email inbox. They can just reach out via dirk@saas.Group. Alternatively, they can also reach out via LinkedIn, where I'm pretty active, or use our website form. These are the main channels."

The Power of Synergies and Integration

As SaaS Group continues to grow its portfolio, the focus is on building internal clusters with synergies. While each acquisition is unique, there are common growth levers such as pricing and marketing that can be optimized across multiple brands. Sahlmer highlights the importance of leveraging the collective knowledge and experience of the SaaS Group team to improve businesses post-acquisition.

He states, "We are still quite opportunistic, not focusing on certain segments, certain industries. If people think they have a valuable asset they are looking to sell, they should just reach out. And if it's not a fit, I can still tell them once I got their mail."

The Role of AI and Machine Learning

While SaaS Group has not yet made significant acquisitions in the AI space, Sahlmer acknowledges the potential of AI and machine learning in improving business processes and enhancing product features. The company is in the process of building a central team focused on AI and machine learning to support the brands and help them leverage these technologies effectively.

Sahlmer also highlights the use of AI in deal sourcing, automating tasks such as website content analysis and lead generation. He mentions, "We had a lot of discussions internally on how to create unique content, how to stand out, and if it makes a difference whether you write with AI or without. I once had the idea to create a second LinkedIn profile with random name, random AI-generated picture, and just starting to post every day, but only AI-generated content because we had a lot of discussions internally."

The Advantage of a Lean Approach

Sahlmer emphasizes the importance of staying lean and agile in the acquisition process. Rather than building a large business development team, he recommends leveraging software tools to automate processes and build a lean origination machine. By utilizing tools for email campaigns, email address lookups, and data enrichment, SaaS Group can streamline the acquisition process and focus on building direct relationships with founders.

Sahlmer states, "I think that lots of bigger PE firms are relying on big business development teams. In my opinion, you have a lot of tools out there you can use to automate lots of these processes when it comes to simple things like email campaigns, but also email address lookups. Then also some AI machine learning functionalities. You have data platforms to enrich companies. So I think before you start hiring people and really build up a big team to generate M&A opportunities, I think there's a big opportunity by staying really lean and building a proper origination machine with the software tools that are out there for a quite reasonable price."

Conclusion and Future Outlook

As SaaS Group continues to acquire and integrate SaaS companies, the focus remains on driving growth, optimizing pricing strategies, and leveraging synergies across the portfolio. By staying lean and agile, SaaS Group can adapt to changing market dynamics and identify valuable acquisition opportunities. The company's commitment to building relationships with founders and providing value post-acquisition sets it apart in the competitive SaaS landscape.

With a growing team and a focus on AI and machine learning, SaaS Group is well-positioned to navigate the evolving SaaS market and drive future success. Dirk Sahlmer and SaaS Group have established themselves as key players in the ever-evolving world of SaaS acquisitions. By employing a combination of inbound and outbound strategies, building direct relationships with founders, and leveraging the collective knowledge of the team, SaaS Group has successfully acquired and integrated multiple SaaS companies.

With a focus on lean processes, optimization of growth levers, and the potential of AI and machine learning, SaaS Group is well-equipped to navigate the challenges and opportunities of the SaaS market. As the company continues to grow, it remains committed to providing value to founders and driving growth in the SaaS industry. Founders looking to sell their valuable assets or simply have a chat can reach out to Dirk Sahlmer via email at dirk@saas.Group or connect with him on LinkedIn.

---- MORE COOL STUFF ---

Are you ready to take your podcast listening to the next level? Subscribe to "DEEPER by How2Exit" newsletter and never miss out on our latest episodes. Join our  newsletter  HERE

Want to stay in touch with what's happening in the Main Street M&A Space?  Subscribe to The Hub - Acquisitions Hub