Hey - Marc here.

Happy Saturday afternoon, motivated B2B SaaS Founders!

Here's at least one tip to keep in mind as you grow your B2B SaaS company:

Today's issue takes about 5 minutes to read.

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In today's issue, I share some key takeaways from a recent interview between Nathan Latka, the host of Daily Interviews with SaaS Founders, and Brad Miller of Awareness Tech. They discussed how he bought a $5 million SaaS Company using debt, grew to $20 million, then flipped for a huge gain.

Brad Miller stands out as a 'creative capitalist,' who sees unique opportunities where others see roadblocks. His journey in acquiring, growing, and flipping SaaS companies is marked by a blend of strategic risk-taking and insightful market analysis.

About Awareness Tech

Miller's journey in the SaaS world began with acquiring a $5 million ARR company by investing just $2.5 million of his equity and leveraging debt for the remainder. His strategy defied conventional norms, as he often secured companies for far less than the typical 3-6x multiple, sometimes as low as 0.6x.

After acquisition, Miller's prowess shone in his ability to scale these companies significantly. One notable success story is how he grew a company to $20 million in revenue and $6 million in profit, eventually selling it for a substantial gain.

His approach involved transforming business models, such as shifting from a perpetual sales model to a subscription-based one, resulting in immediate revenue increases. Miller's keen sense of market dynamics and operational efficiency played a pivotal role in these transformations.

Challenges

He took companies that were either languishing or mismanaged and turned them around.

One notable challenge was shifting a company's business model from a one-time sale to a recurring subscription model. This move alone boosted revenue by 40% overnight but wasn't without its tricky moments, especially when dealing with pushback from existing customers.

Advice to Other Founders

Leverage debt wisely.

Miller's approach to using debt instead of equity for acquisitions is a masterclass in financial strategy. He advises entrepreneurs to consider debt as a tool to minimize equity dilution and maximize returns.

Focus on underutilized opportunities.

Look for opportunities in mismanagement. Look for companies with potential that haven't been fully realized, such as those with outdated business models or inefficient operations. Transforming these aspects can unlock significant value.

Be prepared for operational challenges.

Transitioning a company's business model or integrating it into a larger portfolio comes with operational hurdles. Be prepared for these challenges and having a plan to address them effectively. Adding unnecessary payroll can quickly eat into profits.

TLDR

Brad Miller, a strategic investor in the SaaS domain, has made a name for himself by acquiring companies at remarkably low multiples, often using debt financing, and then transforming them into highly profitable ventures. His success stories include turning a $5 million ARR company into a $20 million revenue business. Miller's approach emphasizes the importance of finding undervalued opportunities, wisely using debt, and being prepared for the operational challenges that come with scaling and transforming business models.

PS Here is a link to the full interview if you are interested in listening to the full episode: How He bought a $5m SaaS Company Using Debt, Grew to $20m, Then Flipped for a Huge Gain

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See you again next week.

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