Buying a SaaS Business for $5M: AI Scheduling Assistant for Calendly

Introduction

In an insightful episode of Acquisitions Anonymous, hosts Heather Anderson and Bill tackle the nuances of buying a SaaS business, specifically an AI appointment scheduling assistant that integrates with Calendly. The discussion revolves around the strengths, weaknesses, opportunities, and threats associated with such a business, shedding light on the intricacies of evaluating tech-based acquisitions. Let's break down their conversation.

Introduction

Welcome to another edition of Acquisitions Anonymous. I'm Heather Anderson and today Bill and I delve into a topic that has sparked debate among professionals—Calendly links. As someone who's traditionally opposed to their usage, I find this episode particularly eye-opening. Besides that, we'll be discussing a fascinating business listed on Acquire.com that integrates with Calendly for AI-powered appointment scheduling. Stay tuned!

Business Overview

The business in question is an AI-driven appointment booking solution utilizing ChatGPT, positioned as the only conversational AI solution that integrates directly with Calendly. With an asking price of $ 5.1 million, the business claims a multiple of 6.4x on its profit. Here’s a detailed look at the numbers:

• TTM Revenue: $ 2 million
• TTM Profit: $ 800,000
• Last Month's Profit: $ 76,000

What the Business Does

The primary function of this business is to streamline the scheduling process for appointment-based users, such as hairdressers, real estate agents, and loan officers. By integrating with ChatGPT and Calendly, it automates the booking process, allowing potential leads to qualify and schedule appointments without any human intervention.

Pricing Model and Growth

Launched in 2020 with Google’s DialogFlow AI, the company pivoted to ChatGPT in December 2022. They initially offered lifetime deals but switched to a monthly recurring revenue (MRR) model in September 2023. As of now, they report an MRR of $ 160,000.

Concerns and Risks

Over-Reliance on Calendly

One of the main concerns highlighted is the business's heavy reliance on Calendly. Any shifts or new features introduced by Calendly could dramatically impact this business, making it highly susceptible to external changes.

Competitiveness

The sector is highly competitive with many players offering similar solutions. Larger platforms like Intercom and even Calendly themselves can integrate similar features, potentially rendering this product obsolete.

Recent Pricing Model Changes

With the shift to a subscription-based model being recent, it is challenging to gauge customer retention and long-term sustainability adequately. The company's oldest cohort post-pricing change is only nine months old, leaving many unknowns about churn rates and lifetime value.

Acquisition Justification

The sellers are pivoting to a new venture, which raises red flags about the business's viability. Such a decision often indicates potential underlying issues that may not be immediately visible but crucial to understand.

Financial Structuring Concerns

Heather outlines the complexities of financing such an acquisition, especially given the high multiples and current interest rate environment. The traditional debt service coverage ratio (DSCR) models offer limited flexibility, making it hard to finance at the asking price without substantial seller financing or considerable equity input.

Summary and Conclusion

While the business offers a cutting-edge solution that's already garnered some traction, the risks associated with it—ranging from competitive threats to financial structuring—make it a challenging buy. It could be transactable, but likely not at the current valuation.

Keywords

• SaaS Business
• AI Scheduling
• Calendly Integration
• Acquisition
• Competitive Landscape
• Financial Structuring
• Debt Service Coverage Ratio (DSCR)
• Subscription Model
• Customer Churn

FAQ

Q: What makes this AI scheduling business unique? A: It integrates directly with Calendly and uses ChatGPT to automate the appointment booking process.

Q: What are the major risks involved in acquiring this business? A: Over-reliance on Calendly, intense competition, recent changes to the pricing model, and potentially unsustainable growth.

Q: How sustainable is the business's current revenue model? A: It's difficult to gauge as the subscription model was only introduced recently, leaving uncertainties regarding customer retention and churn rates.

Q: Can this business be financed through traditional bank loans? A: Financing at the asking price is challenging due to high multiples and current interest rates, necessitating either significant seller financing or equity input.

Q: Why are the sellers looking to offload the business? A: The sellers claim lack of time and the initiation of a new venture as the reasons, which raises concerns about the business’s long-term prospects.