Thomas Smale, co-founder of FE International, a company with seven-figure revenues that specialises in brokering the sale of online businesses. Listen as Nathan and Thomas talk about valuing SaaS companies, brokerage models, and the importance of focus. Famous 5 Favorite Book? – The Tipping Point What CEO do you follow? —Elon Musk What is your favorite online tool? — SEMrush Do you get 8 hours of sleep?— No If you could let your 20 year old self know one thing, what would it be? — Focus. I used to jump from idea to idea - it’s far better to focus on one thing. Time Stamped Show Notes: 01:06 – Nathan’s introduction 01:50 – Welcoming Thomas to the show 02:00 – FE International started at university when Thomas was 22 02:30 – Completed just over 300 deals 02:50 – Last deal was a SaaS business 03:20 – Model: FE will value a business, put together a package, and look for buyers 04:10 – How do you value a SaaS business? The amount of time the owner spends on a business: more time = less valuable The growth prospects of a business A multiplier of 4-6 times on annual net revenue 06:10 – Why use net? 06:30 – When valuing smaller businesses, it makes more sense to use net revenue 07:05 – Business in last deal had around $200k net revenue 08:11 – Recent public deal was with PlanScope - around $100k 09:10 – The buyer was a developer looking for a safe investment project 11:00 – 7-12% churn rate is normal for businesses they deal with 11:30 – FE International charges 15% brokerage on each deal 12:00 – Currently have a team of 12 people 12:30 – Made $1.5 million in commissions in 2015 16:00 – Famous Five 3 Key Points: Focus on one thing. It’s tempting to jump from plan to plan - but focus leads to success. Small businesses need a different valuation model to large ones. Make sure you’re looking at the right numbers. Always be looking for opportunities - a start-up can expand incredibly fast with the right input Resources Mentioned: Freshbooks - The site Nathan uses to manage his invoices and accounts. Host Gator – The site Nathan uses to buy his domain names and hosting for cheapest price possible. Leadpages – The drag and drop tool Nathan uses to quickly create his webinar landing pages which convert at 35%+ Audible – Nathan uses Audible when he's driving from Austin to San Antonio (1.5 hour drive) to listen to audio books. Show Notes provided by Mallard Creatives The Top is FOR YOU if you are: A STUDENT who wants to become the CEO of a $10m company in under 24 months (episode #4) STUCK in the CORPORATE grind and looking to create a $10k/mo side business so you can quit (episode #7) An influencer or BLOGGER who wants to make $27k/mo in monthly RECURRING revenue to have the life you want and full CONTROL (episode #1) The Software as a Service (SaaS) entrepreneur who wants to grow to a $100m+ valuation (episode #14). Your host, Nathan Latka is a 25 year old software entrepreneur who has driven over $4.5 million in revenue and built a 25 person team as he dropped out of school, raised $2.5million from a Forbes Billionaire, and attracted over 10,000 paying customers from 160+ different countries. Oprah gets 60 minutes or more to make her guests comfortable to then ask tough questions. Nathan does it all in less than 15 minutes in this daily podcast that's like an audio version of Pat Flynn's monthly income report. Join the Top Tribe at http://NathanLatka.com/TheTop