When it’s not a market boom time, great software exits are a result of being a rare premium prize that checks all the boxes for active buyers. This year’s flight to quality for private equity and strategic buyers means fewer companies are getting more attention.
Hot right now includes: system of record, extremely low churn, steady growth above 40%, proven profits, scalable pricing, payments revenue, leading brand reputation, efficient organic GTM. And accelerating with AI leverage.
That’s a lot, but it’s the sweet spot for high-value software acquisitions under $100M, even this year.
Eran Galperin is a Brazilian jiu-jitsu black belt who had already had one VC-backed marketplace failure when he started Gymdesk.
Originally called Martial Arts on Rails, it launched in 2016 as a naive version of what he thought a gym needed. He was training five or six times a week, and every gym owner he knew hated the software they used.
For four years, he couldn’t acquire enough customers, so he took a job as CTO of an e-commerce company and built the product on nights and weekends.
Growth finally came through organic SEO, which still drives over half of new leads.
He hit $3M in ARR by the end of 2023 with 16 employees, no salespeople, and over 40% of free trials converting without a demo.
In May 2024, he sold a majority stake to Five Elms Capital for $32.5M in cash for his share.
What they paid the premium for wasn’t size — it was SMB churn under 1% a month, three straight years of more than doubling, profit margins over 50%, and a payments business compounding underneath.
He stayed on eighteen months and now lives in Tokyo, building a custom house and an AI vision product for real estate.
Gymdesk checked all the boxes for this PE buyer, especially high retention.
“What we did have was very low churn, and that’s one of the factors that helped us get the premium when we sold the company. Everybody building SaaS eventually realizes that churn is the cap your company has on growth. Eventually, churn, which is a relative number, grows to the point where it meets the absolute numbers of your growth.
“Because we had very low churn, less than one percent month over month, that definitely helped us start the conversation from a very good position. The other element was that growth was very consistent year over year. I think we more than doubled three years straight.
“That, in combination with the low churn and high profit margins, was the last big item. We had a lean team, and we were over fifty percent profit margins when we sold. This was a firm that had multiple other portfolio companies similar to us, so they had a pretty good idea what a successful outcome would look like for them, and we filled all those criteria.”
Check out this amazing interview with Eran Galperin on the Practical Founders Podcast.
