Same SaaS, New Acquisition Model: Q&A With Dura’s Paul Salisbury
San Antonio—Dura Holdings is trying to put a different spin on the model of acquiring and improving a business that has either underperformed or may have room to grow.
San Antonio-based Dura buys software-as-a-service (SaaS) companies with recurring revenue and seeks to cut operating costs or improve simple things like marketing and sales processes, in order to boost profitability. Venture capital and private equity groups have been targeting investments toward similar SaaS businesses—including other San Antonio-based firms Active Capital and Scaleworks—though the end goal of Dura is a bit different. A traditional investor might buy a stake in a company, or buy the whole thing outright, with the intent to improve the business and sell it (or exit otherwise) later on.
Dura Holdings, however, plans to maintain ownership of the companies it acquires—indefinitely, says CEO Paul Salisbury. Plus, Dura is a holding company that operates each business, not an investment firm, he says. The Dura Holdings model is to get each business it buys to the point of profitability that increasing cash flows eventually provide a return to Dura (and any investors, if the company ever takes funding).
Salisbury founded the business in November with Michael Girdley, who has started numerous San Antonio companies and investment firms, including coding school Codeup and Geekdom Fund. Salisbury most recently worked at Rackspace, and has also held roles at Dell, Ernst & Young, and Procter & Gamble.
The pair announced this month that they acquired one business, Salt Lake-based Moki Mobility, and plan to buy as many as two to three annually. Dura funded that first acquisition internally and hasn’t yet determined whether it will take on outside investors, or how those investments and returns (if they happen) might be structured.
Salisbury spoke with Xconomy about Dura Holdings’ first acquisition, developing the Dura business model, and the company’s goals. (This conversation has been lightly edited for clarity.)
Xconomy: How did you meet Michael Girdley, and what made you leave Rackspace?
Paul Salisbury: In the latter part of the spring, early summer of last year, I decided I wanted to do something else more entrepreneurial. I reached out to folks in my network and Graham Weston [an early investor and co-founder of Rackspace] introduced me to Michael Girdley. Michael has been extremely influential in investing in startup businesses in San Antonio for the last five to six years. He had already been working on the concept of Dura, and had already developed most of the sourcing engine to begin identifying companies.
X: How did you finish developing the concept?
PS: Our overall expectation is that there will be opportunity to optimize and improve any company we acquire. We think it’ll be unique for every company, and for some companies there will be growth opportunities because the product hasn’t been effectively marketed or sold. There will be opportunities with other companies to be just more operationally efficient—where we’ll be able to reduce cost of goods and operate in a way that will allow the company to be profitable without necessarily making any changes or requiring any additional growth.
X: How are you picking the companies you buy?
PS: We’re looking for software and SaaS businesses. We like recurring revenue. That’s a model that makes sense for us. Those companies come with high gross profit margins. We’re looking for owners and founders, who, for whatever reason, are looking to take cash out of the business because we want to put our own leadership team in place and run it the way we think makes sense.
X: That’s the same thing that a lot of venture capital investors and private equity buyers want.
PS: We are a holding company, not a fund. We are different, not only in the way we are structured, but in the way we want to keep, operate, and run … NEXT PAGE »