Molson Hart

The debt you're seeing on these software cos must be personally guaranteed as they are basically without bankable collateral, right?

No. Not debt from banks. It’s from SAAS lenders.

What's non-personally guaranteed SAAS lender debt going for these days? I was kicking around the idea of taking out a big loan as an option in case markets really tank over the next 3-6 months.

All over the place. Some I’ve seen are like this: Assuming recurring subscription revenue, most are like 10-12% with a minimum repayment multiple (like 1.2x loan amount). Will lend up to 6 months of MRR.

I don't know enough about the space to make a call like this, but I expect those guys to get KILLED when/if our economy turns. Companies definitely cancel those recurring revenue subscriptions when times get tough. The chase for yield continues.

I think you’re right and I think it depends on the business. It’s why @dura_software only acquires products that are mission critical OR we think will be cycle-neutral.

Looking at it in practice, at exit it seems the lenders always get their money back. Remember, debt gets paid before equity etc.

Yeah, but...there's no liquidatable assets when these SAAS cos blow. Charlie Munger had some comments about how much he loves government software companies at the recent DJCO meeting. I haven't gotten to them yet, but you may also be interested.