[HN Gopher] How to Sell Your Startup
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How to Sell Your Startup
Author : AnhTho_FR
Score : 108 points
Date : 2022-12-26 11:58 UTC (11 hours ago)
(HTM) web link (bilalmahmood.medium.com)
(TXT) w3m dump (bilalmahmood.medium.com)
| i_like_pie wrote:
| bluntly, a bit generic, but its a start.
|
| do think it's an important topic. wish more founders were better
| prepared for how to sell their life's work
|
| sharing my experience of selling to a F500 for $100M+ without
| hiring a banker https://acehigh.substack.com/p/how-to-sell-your-
| startup
| belter wrote:
| Can I read about it without having the modal annoying login
| window? At $100M+ you should be doing alright to afford your
| own server?
| ProjectArcturis wrote:
| Here you go, though I agree it's odd that the author is
| pinching pennies if his story is true.
| https://archive.vn/YZ8sU
| appstorelottery wrote:
| Our experience was quite different in terms of how it progressed
| (we were acquired by a public company). I remember after meeting
| with the Chairman/CEO they more or less went straight into heavy
| due-diligence; Deloitte audited our financials (I believe this
| was paid for by the acquiring company). The process in our case
| was much quicker than six months to get to the definitive
| agreement - only a few months. It was tremendously stressful,
| however I recall that day of initialing what seemed like hundreds
| of pages of agreement for the sale - such relief.
| jacquesm wrote:
| If you read this and found it useful then maybe this one is
| useful to you too, it was the work of quite a few HN'ers to
| gather all that information:
|
| https://jacquesmattheij.com/how-to-sell-your-company/
|
| It's a while ago but as far as I can see most of it still applies
| today.
| simonebrunozzi wrote:
| Thanks for sharing, Jacques (and Merry Christmas, even if it's
| late!). I actually remembered something like that and was
| pleasantly surprised to see it mentioned by you.
| jacquesm wrote:
| Hello Simone, Merry Christmas to you too! That article is an
| evergreen, I still get pretty regular mail about it from
| people that are in the process and somehow find it and have
| concrete questions about what they are going through.
| closeparen wrote:
| Interviewing to keep your job sounds brutal, especially given how
| much of a crap-shoot it is whether the problem you get is one you
| can solve in 45 minutes. When you are job hunting, you can
| interview a bunch of places so that hopefully one of them
| succeeds, even if the per-interview pass rate is low. But in an
| acquisition context, where it's just one interview, wouldn't we
| expect the vast majority of the team to fail? Are these
| interviews graded more gently? Or do employees of acquired
| companies actually do meaningfully better in the interview
| process than people off the street?
| 2c2c2c wrote:
| How does the process look for a 1man product that took no VC?
| codegeek wrote:
| Keep everything clean. Have accounting setup correctly with PnL
| no matter how small. Then calculate Seller's discretionary
| Earnings (SDE) for 12 months and multiply it by 2x-5x usually
| to get a price. the multiple depends on tons of factors. rarely
| it will be over 5x SDE if your SDE is less than 500K.
| alberth wrote:
| There's some major caveats that need to be detailed:
|
| - _Acquisition price_. The smaller the $, the quicker the process
| can be.
|
| - _Who's the champion_. The higher up in the org the acquiring
| champion is, the quicker the process can be. (Eg Zuck acquiring
| WhatsApp took just days)
|
| - _Regulated industry_. If the acquirer is not in a regulated
| industry (Eg banking), the quicker the process can take.
|
| - _Competitor acquisition_ halo effect. Eg did Coke just acquire
| a Coffee company, that will put time pressure for Pepsi to do the
| same.
|
| And just because an acquisition can be quicker, doesn't mean it
| will be quick.
|
| Also keep in mind, there's a higher chance the acquisition will
| fall through than to actually complete. If the acquisition does
| complete, there will likely be an earn out period of 12-24
| months.
| GoRudy wrote:
| I found anchoring on price early in the process has been helpful
| to understand who is serious and who is not. I've been through
| the process twice, well actually three times as the first time
| the deal fell through (we sold 20 months later). Some businesses
| simply are bought on a multiple of revenue or ebitda that is
| common in their industry and in that case I found it expedites
| the process to be clear on top line + adjusted ebitda and
| expected range of valuation.
|
| I also negotiated salaries etc early in the process so it's all
| generally done at the same time before the term sheet.
| berkle4455 wrote:
| Similar. I wanted out of my startup to pursue a new avenue. I
| sold for 5x annual revenue and a 1-yr exit. All paid in cash
| over that one year.
| lmeyerov wrote:
| Selling on revenue multiple is easier bc means leaving a lot of
| $ on the table: a good sale is in terms of the value to the
| acquirer, which can be a % of a massive #, not the immature
| revenue operations of some young startup . But if you don't
| super care, then based on revenue or next round are easy _low_
| standins -- basically the "BATNA".
|
| A lot of the reasoning in the article comes from the difference
| between being bought vs sold. Hiding lack of runway is clear
| there. The article repeats a lot of good standard advice &
| prioritization in general.
| dceddia wrote:
| > Most acquisitions happen due to an acquirer wanting one of
| three assets: your team, your product, or your revenue. And if
| you're lucky, all three.
|
| I might be alone on this (I don't see it mentioned often) but I
| think I'd consider it very lucky if they only wanted 2 of those
| 3. A huge part of _why_ I started a company in the first place is
| to not work for someone else, and selling myself back into a job
| seems like the opposite of a win!
|
| It doesn't seem very common for sales to happen without the
| founder sticking around though. I've assumed this is because
| buyers do in fact _mostly_ want the founder as an employee, and
| either aren't willing to do the deal without that, or the offer
| is so much lower that it's not worth selling.
| nickstinemates wrote:
| > It doesn't seem very common for sales to happen without the
| founder sticking around though.
|
| Typically there's a reason to keep founders around and it's not
| related to their output, but more as a figure head/tacit
| acceptance of the deal that is made.
|
| If a larger company is swallowing a smaller company, they may
| want to continue to work with the founder/some members of the
| exec team to help with integration efforts for the companies.
|
| In return, the members of this team typically added incentives
| and ability to generate even more wealth as a result.
| kartayyar wrote:
| I think the article should more accurately be titled as how to do
| a small scale feature tuck in / acquihir-ish soft landing.
| jaxn wrote:
| The intro talks about 9-figure deals, which seems a bit higher
| than an acquihire to me. 7-8 figures sure.
| jacknews wrote:
| Is it possible to sell a something that's not yet a going
| concern? ie name, logo, branding, ideas, prototypes, etc? Where
| and how?
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