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I almost sold Baremetrics for $5M

baremetrics.com

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Re: I almost sold Baremetrics for $5M

#101

Post by jessaustin »

mbesto wrote: post #41
jakozaur wrote: post #2

Hearing many horror stories over backing out at last minute, I wonder why breakup fees and escrow are not more popular in startup world. E.g. if you would like to acquire for $5mln you need to deposit $100k. If you walk out, this is a breakup fee. If startup bails it also have to pay same amount to the acquire.

This is why reputations in M&A matter.

Most high-reputation firms wouldn't hesitate to leave a poor founder swinging in the wind. What's she going to do, sue them? Any lawyer capable of handling that case, the M&A dudes already have on retainer.

Re: I almost sold Baremetrics for $5M

#102

Post by Exuma »

throwaway5752 wrote: post #84
Exuma wrote: post #38

This is very painful to hear. I've tried selling my main company to 4 different buyers now... every single time we get past the LOI phase, they see all our financials in plain sight, and there's always some stupid hangup/ghosting/sketchiness exactly like in this article. Very disappointing, considering how transparent we are up front sending every financial, and there's no real 'discoveries' later that would change t…

I'm very sorry for your circumstances, but are the "every buyer ghosted me when they saw our financials" and "our accountant had dementia" elements of this related? How could millions of dollars of net income go to insolvent so quickly? There are two sides to this general issue, and while there are bad buyers there are people dishonestly presenting their companies. Not that you are, but it seems like a very low-trust…

There's obviously a lot more nuance to the situation. I'm here just posting my in-passing rambling, glossing over most details. In general, any mistakes made were clearly presented, and no numbers were deceivingly absent or misrepresented.

The accountant issue is related because there were a number of major issues that lead to the downfall. One being the entire year-long+ selling debacle, the other other was accounting issues.

FWIW, both brokers (2 deals on 1, 1 on another) both said "we've never seen anything like this in the entire time of doing this." I think a lot of it was just bad luck, or low quality buyers and not having experience to see certain red flags.

As far as insolvency so quickly, we were a 2 man company with 0 employees. I started the company several years ago with zero business experience and we grew it to 11 million per year. So there were many mistakes along the way (all of which were clearly laid out to potential buyers btw). We re-invested almost all our money to grow bigger and quickly.

Re: I almost sold Baremetrics for $5M

#103

Post by Exuma »

teruakohatu wrote: post #81
Exuma wrote: post #38

This is very painful to hear. I've tried selling my main company to 4 different buyers now... every single time we get past the LOI phase, they see all our financials in plain sight, and there's always some stupid hangup/ghosting/sketchiness exactly like in this article. Very disappointing, considering how transparent we are up front sending every financial, and there's no real 'discoveries' later that would change t…

I am sorry to hear that you experienced that. I am curious to know why you did not run the business as a profitable going concern instead of selling?

After years of doing it, I was very very sick of it and just wanted out. I'm a developer by "heart" and I just want to build and tinker. I do love spreadsheets, and I love the thrill/ups/downs of business, but the monotony is what kills me. I have another company I'm investing all my time into that I am optimistic of, and it's new and fresh again.

Re: I almost sold Baremetrics for $5M

#104

Post by teruakohatu »

Exuma wrote: post #103
teruakohatu wrote: post #81

Earlier quoted context omitted.

I am sorry to hear that you experienced that. I am curious to know why you did not run the business as a profitable going concern instead of selling?

After years of doing it, I was very very sick of it and just wanted out. I'm a developer by "heart" and I just want to build and tinker. I do love spreadsheets, and I love the thrill/ups/downs of business, but the monotony is what kills me. I have another company I'm investing all my time into that I am optimistic of, and it's new and fresh again.

Sounds like you are going in with eyes wide open this time. Best of luck with the new venture. Thank you for sharing your story.

Re: I almost sold Baremetrics for $5M

#105

Post by aidos »

ricardobeat wrote: post #44
aidos wrote: post #29

Earlier quoted context omitted.

Unless you’re in England, where people can drop out or change their price on a house sale or purchase at any time, even after months of legal red tape.

What would you spend months on when buying a house? Over here (NL) a buyer inspection is a 30 minute affair. Then you sign a purchase contract straight away, three days to back out.

Oh it’s insane. You’ve never seen a process like it. Nothing happens, but it takes forever. Half of the sale chains fall apart during the wait. Brexit delays seem a whole lot more obvious in that context.

Re: I almost sold Baremetrics for $5M

#106

Post by rapnie »

solotronics wrote: post #54
ngngngng wrote: post #51

There's got to be a business in here somewhere. A company that acts as a middleman that sorts through all your financials for you, does all the communicating, drafts all legal paperwork and just gives you quick regular updates through the process. That way you can keep running your company during all of this madness. I wish I knew more about selling and acquiring companies since it seems like a business well worth la…

We could call it middlemetrics.com

venturetransfer.com

Re: I almost sold Baremetrics for $5M

#107

Post by zerkten »

enjo wrote: post #91
athiercelin wrote: post #4

"In many ways, I feel like my job as CEO and Founder is to absorb all of the insane parts of running a business so my team can focus on building, learning and enjoying their jobs." This is spot on. I would extend to senior leadership in general.

I strongly disagree with this. You and everyone in your company are on a journey together, a leader who thinks that it’s their job to curate that journey inevitably fails. People know when you’re stressed or when things are tough... when you try to hide these things or deflect them away you erode trust and ultimately performance. The role of a good leader is contextualize hard information and provide support for the…

> provide support for the team

I'd be more specific and state that they should be consciously building systems to manage these things, even if it's done manually by them. This provides clarity about what and how things are being done, and let's them more easily scale (or kill) the process.

The kill part is important because when you are thinking systematically you're more likely to be able to communicate the details, or other people can observe it and make recommendations. It's hard to kill things that leaders are effectively doing in secret and stealing time and attention from an org.

Re: I almost sold Baremetrics for $5M

#108

Post by hinkley »

jessaustin wrote: post #96
hinkley wrote: post #43

Earlier quoted context omitted.

Part of any acquisition is getting a look at your books. Now the buyer knows exactly how much runway you have left and all they have to do is drag their feet until you get desperate to make a deal. Either you have to be cashflow positive, or keep at least two buyers on the hook past whatever disclosure phase nets them this sort of information. I think maybe one company I ever worked for was clever and healthy enough…

Wow I'm struggling to imagine how a too-long method could keep the wolf from the door for a month. More details please, if you can.

Horrible messy business logic to fulfill a short term contract. It's been a long time, but if memory serves it was used for data ingestion. The file was 6000 lines, the worst method was over a third of that, closer to half.

It never really worked, as some of us predicted while the project was being ramped up. Without going into too much detail (most of which has gone from my head anyway), the speed of light won and we used a different architecture which obsoleted most of that code.

However, if I and the other people who said it couldn't be done had gotten our way, that sale would have gone much worse for us. Decisions from incomplete data and all that jazz. It went live and the customer and we cashed the check with less than two months of operating capital left, while the lawyers were still futzing around with term sheets.

The irony is this was also the owner who thought he was rallying the troops and instead filled us with existential dread every time he tried to give us a speech. Why I wasn't aware we were scraping bottom of the barrel until six months later, I'll never know.

Re: I almost sold Baremetrics for $5M

#109

Post by Exuma »

teruakohatu wrote: post #104
Exuma wrote: post #103

Earlier quoted context omitted.

After years of doing it, I was very very sick of it and just wanted out. I'm a developer by "heart" and I just want to build and tinker. I do love spreadsheets, and I love the thrill/ups/downs of business, but the monotony is what kills me. I have another company I'm investing all my time into that I am optimistic of, and it's new and fresh again.

Sounds like you are going in with eyes wide open this time. Best of luck with the new venture. Thank you for sharing your story.

Thanks friend, I appreciate it. It's been quite brutal, but who I am at the end and at the start are very different, and I'm very thankful for that, even if I quite literally have nothing to show for it.

Re: I almost sold Baremetrics for $5M

#110

Post by georgeecollins »

Domenic_S wrote: post #62
georgeecollins wrote: post #34

Earlier quoted context omitted.

Jeffrey Kaplan, in his book "Start Up", would talk about how Microsoft would do this in the days when it was particularly powerful. Think about it this way: You always want to learn about opportunities and potential competitors. The biz dev team may say, hey we should maybe acquire this company, and the product people may say, no this is a good idea but we should copy it. It doesn't have to stem from a sinister inten…

Did you mean "Startup: A Silicon Valley Adventure" by Jerry Kaplan?

Yes, an old book but still a good one.
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