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I almost sold Baremetrics for $5M

baremetrics.com

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Re: I almost sold Baremetrics for $5M

#141

Post by adventured »

xwowsersx wrote: post #123

Can breakup fees be negotiated in these kinds of deals to protect the would-be acquired company? Seems like the company to be acquired bears all the risk.

You can negotiate anything you want, and I'm not joking or being sarcastic about it.

A lot of people in this thread will say: well, it's unusual or non-standard to do x y z. Good. Most of the interest a company receives re acquisition is going to be pure bullshit at best and malevolent at worst. Ideally you cause the majority of both types to turn tail and run away immediately. If you're not careful you'll waste an enormous amount of valuable time dealing with bogus acquisition (and partnership) interest. Big companies waste a lot of time and money screwing around with: let's make a deal; they can afford it.

The break-up fee should not be layered under 27 conditionals. As someone pointed out, the acquiring company will bury you under a mountain of difficult to fight legal justifications to get out of the break-up fee if they can. And they're almost always going to be far stronger financially than you are.

A fee is going into the company bank account no matter what, without conditions, if you want to get serious about an acquisition. You're going to pay us for our time - risk, legal costs, etc. - if you're serious. The mental approach is simple: don't like the arrangement? Fuck off right now so I can get back to running my business. That's not standard? Too bad. It's your business, you can do anything you want to in that respect. Don't let people tell you that you can't do it, you certainly can. If a company is very serious about buying you, they won't run away if you put this on the table up front, they'll be willing to discuss it at least.

Re: I almost sold Baremetrics for $5M

#143

Post by trentnix »

quickthrower2 wrote: post #138

Sounds like there needs to be a way for the buyer to put some skin in the game. Maybe asking for a $50k non-refundable deposit to kick things off. Sounds harsh? Well non-refundable deposits are a thing in real estate. For example in my country it is common to put 0.25% down to take the property off the market, non refundable, allowing you to do due diligence and then 19.75% deposit within 5 days non-refundable, with…

Agreed.

It’s perfectly acceptable for a business to ask for (or even demand) earnest money when signing an LOI. The buyer, via the LOI, is asking for the right to negotiate with you exclusively. That’s worth something and if they refuse, that tells you how serious they really are.

The amount of that earnest money is up to the parties involved - 50k might be high for some situations, low for others, and just right for the rest. But they should pony up something. Otherwise you are just giving away leverage.

As the article mentions, there is an incredible amount of work that goes into due diligence and sometimes an even larger emotional investment. A sale falling through, and I can speak from experience, can be devastating.

Re: I almost sold Baremetrics for $5M

#145

Post by mtnGoat »

trentnix wrote: post #143
quickthrower2 wrote: post #138

Sounds like there needs to be a way for the buyer to put some skin in the game. Maybe asking for a $50k non-refundable deposit to kick things off. Sounds harsh? Well non-refundable deposits are a thing in real estate. For example in my country it is common to put 0.25% down to take the property off the market, non refundable, allowing you to do due diligence and then 19.75% deposit within 5 days non-refundable, with…

Agreed. It’s perfectly acceptable for a business to ask for (or even demand) earnest money when signing an LOI. The buyer, via the LOI, is asking for the right to negotiate with you exclusively. That’s worth something and if they refuse, that tells you how serious they really are. The amount of that earnest money is up to the parties involved - 50k might be high for some situations, low for others, and just right for…

I agree in this case the author created this problem for himself by not following some norms, namely getting a non-refundable deposit for his time and energy.

lesson learned for seller and a good reminder for the rest of us.

Re: I almost sold Baremetrics for $5M

#146

Post by tuesday20 »

unlinked_dll wrote: post #124
zyang wrote: post #45

Earlier quoted context omitted.

It wouldn't feel great seeing this as an employee of the company. The only reason you are not sold to the highest bidder was because the ceo got played.

I fucking wish some of the companies I've been at sold to the highest bidder when they had the chance. Exits are better than layoffs.

There is always a non insignificant chance that exits will be followed by layoffs

Re: I almost sold Baremetrics for $5M

#147

Post by CryptoBanker »

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…

That's called an investment bank

Re: I almost sold Baremetrics for $5M

#148

Post by okr »

david_shaw wrote: post #92
rb808 wrote: post #83

Earlier quoted context omitted.

I've heard this too, except it got really annoying to be working crazy hours doing annoying crap while you have a team of devs working 40 hrs working on interesting tech with not much pressure. I burnt out, now I delegate lots of crap work and it works better for me and I think the team as well as they get a wider perspective.

> I burnt out, now I delegate lots of crap work and it works better for me and I think the team as well as they get a wider perspective. I think this is an underrated (but very accurate) opinion. While I'm not the founder of a company, I do have the tendency to shield my team from much of the insanity I deal with on a daily basis. I've made active, conscious efforts to stop doing this. When you shield your team from…

Are we talking about business decisions? My experience is, that developers are only interested in taking that risk, if they also get a share in the company and get access to internals. "Your house, your decision, your money. We are just the hired gun to do the carpenting."

Re: I almost sold Baremetrics for $5M

#149

Post by mtnGoat »

david_shaw wrote: post #92
rb808 wrote: post #83

Earlier quoted context omitted.

I've heard this too, except it got really annoying to be working crazy hours doing annoying crap while you have a team of devs working 40 hrs working on interesting tech with not much pressure. I burnt out, now I delegate lots of crap work and it works better for me and I think the team as well as they get a wider perspective.

> I burnt out, now I delegate lots of crap work and it works better for me and I think the team as well as they get a wider perspective. I think this is an underrated (but very accurate) opinion. While I'm not the founder of a company, I do have the tendency to shield my team from much of the insanity I deal with on a daily basis. I've made active, conscious efforts to stop doing this. When you shield your team from…

awesome post, thank you! certainly addresses some issues ive had at work recently.

Re: I almost sold Baremetrics for $5M

#150

Post by doingmyting »

zonethundery wrote: post #68
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…

It can't really work that way. There are diligence firms that provide quality of earnings analysis, compliance analysis, intellectual property audits, etc. But potential buyers always have questions that require input from staff. The executive team has to be very involved in the process. Their involvement naturally drags management/staff into it.

I'm certain there'd be questions unique to a company that only the staff would know but I'd want to assume most questions would be the same across companies.

Are you saying in most of these situations the questions never overlap?

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