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I almost sold Baremetrics for $5M

baremetrics.com

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Re: I almost sold Baremetrics for $5M

#161

Post by nlh »

drclau wrote: post #21
meritt wrote: post #17

Earlier quoted context omitted.

Sure, Amazon does it all the time to small startups. They fly you into Seattle, setup a fancy meeting with strategy teams and M&A, make you run through a pitch deck, explain every aspect of your business. They take diligent notes until they fully understand your inner workings, they tell you thanks, you'll hear from us soon. And nothing happens, 6 months later AWS launches your exact product. Founders need to be extr…

This is not an example. This is an explanation of how it could happen. Can you share an actual case? Such as, a startup that went through this.

Yes (sort of - I can’t share the name because this was a friend’s startup and I don’t want to gossip explicitly) but this exact thing happened:

Amazon went through an acquisition process and on the day of closing, as everyone was in the room and documents were being signed, Amazon reps came back from a break in the meetings and said “Oh sorry for the delay — we’ve actually got an internal team working on this already. Our mistake. We’ll still do the deal because there’s some value here, but we’re going to lower the price by 20%. Take it or leave it.”

(They did the deal, but man, f-that.)

Re: I almost sold Baremetrics for $5M

#163

Post by Exuma »

throwaway5752 wrote: post #116
Exuma wrote: post #102

Earlier quoted context omitted.

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 accounti…

I'm so sorry. I hope you bounce back and have an exit on your next try such that you don't worry about fico.

Thank you, I appreciate it Mr. 5752

Re: I almost sold Baremetrics for $5M

#164

Post by Exuma »

rglover wrote: post #133
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…

Thanks for sharing this, a lot to learn from here. I hope you're doing well (sounds like it despite the circumstances). Also: I wanted to say kudos for your profile link.

Hahahaha.. I had forgotten about that.

Re: I almost sold Baremetrics for $5M

#165

Post by okr »

david_shaw wrote: post #158
okr wrote: post #148

Earlier quoted context omitted.

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."

Agreed. However, granting visibility to decisions (and the information that leads to them), when possible, is a great tool. A generic example might be that a major client will sign onboard if a new API feature is implemented. Just asking a development team to build the feature will get it done, but in my experience, teams will feel significantly more included (and important) if they have the context of why it needs t…

Ok, yes, i understand and i agree.

Re: I almost sold Baremetrics for $5M

#166

Post by kresten »

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…

You’d be crazy to guarantee exclusivity when negotiating sale of your company.

It would make more sense to give an absolute assurance that you’re talking to all possible buyers and that the potential buyer should understand that you might easily sell at any moment.

Exclusive negotiation is the precise opposite of a good approach.

Indeed implying that there are other negotiating parties is almost an essential component of any such negotiation.

Re: I almost sold Baremetrics for $5M

#167

Post by boulos »

fludlight wrote: post #87
paxys wrote: post #22

Earlier quoted context omitted.

It is standard in bigger corporate M&As, but a tiny startup isn't going to have the leverage to pull it off.

A contract is only worth as much as you are willing to pay to enforce it. It makes sense to pay an army of lawyers for years to pursue a $100m breakup fee. For $100k, not so much. Quod licet Iovi, non licet bovi

The solution though is escrow. Upon agreement, you have them wire the money to an escrow agent. If they back out, the escrow goes to you. There's no need for follow-on lawyering. (And no, no escrow agent worthwhile is going to be pressured easily into giving a large corporation their $100k back).

Re: I almost sold Baremetrics for $5M

#168

Post by s1artibartfast »

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…

This is fairly common in M&A and is called a "reverse termination or reverse breakup fee". In addition to the direct cost of having a deal fall through, you can imagine other damages from having a major competitor scrutinize your books.

Some notable reverse break up fees include: * a 6 Billion dollar fee AT&T incurred for failing to complete a purchase of T-mobile. * A 10 Billion fee (avoided) if Verizon backed out of buying Vodafone's stake in Verizon.

Re: I almost sold Baremetrics for $5M

#169

Post by Mr_2020 »

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…

~$8m price. Asked for $25,000 break fee to cover our costs. Was balked at. Have no reason to believe they were not serious buyers as they bought another company or two.

Re: I almost sold Baremetrics for $5M

#170

Post by trentnix »

kresten wrote: post #166
trentnix wrote: post #143

Earlier quoted context omitted.

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…

You’d be crazy to guarantee exclusivity when negotiating sale of your company. It would make more sense to give an absolute assurance that you’re talking to all possible buyers and that the potential buyer should understand that you might easily sell at any moment. Exclusive negotiation is the precise opposite of a good approach. Indeed implying that there are other negotiating parties is almost an essential componen…

The LOI, at least the ones I've read, prevents you from discussing sale opportunities with anyone else. It's called a "no shop" clause.

Before the LOI? Go crazy.

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