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I almost sold Baremetrics for $5M

baremetrics.com

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Re: I almost sold Baremetrics for $5M

#171

Post by kresten »

trentnix wrote: post #170
kresten wrote: post #166

Earlier quoted context omitted.

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.

I’d rather not do the deal than have a no shop clause.

A no shop clause destroys so much deal leverage. I can see why the buyer would want it.

In fact a no shop clause is indistinguishable from an exclusivity agreement.

If the buyer absolutely required it I’d put a hefty non refundable price on it, probably 50% of deal value. Such a commitment has to work both ways.

Re: I almost sold Baremetrics for $5M

#172

Post by trentnix »

kresten wrote: post #171
trentnix wrote: post #170

Earlier quoted context omitted.

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.

I’d rather not do the deal than have a no shop clause. A no shop clause destroys so much deal leverage. I can see why the buyer would want it. In fact a no shop clause is indistinguishable from an exclusivity agreement. If the buyer absolutely required it I’d put a hefty non refundable price on it, probably 50% of deal value. Such a commitment has to work both ways.

And that's certainly your prerogative. Your preferences aside, a "no shop" clause is the norm.

Re: I almost sold Baremetrics for $5M

#173

Post by [deleted] »

Mr_2020 wrote: post #169
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.

[deleted]

Re: I almost sold Baremetrics for $5M

#174

Post by Seufman »

kresten wrote: post #171
trentnix wrote: post #170

Earlier quoted context omitted.

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.

I’d rather not do the deal than have a no shop clause. A no shop clause destroys so much deal leverage. I can see why the buyer would want it. In fact a no shop clause is indistinguishable from an exclusivity agreement. If the buyer absolutely required it I’d put a hefty non refundable price on it, probably 50% of deal value. Such a commitment has to work both ways.

No shop clauses are normal -- no serious buyer would move forward with diligence without it

Re: I almost sold Baremetrics for $5M

#175

Post by mlyle »

kresten wrote: post #171
trentnix wrote: post #170

Earlier quoted context omitted.

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.

I’d rather not do the deal than have a no shop clause. A no shop clause destroys so much deal leverage. I can see why the buyer would want it. In fact a no shop clause is indistinguishable from an exclusivity agreement. If the buyer absolutely required it I’d put a hefty non refundable price on it, probably 50% of deal value. Such a commitment has to work both ways.

As others say, once you reach the point of a letter of intent-- there's no way a buyer wants you carrying their LOI around to everyone in the world trying to get a better offer while the buyer is committing resources trying to get the deal done.

It's reasonable to expect a ("reverse") break-up fee, but it is not likely to be half the deal value.

Re: I almost sold Baremetrics for $5M

#176

Post by RaceWon »

Want to sell your startup: don't be desperate; people smell that--and it stinks.

Attract buyers (put out press releases about how well you're doing--hire a PR firm), and then Say No. Tell them are too busy to prepare financials, and your lawyers refuse to waste their time. Just say no But Be NICE About it.

This works like a motherfucker because (A) People Really Want What They Can't Have... and (B) They Already Really, Really Want It Because Of The Press Releases. (C) Hire a Real Negotiator--and a person who is dispassionate about the business. Pay them a percentage of the gross profits; of course you tell them a bottom line number which is the lowest offer you'd accept.

Put the sale money in escrow and you each pay 50% of the due diligence cost After the money is in the bank.

Re: I almost sold Baremetrics for $5M

#177

Post by kresten »

mlyle wrote: post #175
kresten wrote: post #171

Earlier quoted context omitted.

I’d rather not do the deal than have a no shop clause. A no shop clause destroys so much deal leverage. I can see why the buyer would want it. In fact a no shop clause is indistinguishable from an exclusivity agreement. If the buyer absolutely required it I’d put a hefty non refundable price on it, probably 50% of deal value. Such a commitment has to work both ways.

As others say, once you reach the point of a letter of intent-- there's no way a buyer wants you carrying their LOI around to everyone in the world trying to get a better offer while the buyer is committing resources trying to get the deal done. It's reasonable to expect a ("reverse") break-up fee, but it is not likely to be half the deal value.

Maybe a no shop clause should have a tight time to live.... “ok we commit but only if you put the money in our account within seven days, after that shopping is ok”

Re: I almost sold Baremetrics for $5M

#178

Post by mlyle »

kresten wrote: post #177
mlyle wrote: post #175

Earlier quoted context omitted.

As others say, once you reach the point of a letter of intent-- there's no way a buyer wants you carrying their LOI around to everyone in the world trying to get a better offer while the buyer is committing resources trying to get the deal done. It's reasonable to expect a ("reverse") break-up fee, but it is not likely to be half the deal value.

Maybe a no shop clause should have a tight time to live.... “ok we commit but only if you put the money in our account within seven days, after that shopping is ok”

Deals take a lot longer than 7 days to close-- especially real acquisitions, but even asset purchases usually take months.

Re: I almost sold Baremetrics for $5M

#180

Post by FpUser »

elbear wrote: post #74
wolco wrote: post #65

Earlier quoted context omitted.

You lost a few grand?

More like missing out on 2 mil

Exactly. Already had some savings. Add 2 mil and was thinking early retirement. Well maybe some work when I feel like here and there but life with no financial pressure ;)
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