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I almost sold Baremetrics for $5M

baremetrics.com

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Re: I almost sold Baremetrics for $5M

#211

Post by hyperbovine »

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…

> You and everyone in your company are on a journey together

Perhaps your comment was intended very narrowly, but this strikes me ... so not the way the 99.999% of people who are not in the founder/Valley/HN bubble think about their job. Chances are you employ these people, even at a small startup.

Re: I almost sold Baremetrics for $5M

#212

Post by mounram »

irjustin wrote: post #72
froindt wrote: post #26

Earlier quoted context omitted.

> Even if they don't sell, the process would have shown light on potential liabilities and issues they hadn't even been thinking about. If I recall correctly, some VC's make their companies put together quarterly reports of similar nature to a normal publicly traded company. It sounds like it would have similar value. Doing so requires significant thought and focus, and provides a structure and cadence to the busines…

Common practice from VC is to do a 3rd party financial audit - billed to the startup in the end. Very expensive, but as you mention, it helps uncover potential ticking time bombs. It's easy to complain about a heavy, expensive finance audit, but startups commonly are setup or practicing mildly to extremely incorrectly. It's just too risky not to do it. Tech audits seem to fly under the radar a lot. Post deal, I've ha…

"was using a single table for users & bookings just more columns" Could elaborate more on this point please ? Thanks.

Re: I almost sold Baremetrics for $5M

#213

Post by tonyedgecombe »

codegeek wrote: post #113
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 found out later our accountant had dementia, and did all our taxes wrong" Holy shit. I can't even imagine if that happens to my business. But really, you always want a second set of eyes to review your taxes, always. Even if you are not the expert, never trust the accountant. I always manually verify the drafts myself even if I don't quite understand everything on it. But I have a high level idea of the important…

Even if you don't understand something you can always phone your accountant and ask them to explain it.

Re: I almost sold Baremetrics for $5M

#215

Post by dgudkov »

charlesdm wrote: post #207
Mr_2020 wrote: post #169

Earlier quoted context omitted.

~$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.

I'm based in Europe but together with a partner I'm a buyer of small tech businesses. We have bought businesses so are credible and are always interested in buying more. We could pay $8m if an interesting business came along. The issue is that a lot of smaller deals fall through, either because of unrealistic final price expectations by the seller or because some metric that is super important to the business was cal…

If you asked them for a commitment (i.e stop looking for other buyers) then you should be ready to commit too. If not money, what would be your commitment?

Re: I almost sold Baremetrics for $5M

#216

Post by YPCrumble »

One of the best parts of Baremetrics is that it's an "Open Startup". I can't help but think that the acquisition is clearly not open if he didn't talk about it during the acquisition and doesn't name names here.

I think he's right not to dox the company, but perhaps in the future having an "open acquisition process" could have avoided some of the headache.

Re: I almost sold Baremetrics for $5M

#217

Post by [deleted] »

charlesdm wrote: post #207
Mr_2020 wrote: post #169

Earlier quoted context omitted.

~$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.

I'm based in Europe but together with a partner I'm a buyer of small tech businesses. We have bought businesses so are credible and are always interested in buying more. We could pay $8m if an interesting business came along. The issue is that a lot of smaller deals fall through, either because of unrealistic final price expectations by the seller or because some metric that is super important to the business was cal…

[deleted]

Re: I almost sold Baremetrics for $5M

#218

Post by ryanSrich »

mrtksn wrote: post #210
thethimble wrote: post #199

Earlier quoted context omitted.

There's a lot of misconceptions here around how corporate acquisitions work. Here's typically how things work in practice when companies are sold: - Seller attempts to garner interest, sometimes facilitated by an investment bank. - Buyers indicate interest informally, eventually culminating in a Letter of Intent (LOI) from each buyer indicating a price and other important factors related to a deal. - A cricitical com…

In the OPs case, the buyer was not disclosed. Did they lose any reputation? How to roll the ball to let people know that someone screwed you up without damaging own reputation?

I’m sure they did. All of Baremetrics lawyers and investors know who it is. Investor circles are small - word gets around. Same with lawyers. The number of times I’ve heard “yeah, we know those guys, I wouldn’t recommend working with them” in board meetings is high.

Re: I almost sold Baremetrics for $5M

#219

Post by codegeek »

einarvollset wrote: post #187
codegeek wrote: post #120

Earlier quoted context omitted.

Not for small companies that generally do less than $2M in revenue.

We do as low as $1m ARR: discretioncapital.com

Yes but you are not a traditional Private Equity if I understand correctly.

Re: I almost sold Baremetrics for $5M

#220

Post by trentnix »

charlesdm wrote: post #207
Mr_2020 wrote: post #169

Earlier quoted context omitted.

~$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.

I'm based in Europe but together with a partner I'm a buyer of small tech businesses. We have bought businesses so are credible and are always interested in buying more. We could pay $8m if an interesting business came along. The issue is that a lot of smaller deals fall through, either because of unrealistic final price expectations by the seller or because some metric that is super important to the business was cal…

>Let's say there is a clause we just can't find each other on. No worries, we can jointly decide to walk away. If I paid you and you're not willing to budge, then I'm out $25k if I walk away. It doesn't keep the discussion balanced.

Balanced? Utter nonsense and I suspect you know it. You know that proceeding past an LOI involves the seller accruing costs, sinking massive amounts of time on activities other than working on their business, and, more often than not, becoming emotionally invested in 'doing the deal'. Buyers buy businesses a lot more frequently than sellers sell businesses, and that makes the transaction a "home game" for the buyer, giving buyers an advantage.

Not providing any earnest money minimizes buyer risk, allows buyers an opportunity for a cheap education on the ins and outs of a successful business, and invites other tactics to tilt negotiations away from the seller - all the reasons selling a business becomes one of the most painful experiences of an entrepreneur's professional life.

If you're not prepared to provide any earnest money, you probably haven't done enough work to decide whether you're really entering into an LOI. Hopefully, the sellers negotiating with buyers like you figure that out and push back.

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