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Project Svalbard, Have I Been Pwned and its ongoing independence

troyhunt.com

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Re: Project Svalbard, Have I Been Pwned and its ongoing independence

#21

Post by JumpCrisscross »

airstrike wrote: post #19
hahla wrote: post #16

I'm surprised the author contacted KMPG to run M&A for a small independently run website..? Not sure what I'm missing here.

I'm surprised anyone would contact KPMG for M&A at all, in that they're primarily an accountant / auditor, not an M&A shop.

> I'm surprised anyone would contact KPMG for M&A at all, in that they're primarily an accountant

They have other business lines. But they aren’t notable. If you’re a top M&A banker, or even the best in a small niche, you’re at a bulge bracket or a boutique. Not KPMG.

Re: Project Svalbard, Have I Been Pwned and its ongoing independence

#22

Post by airstrike »

Sorry, but the more I read this, the more I feel like KPMG is the main reason for the failed process...

> And so in September, we granted exclusivity to a bidder. (...) And so began the extensive due diligence. KPMG had warned me about this phase right at the beginning of the process and from memory, the word they used was something akin to "onerous".

You're supposed to have your ducks in a row before you launch the process, not after. As you're drafting your IM, you should also be preparing a virtual data room with as much data as you reasonably expect to be asked, and board minutes are the absolute minimum that any advisor should know...

> Among literally thousands of other requests (seriously - the total number was four figures)

And you don't have to respond to all of them! You can answer any request with "The company believes this can be answered as a matter of confirmatory diligence"

From literally dummies.com[0]

"Sellers can’t be afraid to remind Buyers that due diligence is confirmatory in nature, meaning Buyer should spend the time confirming Seller’s information and not planning, creating, and combining the two entities. The Buyer should take care of post-closing activities after closing! Otherwise, due diligence will drag on longer than necessary."

[0] https://www.dummies.com/business/corporate-finance/mergers-a...

Re: Project Svalbard, Have I Been Pwned and its ongoing independence

#23

Post by fphhotchips »

JumpCrisscross wrote: post #21
airstrike wrote: post #19

Earlier quoted context omitted.

I'm surprised anyone would contact KPMG for M&A at all, in that they're primarily an accountant / auditor, not an M&A shop.

> I'm surprised anyone would contact KPMG for M&A at all, in that they're primarily an accountant They have other business lines. But they aren’t notable. If you’re a top M&A banker, or even the best in a small niche, you’re at a bulge bracket or a boutique. Not KPMG.

I think it's worth noting that Troy may have wanted a firm with a global presence given that he's based out of the Gold Coast. The firms with big M&A reps in the USA don't necessarily have that same rep or presence down here, particularly in Brisbane.

Re: Project Svalbard, Have I Been Pwned and its ongoing independence

#24

Post by illumin8 »

irjustin wrote: post #13

Thanks to Troy for HIBP and the story here. It may be because he cannot speak towards the specifics of the deal, but I truly hope there was a breakup clause. For those un-aware, M&A deals eventually go exclusive which, as this post points out, is very very time consuming, which means expensive. Those who are involved in the deal itself, very little work gets done that runs the business. So to protect against the down…

Yeah, all I can say is "ouch." I went through a very similar courtship process with a large tech unicorn and luckily my outcome was good, but halfway through the process I basically had to ask them to give me 5 figures in legal fees because I was paying a huge bill to attorneys and the power dynamics between single person startup and unicorn are huge. They were spending 6 figures on attorney fees and I was spending a smaller multiple, but as a single person startup.

I hope he got good advice, because this sounds really bad. HIBP is an amazing resource, and should easily command an 8-9 figure exit for the founder. It's disappointing to learn that the one suitor he settled on ended up being a dud.

Re: Project Svalbard, Have I Been Pwned and its ongoing independence

#25

Post by alexpetralia »

airstrike wrote: post #22

Sorry, but the more I read this, the more I feel like KPMG is the main reason for the failed process... > And so in September, we granted exclusivity to a bidder. (...) And so began the extensive due diligence. KPMG had warned me about this phase right at the beginning of the process and from memory, the word they used was something akin to "onerous". You're supposed to have your ducks in a row before you launch the…

I also distinct got the sense that KPMG bungled this process. They seemed to bafflingly parlay Troy's position of strength into a position of weakness. Of course, all they really cared about was the bill at the end!

Re: Project Svalbard, Have I Been Pwned and its ongoing independence

#26

Post by yellowapple »

saagarjha wrote: post #4

I believe that Have I Been Pwned provides a useful service, but I find it very strange that needs to be valuated and sold like a startup when it’s essentially been able to survive because people singularly trust Troy with a bunch of illegally obtained material. Like, how do you buy that; how could you ethically and legally make money from it? Why can’t it just continue being supported by contributions?

The way you buy that is by buying the thing that's trusted - that is, you buy Troy Hunt.

That realization appears to have been a major factor in the decision not to pursue other buyers.

Re: Project Svalbard, Have I Been Pwned and its ongoing independence

#27

Post by danudey »

lidHanteyk wrote: post #5
saagarjha wrote: post #4

I believe that Have I Been Pwned provides a useful service, but I find it very strange that needs to be valuated and sold like a startup when it’s essentially been able to survive because people singularly trust Troy with a bunch of illegally obtained material. Like, how do you buy that; how could you ethically and legally make money from it? Why can’t it just continue being supported by contributions?

A key feature of our society is that many things are given away for free and supported by an advertising infrastructure.

That sounds like a terrible idea in this case. It would all be ads for VPN services in the best case, or credit protection services in the worst case.

Re: Project Svalbard, Have I Been Pwned and its ongoing independence

#28

Post by AdmiralAsshat »

> So we wrapped it up, I got the single largest bill I've ever received in my life and then I sat down and started writing this blog post.

Where did the bill come from? Did he get billed by the prospective buying company for not purchasing him?

Re: Project Svalbard, Have I Been Pwned and its ongoing independence

#29

Post by michaelt »

AdmiralAsshat wrote: post #28

> So we wrapped it up, I got the single largest bill I've ever received in my life and then I sat down and started writing this blog post. Where did the bill come from? Did he get billed by the prospective buying company for not purchasing him?

He hired KPMG to help him court possible buyers, I'm guessing it came from them. They talked to 141 companies, and I doubt their hourly rate is cheap.

Re: Project Svalbard, Have I Been Pwned and its ongoing independence

#30

Post by hahla »

fphhotchips wrote: post #23
JumpCrisscross wrote: post #21

Earlier quoted context omitted.

> I'm surprised anyone would contact KPMG for M&A at all, in that they're primarily an accountant They have other business lines. But they aren’t notable. If you’re a top M&A banker, or even the best in a small niche, you’re at a bulge bracket or a boutique. Not KPMG.

I think it's worth noting that Troy may have wanted a firm with a global presence given that he's based out of the Gold Coast. The firms with big M&A reps in the USA don't necessarily have that same rep or presence down here, particularly in Brisbane.

Regardless I think using any big 4 consulting firm would be cost prohibitive for a small sale like this? No wonder they were laughing at the end of every meeting. He literally flew around with a team of KMPG consultants to 43 meetings to sell a site worth what a couple million at best...?
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