My confidence level on this is very low, because what do I know, but my emotional commitment to this take, having been a small business operator (in Hunt's field) for a couple decades now, is very high:
This makes me very sad. Not that the deal fell through, because of course it did, but because of the process he undertook. Every part of it makes me sad. Any correction or rebuttal I get to this will make me happier, so I hope I'm wrong about a lot of it.
First, the adage that companies are bought, not sold, has in my experience and the experience of my friends been pretty much true.†
Next, The most valuable thing about HIBP isn't the underlying work Hunt did --- lots of companies have done equivalent work --- but HIBP's notoriety and popularity.
Which to me means that every credible acquirer of HIBP already knew he was for sale --- because everybody is for sale --- and already fully capable of reaching out to Hunt and offering him some kind of deal. The list of bizarre stories I've heard about random projects that have received corpdev offers like this is long.
Which to me suggests that putting a lot of work into a deck that explains HIBP and what makes it valuable was not a good use of time. If you're explaining, you're losing.
Then there's reaching out to your tax advisor to coordinate the sale. I have only heard bad stories about retaining financial firms to shop companies. In this case there's the added fact of the enormous incentive mismatch: Hunt is engaging a financial firm to act as his agent with a bunch of their own clients and client prospects, practically every one of which seems like it'd be worth more to KPMG than the HIBP "sale" or any ongoing relationship with Hunt himself.
Then there's what KPMG actually did, which was to arrange FORTY(!) pitches. To each of which he disclosed traffic stats and revenue numbers!
Bringing us back to HIBP's value being its notoriety, in that: anyone you have to explain HIBP to is probably not a qualified prospect. Also, just the idea that there would be 40+ qualified prospects to begin with.
My feeling is that a pretty big chunk of YC companies get a whole stream of invitations to corpdev meetings equivalent to the ones Hunt went through here. And that a big part of YC's founder education is convincing founders never to go to these meetings, because they're so unlikely to have good outcomes, and because the counterparties in those meetings are basically trained and selected to efficiently screw founders over. Here, it seems like Hunt paid for the privilege of experiencing this.
Then there's the deck itself; the one detailed slide of which we get to see is an exquisitely detailed rationale for why Hunt's presence is vital for the continued success of HIBP. "This is what the organisations bidding on HIBP were buying: trust in me." That's a description of a job interview, not a company sale. Elsewhere on this thread there's a comment saying HIBP should be worth 8-9 figures. Can we think of a company with this slide in their deck and that valuation?
In the end, he gets to term sheets with one potential company, and goes through what appears to be a full-fledged warrants-and-reps due diligence process, the completion of which is rewarded with a polite "no thank you" from the company.
This seems like the longest, most expensive job search anyone here has ever read about. I assume he paid KPMG for their work on this, and what KPMG did here looks to me like malpractice.
We give YC a lot of shit and they sure deserve a lot of that shit, but it's not unusual for me to look at a security founder story and think "this person really, really would have benefited from going through YC".
I like what Troy Hunt is doing a lot and he seems great. I hope things go better for him building this project up without trying to shop it for new owners.
† The exceptions to "bought not sold" that we read about most frequently here are companies put up on company-flipping brokerage sites and sold solely for their revenue streams.