Hey everyone, it’s Andrew! Hope you had a great time at the webinar on Wednesday – I know I had a blast. If you didn’t catch it, no sweat. You can rewatch the webinar above or keep reading for the recap.
Now, I know what you’re thinking: “Andrew, didn’t you just host an acquisition webinar?” We did, and you can check it out here. But our last conversation focused on selling your startup for 7-8 figures. This time, I wanted to show buyers how to maximize the Acquire.com marketplace to buy the best startups.
Acquisitions can get complicated real quick, and at Acquire.com, we have the tools and resources to help you streamline the buying process. But how do you use our tools? When is it better to buy a startup instead of building from scratch? What should your acquisition journey look like?
This guide holds all the answers. Check out the video above to see if I answered your burning questions about acquiring a startup, or keep reading for the recap and Q&A from the webinar.
Acquire.com’s Guide to Buying the Best Startup
- Webinar slides – You’ll read about the important ones below in the recap, but feel free to download the slides for your own notes.
- The Acquisition Playbook: 10 Proven Post-Acquisition Strategies to Increase Revenue 10% or More (ebook) – This free ebook shows you ten ways to boost revenue post-acquisition with little to no investment on your end.
- The Advanced Buyer Course – Features Ryan Kulp, Founder of Fork Equity, laying out a comprehensive lecture series that teaches entrepreneurs to build a portfolio of cash-generating assets through acquisition. I acquired the course from Ryan in August of 2023 and made it free for all Acquire.com buyers to access (previously retailed for $400). It’s just one of the many initiatives we’re taking to enhance the buyer experience on Acquire.com.
Recap and Learnings
Acquire.com does the hard work for you
As an entrepreneur who built and sold two businesses, I remember how challenging it was to find the right buyer for my startups. And vice versa – I saw buyers struggling to find great acquisition opportunities. That’s why I built Acquire.com.
Acquire is all about connecting buyers and sellers. We’re the first to truly disrupt the M&A process, removing complexity and inefficiency so it’s easier for you to close life-changing acquisitions.
How do we do that? By committing to curate the highest-quality deal flow to accelerate your search.
Over 300,000 registered buyers tell us exactly what they’re looking for in an acquisition, and we match them to the best startups. It’s quicker and easier than ever to find your ideal startup, and 1000s have already closed with us in the last three years.
Here’s how you can do the same.
Why buy instead of build?
Before diving into the how, let’s talk about the why. Why bother buying a business when you can build one from scratch?
It’s like my buddy Warren Buffett says: “Buy a business, don’t rent stocks.”
I love this quote because Warren’s right – buying gives you more control over the startup from the beginning. It’s easier to influence the outcomes because the customer has already been defined.
You’re not starting at 0, grinding to make minuscule progress. The traction’s already there; you just have to hit the gas.
Some other reasons to acquire instead of build:
- Buy product-market fit and move to market faster.
- Inherit a ready-made, super-star team that knows the business.
- Focus on scaling the startup with your specific skill set (marketing, sales, etc.).
- Capitalize on existing momentum to gain profits from day one.
Thousands of startups in our marketplace have already done the hardest part in finding product-market fit. I remember what a struggle it was to earn those first few customers, and many of my early startups failed because of it. But you don’t have to.
Save yourself years of building, iterating, and marketing by acquiring a ready-made startup from our marketplace.
Setting you up for success
Now that we’ve covered why you should buy, here’s how we set you up for success. We help by:
- Providing access to 1,000s of quality, post-revenue online businesses for sale
- Offering helpful tools to streamline your acquisition process
- Connecting you with our support team and resources to guide you every step of the way
Plus, we’ve established a safe and secure environment to manage your acquisition end-to-end. We vet all sellers before their business hits the marketplace and cover all your legal docs and escrow needs to increase your confidence in the deal.
Gaining access to 1000s of quality listings
Before Acquire.com, you could spend months searching for acquisitions through brokers or cold outreach to sellers. Now, we’ve saved you the legwork of finding potential businesses to buy. Thousands of high-quality startups are ready and waiting for you on our marketplace.
To maintain that quality, we follow a pretty strict curation process. Only about 46% of submissions get approved, and our team ensures these sellers verify their identity and value their startup reasonably.
We don’t want you settling for anything less than the best. Every live startup on the marketplace is one we’ve carefully curated to capture your interest. And with our flexible tiered subscription plans, you can now access the listings that best match your acquisition goals.
Using your acquisition toolbox
We built all this for you. From our startup recommendations to mutual NDAs to letter of intent (LOI) and asset purchase agreement (APA) builders, our tools save you time and effort during your deal.
Steps that would normally take hours of work or tons of cash to hire an attorney can be done in minutes. You can customize your deal to accommodate different terms and close safely with our built-in escrow process. Our tools are simple, effective, and trusted by thousands of buyers and sellers.
Working with our expert team to achieve your acquisition goals
We’re invested in your success. No matter your subscription tier, all buyers can contact our customer success team via email, phone, or chat. We’re here to help you 24/7, and if you need immediate answers, you can always explore our blog or help desk and template center.
We’ve got tons of tutorials and explainers to help you navigate the acquisition process. Not sure how due diligence works? Check out this article. Wondering how to make an offer? See our guide here. Get answers to all your acquisition questions and learn how all our tools work.
Our support doesn’t stop there. To help you succeed, we’ve also acquired an advanced buyer course from Ryan Kulp and made it free to all Platinum subscribers.
We’ve known Ryan for a while and helped him buy and sell several startups on Acquire.com. I’ve taken his course myself and can confirm you’ll learn invaluable lessons about negotiations, how to structure a deal, and what buying a business is like from start to finish.
End-to-end acquisition support
Let’s take it from the top.
At the start of your acquisition, we provide tools like our recommendation engine and resources like our buyer course to help you make a shortlist of startups.
From there, the chat and mutual NDA features help you start conversations with sellers on your shortlist. As you talk, you also gain access to private listing details that let you get a head start on the due diligence process. If their website and information check out, it’s time to make an offer.
Luckily, that’s super simple with our LOI builder. You can even include more complex deal structures like holdbacks or seller financing. Once the seller approves the LOI, you can start drafting the APA with our builder.
The builder pulls info from the LOI automatically, but you can still customize everything as negotiations wrap up. After signing the APA, it’s on to our escrow builder to help you close safely and securely.
That’s it. The process might take a few days, weeks, or even months if it’s a more complex deal. But we’re there every step of the way to guide you through it.
How our buyer success program helps Platinum members shine
Platinum members already receive access to every listing on the marketplace and priority customer support. But we’ve recently launched a new buyer success program to take the Platinum experience to the next level.
Our expert team will help you land those major acquisitions, coaching you through complex 7-8-figure deals and ensuring you know your way around our platform. Get a personalized and customized deal flow, and tell us your acquisition goals so we can help you find the right startup.
We’ll even help you stand out among other buyers with our Buyer Scorecard review. Just like you assess startups based on the quality of their listings, sellers will evaluate you based on your profile and early conversations.
Even something as simple as setting up a good profile picture and adding your LinkedIn profile goes a long way to building trust with sellers. They want to see the person behind the deal, not a faceless company. One of the best ways to do that is to ensure your profile is as complete and compelling as possible.
But our scorecard measures more than just your profile and whether you’ve verified your identity and funds. We also gauge where we can help with your acquisition criteria, ability to close, and organization and upkeep. You’ll receive expert coaching on how to talk to sellers and make a good first impression when you start negotiating.
No matter your score, we’ll help you become an Acquire.com aficionado to achieve your acquisition goals.
Join as a Platinum member or upgrade today to access the new Buyer Success Program and get a Buyer Scorecard review.
They Acquire’d: Buyers who followed our guide
Syed Balkhi, Founder & CEO, Awesome Motive
Syed Balkhi began his entrepreneurial journey helping business owners transfer to WordPress sites. Now, 15 years later, he’s acquired dozens of WordPress companies, several through Acquire.com. Every addition to his portfolio helps him power millions of websites, as each tool contributes to users’ WordPress experience.
Ryan Kulp, Founder, Fork Equity
To this day, Ryan Kulp holds the record for the fastest closed deal on Acquire.com at 48 hours. Though that deal was on the smaller side, Ryan’s also closed his fair share of larger deals. His secret to buying and selling so many successful startups? Sticking to his skill set in sales and marketing. He acquires, grows, and resells businesses for killer profits.
Joe Speiser, Partner, Hampton VC
Joe Speiser also excels at the wash, rinse, and repeat acquisition cycle. In his mind, acquiring startups, scaling, and reselling them is the most practical way to make a quick profit. Though he’s not a technical entrepreneur, Joe’s skills in sales and marketing allow him to do what he does best with these businesses and help them grow.
Dirk Sahlmer, Head of Origination, SaaS Group
A few months ago, we helped Dirk Sahlmer of SaaS Group close a seven-figure deal for MyWorks. Dirk and SaaS Group specialize in 7-8 figure acquisitions, so they knew exactly what they wanted when they started browsing Acquire.com. Dirk trusted us to guide him through the acquisition process and find him a startup that matched his exact criteria.
Eyal Toledano, Founder & Operator, MicroAngel
Eyal Toledano had $500,000 in cash and a dream. I personally loved his dream – to acquire multiple micro-SaaS companies with that cash and turn it into $1.4 million in two years. Our marketplace of SaaS businesses has already helped Eyal surpass his goal. He can now take his lessons and apply them to his next venture.
Join Platinum today for access to our NEW Buyer Success Program
Your path to acquisition success begins when you register as a buyer on Acquire.com.
Join as a Platinum member today and gain access to thousands of vetted listings and expert support. Receive relevant, targeted startups directly in your inbox and work with an automated deal flow to help your deal run smoothly. Trust our Client Success Team to guide you through your next big acquisition and help you make a good impression on sellers.
Your ideal startup could be only a few clicks away on our marketplace. Sign up now to Acquire it.
Does Acquire do any diligence on listings prior to them being listed?
Yes, we do. We look at the financials to ensure they make sense. We verify the business owner's identity. We'll even do the simple things like look up the businesses name across various search databases, make sure they have a valid URL, and take a look at their social presence to ensure it's a real business. We pride ourselves in having the highest quality listings of any marketplace within the industry.
What type of buyers do you typically see on Acquire.com?
On Acquire.com, we've democratized entrepreneurship through acquisition. Yes, we do work with some of the largest private equity firms and public companies that have corporate dev teams. But we also work with individual buyers and entrepreneurs looking to diversify their investment. The buyers looking for a passive, profitable business to acquire and hold for the long term. Or maybe you're a buyer looking for a business that's missing a few items. You see some excellent growth strategies that could allow you to take the business further than the original owner could. No matter your acquisition goals, we're here to help you achieve them on Acquire.com.
How do I show I’m a serious buyer, and how can I differentiate myself from other buyers? And what’s the difference between free, premium, and platinum buyers?
I'm going to bucket this into one question. How do you show you're a serious buyer? Subscribe to the Platinum plan on Acquire.com. As a Platinum buyer, we'll help set up your buyer profile so you stand out from other buyers. Verifying proof of funds, connecting your LinkedIn profile, and writing a thoughtful bio about yourself all help to make a good impression on sellers, who really do look at these items. We'll also help automate your deal flow by setting up all of your criteria, ensuring you see the startups you're most interested in and helping you get the most out of Acquire.com.
What deal types are available through Acquire.com?
Currently, you can only complete asset sales on Acquire.com, not stock sales. But in terms of the types of businesses you can buy and sell, we help SaaS, e-commerce, mobile app, agencies, and more companies get Acquire'd. While profitable online SaaS is our strongest category, our marketplace is built for any type of profitable online business.
If a seller hasn’t responded to my inquiry, how persistent should I be in chasing them?
If a seller doesn't respond to an access request, you can contact our support team to help you reach them. For sellers who don't respond to your chat messages, try the tips outlined in this article. But if you come across a listing and you think the seller has no intention to sell and might be a scam, you can also report a listing. This is how we keep the marketplace secure, safe, and high-quality. A lot of our buyers notify us if they come across something fishy. So if you see something that seems a little off, report it to us, and we'll look into it within hours.
Does Acquire.com help buyers with financing options?
We do, but only on specific startups. They have to meet certain criteria (generally being on the larger side). One thing we can help you with is understanding the options you can explore with the seller, such as seller financing. For example, if you're looking to acquire a business for $500,000, you don't have to pay all $500,000 for that business upfront. Instead, you can structure a deal where maybe 80% is cash at closing. So that would be $400,000 in cash at closing, and then $100,000 is financed by the seller through monthly or quarterly payments over the course of 12-24 months. So, we can help you explore those options and educate you on other deal structures. Check out more options in our blog post here.
Can you share a link to the Advanced Buyer course you mentioned earlier for Platinum subscribers?
We definitely can. We'll contact all of you who attended this webinar to see if a Platinum membership makes sense. And if it does, we'd love to see you upgrade. Then, we'll provide all the items and services that I went over in this webinar, such as optimizing your profile. It's important to take steps like this so when you do find a startup you're interested in, your profile is at the top. From there, we'll provide the advanced buyer course for you. But we'll also talk to you one-on-one in terms of any specific questions you have about how the marketplace works, things that you're interested in, and really helping you set up for success.
What are the top considerations if I’m interested in buying a business on Acquire that’s based internationally and I’m based in the US?
If you're looking to acquire a business in another country, there will be a lot of different scenarios to consider. But my best recommendation is to let us know your situation so we can refer you to potential legal help. We want to ensure that if you do buy a company internationally, you're safely protected. See how Scott Fitsimones did it here. But the top considerations would definitely be do you trust the seller? Do all of the financials check out? Try to get a read on the seller and their situation before making your decision. And when you buy internationally, absolutely use an escrow service so you're not sending money overseas without any legal recourse (if needed). This is why we built tools for you like our letter of intent builder, asset purchase agreement builder, and escrow integration. We want you to close safely and securely.
Is it necessary to have technical skills to acquire SaaS businesses in the marketplace?
Here's a good tip for if you're not technical and you're looking at all these businesses (I'm not technical, and it's really hard for me to run this business and not want to acquire a startup). If I wasn't running Acquire.com, I would be on here acquiring businesses. Say I found a business that offers AI-powered, personalized cold emails at scale to help increase response rates. As a stopgap, I would hire a third-party agency and have them do a code review with the owner of the business. And then, if I actually do buy the business, I would also ask the founder to be on standby for bug fixes or additional features (if they're a technical founder). You can negotiate with them for a consulting agreement to ensure they help you out for a brief time post-acquisition. So, there are plenty of ways for you to vet startups technically, even if you're not technical. Learn more about conducting tech due diligence without being a coder in this article.
When looking to acquire a business for the first time, do you need to already have a registered business?
Yes, when seeking to acquire a business for the first time, it is generally expected that the acquirer already has a registered business. This is because acquiring a business typically involves legal and financial processes that are easier to navigate if the acquirer already has an established business entity. Additionally, having a registered business demonstrates credibility and seriousness to potential sellers.
Can you show us recent trends or data that prove what acquisitions are most successful?
SaaS and eCommerce businesses have seen the most success on Acquire.com. Here's a quick breakdown of businesses sold by startup type so far in 2023:
How many of the companies listed get sold? What is the average price paid? What is the average timeline for a sale?
Take a look at our August 2023 business update for some stats. Take a look at the Multiples Report to get a sense of average sale prices. The average timeline for an acquisition is around three months.
Get content like this, and more, sent directly to your inbox twice a month.
What is the buyer scorecard feature?
The Buyer Scorecard review is a new service offering as part of the Buyer Success Program for Acquire.com Platinum Subscribers. Having facilitated thousands of conversations between buyers and sellers, we've determined which factor stand out to sellers when they're evaluating buyers. And the number one thing buyers should do? Optimize their Acquire.com profile with the help of our Platinum team. Our team will review your profile details and then cover the following topics to increase your readiness to acquire: • Acquisition criteria - platform personalization • Organization + upkeep • Outreach cadence • Evaluate your close ratio If you're serious about acquiring a business in the near future, subscribe to Platinum and get instant access to the Buyer Success Program.
How do people fund their first SaaS acquisition deal?
When it comes to funding their first SaaS acquisition deals, people have several options available to them. Here are a few common ways to fund a first SaaS acquisition: 1. Personal Savings: Some individuals use their personal savings to fund their first SaaS acquisition. This can be a viable option if they have accumulated enough capital to cover the purchase price. 2. Seller Financing: In some cases, the seller of the SaaS business may be willing to provide financing for the acquisition. This means that the buyer can make payments to the seller over time, typically with interest, instead of paying the full purchase price upfront. 3. Traditional Bank Loans: While banks may be hesitant to lend to SaaS companies, some buyers may still explore traditional bank loans as a funding option. However, it's important to note that banks may have strict requirements and may not fully understand the SaaS business model. 4. Alternative Financing: Alternative financing options, such as partnering with companies like Pipe, can provide fast and non-dilutive financing for SaaS acquisitions. These options are specifically tailored to the needs of SaaS businesses and can help buyers close the acquisition without sacrificing equity or accruing restrictive debt. 5. Venture Capital or Angel Investors: Some buyers may seek funding from venture capital firms or angel investors who are interested in investing in SaaS businesses. These investors typically provide capital in exchange for equity in the company. It's important for buyers to carefully evaluate their financial situation and consider the pros and cons of each funding option before making a decision. Working with professionals who specialize in SaaS acquisitions can also provide valuable guidance throughout the funding process."
Are there resources available to help check a quality of earnings report? Especially for companies that do not use Stripe?
While the specific resources for quality of earnings may vary depending on the industry and location, there are general guidelines and best practices that can be followed. Our blog post on "What Is a Quality of Earnings Report and Why Is It Important?" provides insights into the importance of quality of earnings and its relevance in various situations. Additionally, engaging with financial professionals, such as accountants or financial advisors, can provide expertise and guidance in preparing a quality of earnings report tailored to a company's specific circumstances. These professionals can help analyze the company's financials, assess its cost structure, and ensure transparent financial reporting. It's important to note that while Acquire.com can provide general information and resources on quality of earnings, specific resources and guidance may vary depending on the unique needs and circumstances of each company. Consulting with professionals in the field is recommended for a comprehensive understanding of quality of earnings and its application to a specific business.
Can we sell newsletters on your platform?
Yes, we've had quite a few newsletters sold on Acquire.com. We profiled two founders who did it successfully and shared their story with us: • When Selling a Newsletter Business, Focus on the Intangibles, Says 23-Year-Old Founder (Sold Tech Pod) • Startup Acquisition Stories with Jaisal Rathee (JR), Founder with 6x Exits (Sold Insanely Useful Websites)
Are you hiring coaches to staff this buyer success program?
Th Buyer Success Program is led by our Client Success Managers. They are part of the Acquire.com M&A Team trained by our two expert brokers (Paul Kelley and Rainier Nanquil) with considerable input from Andrew Gazdecki (Founder) and James Graves (General Counsel). The Buyer Success Program is built from the combination of strong institutional knowledge brought by our various experts and the massive amounts of acquisition data gathered from the Acquire.com platform.
What was the course mentioned earlier?
The Advanced Buyer Course featuring Ryan Kulp is a comprehensive lecture series that teaches entrepreneurs to build a portfolio of cash generating assets through acquisition. Andrew acquired the course from Ryan in August of 2023 and made it free for all Acquire.com buyers to access (previously retailed for $400). It is just one of the many initiatives we're taking to enhance the buyer experience on Acquire.com.
When you sign up on Acquire.com, can you register as an individual or as a business?
You can do either.
Are listings on Acquire.com exclusive to your marketplace? Do you assist sellers in pricing their listing?
Founders are free to list anywhere else even if they've listed on Acquire.com. Listing on multiple acquisition platforms may increase a business' visibility but may also increase the upfront costs. The good thing about listing on Acquire.com is that there are no listing fees. It's free to list and meet buyer. Acquire.com will only take a flat 4% success fee if you successfully complete a deal. We do offer pricing recommendations for businesses intending to list on our platform based on the data we've gathered. We may reject ones that deviate too far out of our ranges if we strongly believe it is off-base. Our goal is to foster a healthy marketplace, taking into account the qualitative feedback from both buyers and sellers along with the quantitative view that gives us the numbers behind how deals are completed.
How many interested buyers do listings typically get? How many LOIs? How many deals are serious buyers able to close?
Listings on Acquire.com typically see anywhere from 10 to 30 interested buyers. The LOIs will vary based on the buyer's assessment of the business, so it's harder to predict. A serious buyer can close as many as they're able and wiling to acquire. We have many serial buyers having completed four or five deals since upgrading and many more fishing for their first and second. Andrew profiled five of these serial buyers during the webinar. Watch the replay to learn more about each of them.
I am a technical entrepreneur. How can I position myself to acquire a business and be successful? I also work with other founders. Is there a referral partnership with Acquire.com for referring some of my clients?
Success after an acquisition is hugely dependent on the business acquired and how much it can leverage a buyer's existing skills, experience, or audience. So focusing on the right acquisition target is key. To position yourself for a successful business acquisition, consider the following steps: 1. Define Your Acquisition Goals: Clearly identify your objectives and what you hope to achieve through the acquisition. This includes determining the type of business you want to acquire, the industry you're interested in, and the specific goals you have for the acquired business. 2. Assess Your Strengths and Expertise: Reflect on your skills, experience, and areas of expertise. Identify what sets you apart from other entrepreneurs and where you can add the most value to a business. This self-reflection will help you target businesses that align with your strengths. 3. Build Relationships and Networks: Networking is crucial in the acquisition process. Connect with industry professionals, attend relevant events, and join communities where you can meet potential sellers or advisors who can assist you in the acquisition process. Building relationships can provide valuable insights and opportunities. 4. Conduct Thorough Due Diligence: Before finalizing any acquisition, conduct comprehensive due diligence. This involves thoroughly evaluating the target business's financials, operations, market position, and potential risks. Understanding the business's strengths and weaknesses will help you make an informed decision and negotiate a fair deal. 5. Secure Appropriate Financing: Determine how you will finance the acquisition. Explore options such as personal savings, seller financing, traditional bank loans, or alternative financing methods tailored to acquisitions. Ensure you have a solid financial plan in place to support the acquisition and a buffer for growth. 6. Negotiate and Structure the Deal: Once you find a suitable business, engage in negotiations to structure the deal. Consider factors such as purchase price, payment terms, earn-outs, and any contingencies. Work closely with legal and financial professionals to ensure the deal is structured in a way that maximizes your chances of success and aligns with your goals. 7. Execute a Smooth Transition: After the acquisition is complete, focus on executing a smooth transition. Develop a detailed integration plan to merge the acquired business with your existing operations, if applicable. Communicate with employees, customers, and stakeholders to ensure a seamless transition and maintain continuity. 8. Leverage Existing Resources: Utilize your existing resources, such as your team, infrastructure, and expertise, to support the acquired business. You should have already identified areas where you can add immediate value and start implementing strategies to drive growth and improve operations. Remember, each acquisition is unique, and success depends on various factors. Being prepared, conducting thorough due diligence, seeking professional guidance, and leveraging your strengths will increase your chances of a successful business acquisition.
Can we find out the locations and demographics of the customers?
That's something worth finding out from a seller during the initial diligence.
Does the platform support startups from anywhere? i.e Africa and LatAm
Yes, we support startups listed in every country (subject to applicable laws and regulations).
Can a person (coach?) help a first-time seller through the process? It would help to know the next steps, etcetera. The content is good, but it would be helpful to have a human to help us push through the process.
We agree! Acquire.com offers a service layer for sellers needing a little bit of extra help and coaching through the acquisition process. It's currently reserved for the larger businesses as the deals are more complex at that stage. Get started by completing and submitting your listing. Our team will reach out once you're at that stage and offer you any guidance you need.
In what scenarios do acquisitions fail? Do you have any examples/stories?
Acquisitions can fail for various reasons. Here are some common scenarios where acquisitions may fail: 1. Financial Issues: If the buyer or seller experiences financial difficulties that prevent them from funding the deal, it can lead to the failure of the acquisition. For example, if the buyer is unable to secure the necessary financing or if the seller's financial situation deteriorates during the negotiation process. 2. Integration Challenges: When the buyer fails to plan and execute a smooth integration of the acquired business into their existing operations, it can lead to failure. Ignoring company cultural differences, forcing integration without considering employee dynamics, or underestimating the complexities of merging systems and processes can all contribute to integration challenges. 3. Misaligned Expectations: If the buyer and seller have significantly different expectations regarding the terms of the deal, it can lead to a breakdown in negotiations and ultimately result in the failure of the acquisition. Misalignment can occur in areas such as valuation, post-acquisition roles, or strategic direction. 4. Legal or Regulatory Issues: Discovering financial or legal issues during the due diligence process can be a deal-breaker. Unresolved legal disputes, compliance issues, or undisclosed liabilities can erode trust and confidence, leading to the failure of the acquisition. 5. Lack of Cooperation: If the buyer and seller fail to cooperate effectively during the post-acquisition transition, it can hinder the integration process and ultimately lead to the failure of the deal. Lack of cooperation can manifest in resistance to change, conflicting priorities, or failure to align on key decisions. It's important to note that these scenarios are not exhaustive, and each acquisition has its unique challenges and circumstances. Successful acquisitions require careful planning, effective communication, and a thorough understanding of the risks involved. By addressing potential pitfalls and proactively managing challenges, buyers can increase their chances of a successful acquisition.
Are you offering a seller webinar?
Yes, we did one last month. Check out the replay here → Acquire’d Webinar Recap: How to Sell Your Startup for 7-8 Figures
What percent of deals are all-cash vs SBA vs partial seller financing?
We don't have explicit percentages but all-cash is most common followed by seller financing and SBA loans.
How do you verify buyers’ funds?
Here's our help center article on verifying funds → https://help.acquire.com/how-do-i-verify-my-funds
Do sellers ever agree to partner with buyers or do most sellers want to get out for good?
Most deals actually have some form of committed assistance from the founder during the transition post-acquisition. However, this is something the buyer will need to include in the terms of the deal during the negotiation process.
Can you share a few examples of companies that were bought and later sold on the platform?
There have been multiple cases of this on the platform but only one where we captured their story publicly. Check out the interview with Varun Kundra who bought a Shopify App and sold it for a profit all on Acquire.com.
How do you handle verification of funds for a private equity fund that has investors subscribed, but has not done a capital call prior to having an acquisition deal on the table? (for example, we could have capital committed, but not in the bank)
We have had many PE groups verify funds. If you do not have the cash on hand, a letter pledging funds from one of your lead investors will work for funds verification.
Are all asking prices in US currency? And when looking at international companies, is the asking price always in U.S. currency?
All asking prices are in USD.
Do you support innovative ways of funding businesses, if the buyer and seller agree to it?
We engage in comprehensive discussions with founders, providing them with education and insights into the diverse spectrum of deal structures they should expect to see when fielding offers. These discussions encompass a range of topics, including: • External Financing: The inclusion of external funding sources, like Boopos Cash at the Close: We delve into the specifics of cash transactions that occur during the initial stages of a deal, ensuring founders grasp the intricacies involved. • Seller Financing: We thoroughly explore the concept of seller financing, elucidating how it can be a valuable component of deals, and offering guidance on its implications. • Contingent Payments and Earnouts: We emphasize the importance of understanding contingent payments and earnouts from the outset. These topics are addressed early and revisited frequently to ensure founders are well-versed in their significance and execution.
Are the seller’s wages/draws excluded from profit?
As tech founders venturing into the market, we emphasize the crucial step of crafting a recast financial statement. This essential document helps pinpoint key adjustable elements, including: • Normalizing Owner Compensation: Ensuring that owner compensation is accurately represented to reflect a realistic financial picture. • Discretionary Expenses: Identifying and accounting for discretionary expenses that may vary based on business needs. • Extraordinary One-Time Expenses: Isolating and addressing exceptional, non-recurring expenditures that may distort financial assessments. • Interest Charges: Evaluating and adjusting interest expenses to align with market norms. • Depreciation and Amortization: Properly accounting for the depreciation and amortization of assets to reflect their true impact on financial performance. By addressing these factors, we help founders present a comprehensive and accurate financial statement that enhances their market readiness.
Is service contract recurring revenue classified in SaaS or other category?
Service contract recurring revenue can be classified in either the SaaS (Software as a Service) category or another relevant category depending on the nature of the services provided under the service contracts. If the service contracts are directly related to software services, such as ongoing access to a software platform or regular updates and support for software products, then this recurring revenue can be considered part of the SaaS category. In this case, it aligns with the core business model of providing software services on a subscription or contract basis. However, if the service contracts pertain to other types of services or products that are not software-related, then it may be more appropriate to classify the revenue in a different category. For example, if the contracts involve ongoing maintenance, technical support, consulting, or any non-software services, the revenue might fall into a "Services Revenue" or "Support and Maintenance Revenue" category.
How do you view the market currently? Would you say it’s a buyers or sellers market at the moment?
I'd like to highlight that the startup acquisition market is buzzing with activity from various player types. We're witnessing significant interest from newcomers seeking a side project, seasoned serial entrepreneurs, high net-worth individuals, and even private equity groups and strategic investors on the hunt for the next game-changing platform or complementary acquisitions. The diversity of interest and involvement is quite remarkable. This is evidenced by the $35M to $50M in close acquisition on a monthly basis… for now!
For first-time buyers with lower capital, do you have any resources for learning the process? What sort of deal flow do you see for smaller startups?
We assist tech founders in the acquisition process by providing a wealth of resources, including contextual information, articles, videos, our Academy, webinars, podcasts, and personalized one-on-one consulting sessions. Our aim is to help you gain clarity on your acquisition goals, align them with the current market dynamics, and assess your purchasing capacity effectively.
Do you have situations where a seller is selling a license to some IP or just some IP without a profitable business behind it? How consistent is that and do buyers buy that? For example: some R&D breakthroughs like a better algorithm for compression or proprietary AI technology?
Yes, in the tech startup world, it is not uncommon for a seller to offer a license or sell intellectual property (IP) without an accompanying profitable business. This is especially prevalent when the IP represents valuable technological advancements or innovations. Here are some key points to consider: Technological Advancements: In cases where a startup has developed cutting-edge technology, such as a superior compression algorithm or proprietary AI technology, but hasn't yet built a profitable business around it, the founders or inventors may choose to sell or license the IP. Strategic Buyers: Buyers, including larger tech companies, research institutions, or investors, may be interested in acquiring or licensing such IP if they see strategic value in it. For example, the IP could enhance their existing products or services, provide a competitive advantage, or open up new business opportunities. Startup Challenges: Some startups may face challenges in scaling their technology into a sustainable business. This could be due to resource constraints, market dynamics, or competition. In such cases, selling or licensing the IP might be a viable exit strategy. Market Demand: The demand for specific types of IP can vary based on industry trends and market needs. IP related to artificial intelligence, data analytics, cybersecurity, and other technology sectors often attracts interest from buyers. Intellectual Property Valuation: The value of the IP can be a critical factor in determining whether buyers are interested. Intellectual property valuation considers factors like the uniqueness of the technology, its potential applications, competitive advantage, and market demand. Legal and Licensing Agreements: The terms of the sale or licensing agreement, including intellectual property rights, royalties, and restrictions, will vary from one deal to another. While selling or licensing IP without a profitable business behind it is not uncommon, the success of such transactions depends on factors like the uniqueness and potential of the technology, the market demand, and the negotiation skills of both the seller and the buyer. In many cases, buyers may see the long-term value in acquiring transformative technology even if it hasn't yet been commercialized into a profitable venture.
We’re looking to potentially buy companies where the seller, a technical person with some competencies, continues running the product while we focus on sales, marketing, and scaling. How frequently do these types of founders genuinely stick around to continue supporting the product?
When we initiate discussions with our founders about listing on Acquire, one of our initial inquiries revolves around their willingness to navigate a transition. We aim to pinpoint what they might be open to offering during this phase and strive to gain insights into their ideal scenario. It's not uncommon for founders to reach the limits of their capabilities and, in a strategic move, pivot towards exploring partnership opportunities or even an outright sale. This transition phase represents a critical juncture where aligning expectations and goals becomes paramount.
How can we verify the quality of earnings? The $20-40K expense doesn’t make sense for some of these smaller acquisitions, hence my question.
Verifying the quality of earnings is essential in any acquisition, regardless of the size. However, for smaller acquisitions where expenses may appear disproportionately high, it's crucial to exercise due diligence efficiently. Here are some steps to help you verify the quality of earnings, particularly when dealing with smaller acquisitions: Detailed Financial Analysis: Scrutinize the target company's financial statements, including income statements, balance sheets, and cash flow statements. Pay close attention to expense breakdowns to understand where the $20-40K expenses are allocated. Expense Justification: Ask the seller to provide detailed explanations and documentation for the expenses in question. Understand their necessity and whether they are related to essential operational activities. Review Contracts and Agreements: Examine any existing contracts or agreements that might be driving these expenses. Ensure that the terms and obligations are clearly defined and reasonable. Historical Trends: Compare the current expense levels to historical data. Are these expenses consistent with the company's past performance, or do they represent an anomaly? Significant deviations may warrant further investigation. Industry Benchmarks: Research industry benchmarks to assess whether the expenses are in line with industry norms. Some expenses may appear high but could be standard in a particular sector. Seller's Motivation: Understand the seller's motivation for the sale. In some cases, sellers may attempt to offload excessive expenses onto the buyer. Be cautious if the seller's motivations seem suspect. Operational Efficiency: Evaluate the target company's operational efficiency. Are there areas where cost savings or optimizations can be made? Identifying potential improvements can help mitigate concerns about high expenses. Professional Advisors: Engage with experienced financial advisors or accountants who specialize in due diligence for acquisitions. They can help you assess the financial health of the target company and identify any red flags. Legal Review: Conduct a thorough legal review to ensure that there are no hidden liabilities or contractual obligations contributing to the high expenses. Negotiate Purchase Price: If you find that certain expenses are excessive, negotiate the purchase price accordingly. Consider whether the value of the acquisition justifies the identified expenses. Remember that the key to a successful acquisition, regardless of size, is comprehensive due diligence. High expenses may not necessarily be a deal-breaker, but they should be thoroughly understood and factored into the acquisition strategy.
Are you planning to offer (or have) legal services that allow buyers to purchase legal services packages or connect with your vetted Contracts Counsel /Qualified Lawyers?
While we have a general counsel on our team who can address high-level legal inquiries, it's always advisable to seek independent legal counsel to address specific and unique legal concerns related to your situation. We want to ensure that you receive the most tailored and comprehensive legal advice. As part of our commitment to supporting startup founders, we have established a referral partnership with Barlow Williams Law Firm. They specialize in working with startups, offering package pricing, and their team includes professionals with Harvard Law training. This partnership is designed to provide you with access to legal expertise that understands the specific needs and challenges faced by startup entrepreneurs.
So, as you check the revenue and profit, do you hold responsibility for the accuracy of that information?
While we take great care to verify the accuracy of the information provided, it's important to note that the ultimate responsibility for the accuracy of financial and operational data lies with the seller, then subsequently the Buyer in due diligence. Although we employ best practices to assess and validate the information, we strongly recommend that both parties engage legal and financial professionals to review and confirm the accuracy of any critical data before finalizing an acquisition. This helps ensure that all parties have a clear understanding of the financial and operational aspects of the transaction.
What is your process of evaluating financials? I see your disclaimer basically saying you don’t verify financial information. Are you looking at “notice to reader” financials? These are not audited and not verifiable. This is the biggest risk area for buyers.
Our process of evaluating financials involves a comprehensive review of the information provided by the seller. We understand that financial data is a critical component of any acquisition, and we take this aspect seriously. It's important to emphasize that while we conduct a thorough evaluation of financial information, the ultimate responsibility for the accuracy of the data rests with the seller. We acknowledge the potential risks associated with unaudited financial statements and encourage buyers to take appropriate precautions to protect their interests, including seeking independent professional advice. Our goal is to provide as much transparency and due diligence as possible to facilitate informed decision-making in the acquisition process.
Are you planning to launch a mobile application?
Not at this time.
When you sign up, can you register as an individual only or as a business too?
You can choose to sign your legal docs as an individual or an entity. Sellers on their listing will select if they are selling their startup as and individual or an entity.
My legal team is pretty specific on legal docs. Can you upload your own NDA for the target to sign prior to engaging them rather than the platform’s version?
While we love this idea, you cannot upload your own before getting access to the platform. But once the seller grants you access, you can send your own NDA to the seller and override the previous NDA.
If a listing has been sitting for a few months, and you are interested but for half of the asking price… is it offensive to offer that?
If your intent is to truly acquire the business and you feel that it's the right move to make to achieve your goal, it's worth a shot. It's not something we recommend in normal circumstances but every founder's situation is different. You may end up with a sour message and kill your chances of ever acquiring the business or find that you've just thrown the founder a new lifeline. All we ask is that you be genuine and respectful. Good luck!
Any coaching services for someone coming from traditional brick & mortar businesses?
Our new Buyer Success Program for our Platinum Subscribers may be the right option for you. Our Client Success Team can accelerate your acquisition readiness and start finding the right businesses according to your criteria. However, this program is NOT meant to help you run, manage, or grow your online business you end up acquiring. Our focus only anchors towards the acquisition prep and process. We have partners like Cultivate Advisors who are true business advisors and we're happy to make a direct introduction.
The content is great, but I’m wondering if there is a person who could assist with the first acquisition, like a coach or someone who helps you understand the order to go through.
The Buyer Success Program led by our Client Success Managers is what you need. They are part of the Acquire.com M&A Team trained by our two expert brokers (Paul Kelley and Rainier Nanquil) with considerable input from Andrew Gazdecki (Founder) and James Graves (General Counsel) on how to coach buyers on what to expect. The Buyer Success Program is built from the combination of strong institutional knowledge brought by our various experts and the massive amounts of acquisition data gathered from the Acquire.com platform.
The content on this site is not intended to provide legal, financial or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before entering into any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional.