- Acquisition Prep 101
- Recap and Learnings
- We’re Always In Your Corner
- Benefits of Acquisition Preparation
- The Purpose of Prep: Closing the Knowledge Gap for Buyers
- Six Reasons Preparation Is Essential
- Covering the Basics of Acquisition Prep
- Identifying Your Acquisition Goals
- What Red Flags Do Buyers Watch For?
- Five Easy Actions to Help You Prep for Acquisition
- How Acquire.com Helps You Prep Like a Pro
- What Buyers Want From You
- They Got Acquire’d: Founders Who Properly Prepared for Acquisition
- Submit Your Listing and We’ll Prepare You For Exit
- Free Resources
- Webinar Q&A
- Recap and Learnings
Loved seeing some of you at the webinar on Wednesday. If you couldn’t make it, no problem. You can watch the video above or read the recap below to catch up.
Last time, we talked about valuations and how setting the right asking price is essential. But before you can convince buyers to pay it, you need to prepare your business for acquisition.
Preparation is key to increasing buyer interest and driving up your asking price. With ready documents and answers, you’ll impress enough buyers to negotiate a higher price and friendlier terms. Why settle for less when you could’ve sold higher with a little more planning?
Let’s get you prepared for acquisition below.
Acquisition Prep 101
Recap and Learnings
We’re Always In Your Corner
I knew very little about acquisitions the first time I sold my business – mostly stuff I picked up from the press and social media. While I was fortunate to get the offer I did, I look back now and see so many simple mistakes I could’ve avoided if I’d had more help.
How much more could I have sold for if I’d shopped around to more buyers? Or if I’d been smarter with my valuation? Or if I’d scaled more before selling? These questions ran round and round my head, so I channeled them into my next venture.
Acquire.com (formerly MicroAcquire) launched in 2020 to help founders sell their businesses quicker and easier. We’re the world’s first founder-friendly startup acquisition marketplace, focused on helping you achieve your M&A goals.
Whether you’re new to acquisitions or an M&A pro, our tools, resources, and expert team are here to help you maximize your exit. We’ve already helped close half a billion dollars in transactions over a thousand exits and listings to 350,000+ buyers.
Benefits of Acquisition Preparation
Like 20-something-year-old me, you might think someone will drop into your life one day with a massive check to buy your business. But no buyer will express interest in your startup if they don’t know anything about it – if you’re not actively selling it to them.
They’ll want to see evidence that your startup is worth pursuing, and that’s where preparation comes in. The more you prepare, the more buyer interest you’ll drive, and the more you can maximize your valuation.
I like to say that if you have one buyer, you have no buyers. Receiving multiple offers boosts your leverage, allowing you to negotiate the price up and close on your preferred terms.
But to attract multiple buyers and offers, you’ve got to prepare first. Delaying answers to simple buyer questions or struggling to pull data won’t make a good first impression. Preparation could be the difference between selling and not selling your business at all. Or worse – it could lead you to close for a far lower valuation than your business is worth.
The Purpose of Prep: Closing the Knowledge Gap for Buyers
Ultimately, the purpose of preparation is to close the knowledge gap for buyers.
They don’t know your business nearly as well as you do, if at all. Looking at your website or social media pages gives them the bare minimum. It’s up to you to explain why your business is so attractive and to back it up with facts.
Facts help de-risk the acquisition for the buyer and show them you know what you’re talking about. To best highlight your understanding of your business, prepare a profit and loss (P&L) statement, a balance sheet, and clear revenue and profit metrics at a minimum.
But buyers will also want to know more about your business’s operations, product, marketing, etcetera. You can save time for both of you by providing this info in a confidential information memorandum (CIM).
Think of a CIM like a reverse pitch deck. But instead of pitching investors, you’re pitching potential buyers on why this is a good acquisition opportunity. It showcases your business’s structure, history, growth potential, and more to convince buyers it’s worth the risk.
Since the CIM answers many buyer questions upfront, you can skip straight to the more advanced acquisition questions in your early conversations. Save time on your deal and hook your buyer with your business’s potential all in one go.
Six Reasons Preparation Is Essential
I could give you 50 reasons why preparation is crucial for your deal, but I narrowed it down to the six most important.
- Increases your valuation and leads to a successful acquisition.
- To me, this is the most important reason you should prepare for acquisition. Preparation attracts more buyers, which attracts more offers, which gives you more leverage to drive up your price for a successful deal.
- Makes it easy for buyers to understand and acquire your business.
- You may not know this, but most buyers look at dozens of startups daily. To capture a buyer’s attention, make it simple for them to understand your business and offering. The better their understanding, the easier to express interest and make an offer.
- Increases buyer interest, which increases your leverage.
- If you have one buyer, you have no buyers. A bigger buyer pool leads to more offers, giving you leverage to drive up your price. Having your prep in place will de-risk your acquisition for buyers, encourage letters of intent (LOIs), and give you more bargaining power once the offers stream in.
- Saves time for buyers so you can accelerate due diligence.
- Whether you prepare or not, buyers will ask questions about your business. In early conversations or during later due diligence, they’ll want to know about your business’s operations, financial health, customers, etcetera. Why drag out the due diligence process for months when you could address these common buyer concerns from the get-go?
- Preparing these answers in advance will accelerate the acquisition process and show buyers you’re serious about selling. If you waste time digging up these answers months into the deal, the buyer may decide acquiring your startup is more trouble than it’s worth.
- Wows buyers and gives you the edge over less-prepared sellers.
- One of the easiest ways to make a good impression on buyers is to show you’ve done your homework. Serious sellers know how risky acquisitions are and actively de-risk the deal through their preparation. Entering conversations with your documents ready and your startup’s info top of mind proves you’re motivated to sell and will be easy to work with post-acquisition.
- Remember, you can’t get back a first impression. You can only wow buyers with your initiative or scare them away with your lack of preparedness.
- Reveals and solves problems before they impact your exit.
- It’s normal to experience issues and blockers when running a business, but you must be upfront with the buyer about those problems from the start. They’ll find them during due diligence anyway, so take the time now to angle the issues in a good light (if not resolve them completely) and showcase them as opportunities.
- The later buyers discover a problem, the more likely the acquisition will fail.
Covering the Basics of Acquisition Prep
I’ve talked a lot about why you should prepare for your acquisition – now let’s get into how you do that. Below are the three basics of acquisition prep: clean financials, buyer documents, and your Acquire.com profile. Let’s review them.
To give buyers a true picture of your business’s financial health, upload a 24 to 36-month profit and loss (P&L) statement. Break it down by month and let them see exactly how your business has performed over the last few years. Back up this data with a balance sheet and some revenue and profitability metrics to really attract buyers.
Aside from your financials, buyers also want to know about your business’s operations, growth opportunities, target customers, and more. Instead of answering these questions in a tedious back-and-forth conversation, address them in the few concise documents outlined below.
Confidential Information Memorandum (CIM)
A CIM pitches your startup to buyers and helps them understand it. You provide ample information to encourage buyer calls that delve deeper into your startup and a potential deal.
Think of it as a sales process – the more information you provide upfront, the likelier you are to reel them in.
Due Diligence Checklist
A due diligence checklist expedites the process later on but also covers some high-level information early. Maybe the buyer doesn’t want to acquire a startup with a high churn rate, and if they only discover that information after drafting an LOI or asset purchase agreement (APA), you’ll both have wasted your time.
Different types of startups will have different items on their due diligence checklist, so ensure you have one that complements your business before sharing it with buyers. A SaaS business, for example, doesn’t need to talk about inventory or manufacturing logistics.
Transition Guide/Asset Transfer Plan
Preparation isn’t only about attracting the right buyer. It also helps you and the buyer transition smoothly post-acquisition – and that’s where a transition guide or asset transfer plan comes in.
This plan outlines how you’ll transfer each asset to the buyer. You’ll list the services used for transition, the usernames and passwords, the permissions, etcetera. How will they access your Stripe account? Or receive your inventory? Or gain access to your code?
Planning will save you time and stress after the deal closes and show the buyer you’ve thought this through from start to finish. Again, they’ll be impressed by your initiative and show more interest in your startup since they know you’re committed to exiting.
The More Docs, the Better
Without documents like these handy, especially a transition plan, you might be looking at a 20-30 percent lower valuation. Buyers want as smooth a transition as possible, and if you can’t guarantee that, they’ll look to lower the price.
Though it may take some time before you hit the marketplace, I promise that preparing these documents now will help you close that much sooner and for a much higher price later.
First, connect your metrics to give buyers an anonymous view of your business data. Sync your Quickbooks, Stripe, Chartmogul, Google Analytics, and more to build trust with buyers and be transparent about your business’s health.
Second, connect your LinkedIn profile. There’s a great quote that says, “You cannot do a good deal with a bad person,” so let the buyers know who you are through LinkedIn. Show them your background, work history, location, etcetera, to help them see the person behind the deal.
In that same vein, record an introduction video. Just a quick two-minute video on Loom or YouTube to introduce yourself and go over the business opportunity. Highlight why you’re selling and why buyers should acquire your business, and invite them to learn more in a buyer call.
Your listing is your first and only shot to impress buyers enough to get on the phone with you. Once you’re there, you can dazzle them with more in-depth knowledge of your business. But to pique their interest and create a smoother transition, pay attention to the little details in your listing.
Identifying Your Acquisition Goals
As much as buyers want to know about your business, they also want to know you. Answering the questions below helps them better understand your motivations.
1. Why Are You Selling?
Buyers often use this question to break the ice and learn more about you. But it’s also a powerful de-risking tool. They don’t want to inherit a sinking ship of a startup, so reassure them that you’re leaving for another reason.
Common reasons to sell include:
- A new venture
- A financial reward
Be honest with the buyer and yourself. This question will keep you motivated throughout the acquisition and remind you of your end goal. What are you working towards? What drives you to pick up the phone to buyers or put together a CIM? Let that motivation drive you toward a successful acquisition.
2. What Life Do You Want Post-Acquisition?
You know the business better than anyone, and the buyer will rely on your knowledge to ease the post-closing transition. But what if you want a clean break and a short transition period? Is the buyer prepared for a crash course in your startup and a short learning curve?
Ultimately, it’s your choice to break away from the business entirely or stay on after the deal. But your plans will affect the buyer, who now has to decide if they can handle that responsibility.
Your decision will also impact your valuation. If you want to keep your valuation high, I strongly recommend a longer transition period (between three to six months, at minimum). The buyer might need your help with a particular customer or to resolve a tricky bug. Your firsthand experience with those issues is crucial, and it reflects in your valuation.
If you’re deadset on a short transition period, that’s up to you – just know it might reduce your valuation.
3. What Kinds of Deals Might Get You There?
Being open to creative deal structures increases your chances of selling. You might not get an all-cash deal with your current valuation, but if you lower your asking price or offer seller financing, the buyer might be more willing to risk it.
Seller financing and earnouts provide more security to buyers because they don’t have to put down the full cash amount at closing. And in an earnout, they only pay the earnout portion of the price if your business meets pre-agreed performance targets. Before talking to buyers, it’s important to assess if you’re okay with that and how it fits into your post-acquisition plans.
If you need all cash at closing to fund a new venture, for example, you might have to lower your valuation or find ways to justify a higher one.
But if you’re concerned about whether a certain deal structure is the right one for you, don’t worry. We’ll happily review any offer with you. If it seems unreasonable or unobtainable, we’ll give you honest feedback until you find the best offer.
4. How Can You Convince Buyers to Offer the Deal You Want?
You get one chance to make a good impression on buyers, so consider how your actions will affect your deal and how you can best persuade buyers to offer your ideal price and terms.
From my experience, the easiest way to get buyers on your side is by:
- Being easy to work with
- Buyers don’t have the time or energy to deal with difficult founders. The more open you are to their questions and suggestions, the easier your acquisition will go. That doesn’t mean you let them walk over you and your wishes. But a calm head and respectful attitude will help you build trust and rapport with them, causing them to listen to more of your demands.
- Being honest
- Be honest and upfront with buyers, especially about your numbers. They’ll fact-check you during due diligence anyway, and getting caught in a lie is the quickest way to kill a deal.
- Being prepared
- Preparedness = seriousness in acquisitions. If the buyer’s willing to take the time to assess and potentially acquire your business, they want to know you’re dedicated to putting that information together for them. Acquisitions are a two-way street, and coming to the table prepared shows you’re just as committed to the deal as buyers are.
- Being realistic on the asking price
- In my experience, the number one reason most startups don’t sell is the asking price. Some prices are too outside of market expectations for buyers to justify. The easiest way to get the price you want is to attract lots of buyers with a lower number and use that interest to drive the price up.
- Being responsive
- Buyers aren’t going to sit around waiting for you to respond to their inquiries. If you can’t take the time to reply to a message, they’ll look at other startups to acquire. Remember, you must constantly sell your business, not expect the perfect buyer to fall into your lap. Follow up within 24 hours, get them on a call as soon as possible, and begin building a relationship with them.
- Just asking!
- Finally, don’t be afraid to ask for what you want. Buyers aren’t mindreaders. If you have a specific demand, put it on the table and see what happens. The worst they can do is say no, and then you can negotiate. But some buyers will surprise you, so be vocal about your wishes.
What Red Flags Do Buyers Watch For?
A massive part of preparing for acquisition is adopting a buyer’s mindset. Put yourself in their shoes and consider what you’d want to know about a business before acquiring it. If you don’t have that information readily available, the buyer’s more likely to pass on your startup than pursue it.
Some common red flags buyers beware (and you should avoid) include:
- You can’t answer their questions
- If you don’t know your own business, how is the buyer supposed to understand it? The buyer wants confidence in your knowledge and ability to train them post-acquisition, and an inability to answer basic questions only invites doubt.
- You don’t answer promptly
- Taking days or weeks to respond to a message causes the buyer to question your seriousness. They’re wondering if you already have one foot in and one foot out of the business – and what does that say about the state it’ll be in after they acquire it? Is the rest of the business as disorganized as the founder? That’s not what you want your buyer to think about you.
- You’re unsure of your goals
- If the buyer’s investing their time into pursuing your startup, they want to know you’re serious about selling it. They’ll only believe you’re serious if you can align on a price, a deal structure, a deal schedule, etcetera.
- You can’t articulate the opportunity
- To target the right buyer for your business, you must know how you’re presenting it. Is it a business that’s growing but needs a cash influx? A startup that needs expertise in an area you’re unfamiliar with? Clarify the buyer’s benefit or you’re less likely to receive a favorable offer. Decide if you want to pursue a strategic or financial buyer so your acquisition marketing is more effective.
- Your data room is inaccurate or untidy
- If buyers see a messy data room, they’ll wonder if the business is just as messy. It all reflects on you as a founder – will this person be easy to work with post-acquisition? What kind of state did they leave their business in? If your data room is unorganized, buyers won’t care to find the answers. They’ll move on to a more organized startup rather than waste their time trying to make sense of your business.
Five Easy Actions to Help You Prep for Acquisition
Time for a quick review! These actions shouldn’t come as a surprise, and they should tell you exactly what steps you can take to prepare your startup for acquisition.
1. Prepare Your Financials
Upload a 24-36-month P&L statement that breaks down your financials month by month. Support your data with revenue and profitability metrics.
2. Build Your Data Room
Your data room can be as simple as a Google Drive folder. Use it to easily store key info about your startup like your marketing docs, business operations, sales processes, etcetera. Highlight what’s performed well and what hasn’t, because those underperforming channels could be growth opportunities for your buyer.
3. Complete Your Listing and Profile
The data we ask you to enter on your profile is data we know buyers want to see. Complete everything with as much detail as possible. Appeal to buyers with connected metrics, a connected LinkedIn profile, a verified identity, and a profile picture. Build trust and inspire them to learn more by impressing them with your listing and profile.
4. Know Your Ideal Outcome
The better you understand your goals and plans, the easier it will be to explain to buyers. Show them you’re serious about selling by having these answers prepared, and know what kind of deals you’re interested in so you don’t waste time with incompatible buyers.
5. Be Personal and Responsive
Finding the right buyer isn’t always an easy process. Sometimes you have to be persistent in messaging them, following up, and sharing additional information to entice them. Treat this like a sales process, where every buyer who signs a non-disclosure agreement (NDA) is a potential lead you have to chase.
Plus, being responsive during due diligence will accelerate the process and help you close sooner.
How Acquire.com Helps You Prep Like a Pro
Even after taking the actions above, it doesn’t hurt to have a helping hand (or several). Our in-house M&A team is specially trained to help you make a splash on the marketplace and sell as quickly as possible.
And the best part? Our help comes free, as part of the 4% closing fee all founders pay to sell on Acquire.com.
I’ve categorized our service into three buckets. First, we help with your listing, then we coach you, and then we market your startup. Let’s break it down.
Improving Your Listing
If you get approved for the marketplace, we’ll polish your listing to help it stand out. Qualifying startups will hear from a customer success manager (CSM) who helps you connect your metrics, upload a P&L statement, and understand what a reasonable valuation is for your startup. We know our buyers, and our support team will help you set an asking price that attracts the most buyer interest and achieves your goals.
Coaching You for the Marketplace
Our M&A team has decades of experience helping founders achieve their acquisition goals. We’ll guide you through the acquisition process from common buyer questions to due diligence items to a living Q&A.
With a living Q&A, you collect questions from buyers and keep them in one document so you don’t constantly repeat the same answers.
We’ll also help you outline a transition guide to explain how you’ll transfer your assets to the buyers and set up a deal schedule to move buyers toward formal offers.
No matter your stage in the process, we’re always ready to help. We’ll review offers and APA, and help with due diligence, escrow, or post-acquisition planning. From start to finish, we’re by your side.
Marketing Your Startup
What we do better than any other company in the world is market your startup to over 350,000 potential buyers. Newsletters and social media blasts go out daily, showcasing your company to hundreds of thousands of prospects.
We’ll also conduct targeted buyer campaigns, using acquisition data collected from buyers to market your startup to the most likely candidates. If a buyer knows they want a SaaS startup worth $100,000 in trailing twelve-month (TTM) revenue, we deliver those listings directly to their inbox.
All of these efforts drive buyer interest in your startup, leading to more offers and more leverage for you to increase your asking price. We want you to exit on as favorable terms as possible, and we’ll do everything we can to make that happen.
What Buyers Want From You
When completing these steps to prepare your startup for acquisition, remember to think like a buyer and keep their expectations in mind. All of this prep is to make the process easier for them and attract more offers. What do they want from you to make that happen?
Common buyer expectations include:
- A financial vs. strategic approach.
- Most buyers fit into one of these two categories, and depending on what you want from your acquisition, you should prep your startup to cater to one of these two audiences.
- Financial buyers are typically private equity firms looking for a return in three to five years. Strategic buyers are usually companies looking for synergy with your product or a large public company that thinks your product can help them expand into new markets.
- Credibility, fit, and opportunity in your startup.
- Without these three elements, buyers won’t see the value in pursuing your startup. They want to acquire a business that benefits and complements their skills, so find out who your ideal buyer is and market your startup to them appropriately.
- Data and facts over emotion and hypotheticals.
- Buyers won’t risk acquiring your startup unless they know it’s a worthy investment. The easiest way to de-risk the deal is to show them viable growth opportunities. Plus, it’s easier to justify a higher valuation if you have data to support it (like rapid growth or low churn).
- Not wanting to waste time or educate you.
- If you’re new to acquisitions, review our resources and familiarize yourself with the process as much as possible before talking to buyers. They don’t want to waste precious time explaining what an LOI or due diligence is when you could be discussing your startup and why they should acquire it.
- Wanting you to be professional, easy to work with, and organized.
- Difficult founders rarely close deals. If you want to work with your buyer to close on favorable terms, show them you’re flexible and responsive instead of abrasive or lazy. You only get out of the acquisition what you put into it, and serious buyers expect serious sellers to show they’re committed.
They Got Acquire’d: Founders Who Properly Prepared for Acquisition
Kissmetrics CEO Jenn Steele closed a seven-figure acquisition in just 30 days. How did she exit so quickly? Jenn had her acquisition goals nailed down and her documents ready, helping her negotiate for a 2x revenue multiple and an all-cash deal. It helped that she followed her M&A advisor’s advice to juice up her listing, which earned her 40 NDAs and a formal offer in eight days.
Just 48 hours after GrowthBar went live, co-founders Mark Spera and Hailey Friedman received almost 50 requests to enter their data room. They hopped on buyer calls within a few hours, answering questions about the business. A few buyers felt persuaded enough to make offers immediately, and Mark and Hailey sold at 3.6x revenue two months later.
MyWorks founder Peter Leonard credits his fast acquisition to three things: his previous dealings with buyers, an Acquire advisor’s help during the process, and having organized his business long before trying to sell it. By completing as much prep as possible beforehand, Peter saved months of due diligence time that he could put towards his family instead. His efforts also earned him a seven-figure deal at 2.5x revenue multiple.
Konch co-founders Sean Shadmand and Anders Hasselstrøm’s preparation earned them over 100 inquiries from buyers. The work they put into their listing and buyer conversations paid off, helping them sell for almost all cash at 2x revenue in just over three months.
Flockler founder Toni Hopponen’s preparation helped her attract dozens of buyers and secure an almost-all-cash deal. Eventually, she found the right fit with Relay Commerce, a PE firm that acquired the startup for a 3x revenue multiple in a seven-figure deal.
Submit Your Listing and We’ll Prepare You For Exit
You’re not alone when selling your startup. Our free M&A team will guide you through the preparation, fielding offers, negotiating, and closing stages of your acquisition. Rely on decades of M&A experience and trust that we’ll help you close on favorable terms.
Sign up now and submit your listing to begin your acquisition journey. We’ll connect you with over 350,000 buyers and help you navigate the marketplace until your business is in good hands.
- Webinar slides – All the slides are below but we’ll cover the important ones in the recap.
- Ask our experts to help prepare your business for the marketplace – Submit your listing to see if you qualify for free acquisition support from our in-house M&A team.
- 5 Things You Must Do Now to Make Your Acquisition Go Smoothly – Learn five actions to help you prepare for a quicker and easier acquisition.
- Free preparation articles – Get a head start on the due diligence process and accelerate your deal with our free resources. Browse dozens of expert blogs explaining what to expect in due diligence, how data rooms work, what CIMs are, and more.
What should I do for a P&L statement if my business is pre-revenue? How do I communicate our growth potential to the buyer at a glance?
Pre-revenue businesses are a hard sell because there’s no track record, no financials demonstrating the health of the business. Projections only get you so far. Your valuation will depend on how much you know your market, the problem your business solves, and the costs of solving that problem. In lieu of a P&L, you’ll need to gather as much evidence as you can find to support future growth and share it in a pitch deck or CIM.
Where can I find a reliable due diligence checklist?
If you work with one of our customer success managers, they’ll send you a due diligence checklist and more acquisition resources. We’ve assembled the checklist from thousands of closed acquisitions, consolidating the due diligence process into the most common questions you can expect to answer while getting Acquire’d.
How much prep time should I allocate to selling my business?
As much as it takes. There’s no standard time to dedicate to acquisition preparation. It’s different for every business. But the more preparation you put in, the better your exit. Don’t take preparation lightly. This isn’t admin. It’s about proving you’re committed to selling, you’ve done your homework, and your business is worth acquiring. It can mean the difference between hundreds of thousands or even millions of dollars. Do you want to knock it out in two or three days? Or is it worth setting aside a week or two to review everything? I’ll let you be the judge of that, but remember we’re here to help you prepare.
How can I afford time to manage the acquisition process while also running my business?
Running your business while selling it can be challenging. Managing an acquisition is like taking on a second job. Especially if it’s your first time or you’re not running the process with any guidance. You can expect to add around 20-30 additional hours of work per week (minimum) to generate enough interest to negotiate the price and terms you want. If that sounds overwhelming, get in touch. Our in-house M&A team can shoulder some of the work.
What do I put in a data room? And what’s the best way to organize it?
Use our template! Your data toom can be simple or complex, but I’d recommend just starting with a Google Drive. Create folders for sales, marketing, operations, financials, and so on. Add your marketing materials, sales playbooks, SOPs, a product roadmap, and more. You don’t need to add anything especially sensitive, but giving buyers as much information as possible helps to de-risk the acquisition and encourage better offers.
How can I negotiate as short a transition time as possible so that I can move on to my new venture?
First, be clear with buyers you want a short transition period. They’ll probably want you to stay on for a few months at least, maybe a year or more. You staying on, even temporarily, reduces acquisition risk, which increases your valuation. As a result, the shorter the transition period, the lower your valuation. For example, you might take a five or ten percent cut in your asking price to leave immediately. But at minimum, buyers will expect you to help for at least a month or so while you transfer all the assets and ensure the business is stable under new ownership. Be open to longer transition periods if you want a higher valuation for your business.
Are financials enough or do I really need a CIM and data room?
No, financials alone are not enough. Buyers are about to spend hundreds of thousands if not millions of dollars on your business. Would you do that based on a P&L alone? I’d hope not. You want to share as much information as possible to truly sell the acquisition opportunity. Let’s say buyers go wild for your financials. The next thing they’ll ask to see is your data room. If you’ve set that up in advance, you accelerate the process and give buyers confidence you know what you’re doing. Completing a CIM and populating a data room is among the highest ROI tasks you’ll ever do. So what if it takes a day or two? Think of the impact on your valuation.
What are some red flags showing a buyer is unprepared?
The first red flag is if they don’t respond to your messages. Chase for a response. They signed an NDA to view your private information, signalling they’re interested in your business, so follow up with them until they tell you they’re no longer interested. The major red flags are when buyers do the opposite of what they expect of you. In other words, they’re unresponsive, dishonest, ask only vague questions, can’t answer your questions, and so on. Before signing an LOI, I recommend jumping on a pre-LOI call to answer questions like: - What are your plans for the acquisition? - Do you have a due diligence schedule? - How are you going to finance the acquisition? - Do you have any references you could share? Ask those questions upfront, and if you're not confident the buyer has funds on hand, ask them to verify them through Acquire.com. Our team will review their financial statements and verify their liquidity to reassure you the buyer is capable of acquiring your business.
I’m struggling to connect my metrics. Any advice on how to best show this info to a buyer?
Connecting metrics is usually easy and builds your P&L and other charts for you. But if you’re struggling to connect your metrics, email us at firstname.lastname@example.org. We can walk you through the process and troubleshoot any issues. Otherwise, you can always upload your P&L manually.
Where can I get all the resources you shared in your presentation?
You can find many acquisition documents in our help center. Other documents are typically only available for startups we’re helping get acquired. We're happy to get on call with you to discuss an acquisition strategy and see if we can help you get Acquire’d.
My business listing is live and getting buyer messages – should I pull my listing and restart the process to better prepare?
Yes, absolutely. If you’ve been listed for four, five, or six months (or longer), and you’re not getting any attractive offers, speak to our M&A team. We’ll cover everything you need to prepare, how to set up a data room, how to answer common questions, and so on. Then we’ll coach you through the entire process. We can help jump-start or restart the acquisition process to make a better first impression, giving you another shot at going to market.
If I’m too transparent, can a buyer copy my business idea?
While you’re protected by the NDA the buyer signs when requesting access to your private information, there’s always the risk they might try to copy your idea. My recommendation would be to not worry too much about it. Entrepreneurs don’t succeed on ideas alone. Execution is what matters. Nevertheless, do your due diligence on the buyer before revealing anything sensitive.
What percentage of businesses for sale don’t have “clean” metrics on revenue and profitability?
We don’t list businesses without clean revenue and profit metrics. This wouldn’t give a good first impression nor give buyers confidence in our listings. If you submit a listing with unclear or incomplete metrics, we’ll ask you to connect your real-time metrics or upload them manually (for which we can provide all the templates).
What percentage of successful acquisitions at good valuations end up with an earnout? What is a typical time period for this?
I’d estimate around 70-80 percent of acquisitions include an earnout. Buyers use earnouts to offset the risk of the business missing performance targets or to incentivize you to stay on and help the business meet those targets. Earnout periods are negotiable, but the most common are 12 or 24 months. For more information, check out our guide to earnouts.
How I can ensure the buyer will pay post-closing conditions like holdbacks and seller financing?
First, verify that the buyer is capable of and committed to repaying by doing due diligence. Ask for references and contractual assurances that in the case of non-payment, the business will return to you. Our APA builder includes the option to add seller financing, holdbacks, and earnouts using fair wordings that give you legal recourse should anything go wrong.
What’s the difference between a P&L and a balance sheet?
A balance sheet is a snapshot of your finances as they look today. A P&L summarizes your financial performance over time. Both are important, but buyers are especially interested in your P&L because it tracks performance and reveals growth opportunities.
How do you determine a realistic price?
The simplest way to value your business is to apply a multiple to SDE, EBITDA, or profit. We report the multiples at which startups get Acquire’d on our platform. Start by referring to our multiples report for the average multiple range for startups like yours. Then apply that multiple to one of the following financial metrics: - SDE = Seller's Discretionary Earnings This is your profit after deducting operating expenses and cost of goods from revenue but after adding back in your compensation. SDE = (Revenue – Operating Expenses – Cost of Goods) + Your Compensation. Consider SDE if you run your business alone or with a cofounder. - EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization Consider EBITDA if your business is medium to large or generating profit. - Revenue = Your total annual revenue Consider applying your multiple to revenue if your SDE or EBITDA is zero because you're investing all your spare cash into growth. For more help, check out our help center article on setting your asking price. Or, drop us a line at email@example.com and we’ll walk you through the process.
Should I work to the buyer’s time zone when being responsive?
Yes, if possible, though I’m sure the buyer would understand if the difference caused delays. Just be honest and upfront about the difference and work out a schedule that works for both of you.
I’m too busy to manage my acquisition – should I delist while I prepare acquisition materials or try to respond to buyers now?
Great question. If you’ve only just listed, speak to our team to see if we can help coach you through the process to ease the pressure. Email firstname.lastname@example.org and we’ll respond usually within a couple of hours. Otherwise, yes, if you don’t have the time to properly manage your acquisition, you’ll find it much harder to exit at the price and terms you want. Better to delist and wait until you’re ready to give it more attention (or work with us to share the load).
What are some seller red flags?
Seller red flags that suggest unpreparedness include things like not responding to messages, giving vague answers, being unable to provide evidence to back up their claims, taking too long to respond, and so on. Pretty much anything that suggests they don’t know their business or how acquisitions work.
What revenue/profit multiple is realistic to aim for?
A realistic multiple is one that reflects current market trends. I suggest checking our multiple reports of past acquisitions and comparing the data with your business. You can go a bit above or below our multiple recommendations, of course, but it might take longer to find the right buyer. Buyers might also impose terms on your acquisition to reduce the risk of a higher valuation, for example.
How does Acquire.com earn money on the business sale?
We charge sellers a flat 4 percent closing fee (on the total purchase price) when they sell (they pay nothing if they don’t). Visit our pricing page to learn more.
Do you have an example of a CIM?
When you work with us on your acquisition, we’ll create a custom CIM that highlights the unique selling points of your business. Past CIMs are private and protected under NDA. For an idea how one might look, and to learn more about CIMs, check out our blog.
What is the requirement for code documentation?
There are no specific requirements other than your documentation should explain how your code works and how to use it. To learn more, check out our blog, What Buyers Look for When Doing Technical Due Diligence on Your Company.
What’s the profile of acquirers?
We have a diverse mix of over 350k buyers from every corner of the M&A market. From private equity and venture capital to individuals and companies, you get enormous exposure to a committed, qualified buyer pool when you sell your business on Acquire.com.
If I have many users but not many subscribers, can I still sell my company?
Yes, it’s possible, especially if you can convince buyers of the growth opportunity. However, most buyers prefer to see revenue and profit. My advice would be to wait a year or two, monetize those users to generate revenue, and then list on Acquire.com. That way you’ll justify a much better asking price.
What’s the common way to share information about my company with buyers?
The most common way to share company information with buyers is with a data room. This is a virtual repository, like a Google Drive folder, where you add details about your business that you can selectively share with buyers. We’ve created a template for you. We also recommend recording an introductory video and uploading it to the private section of your listing along with a P&L (even if you’ve connected metrics).
What is pre-financing?
Pre-financing allows you to unlock future revenues from your business to help fund its acquisition. You apply to be pre-qualified with our finance partner, Boopos, and then buyers can take advantage of the financing to acquire your business and repay from the company’s future revenues. It doesn’t cost you anything, and for the buyer, the financing is non-dilutive and requires no personal guarantees. To learn more, check out our blog.
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Should I add founder’s salary into my financials?
Your accountant can best advise you on what items to include in your financials. Small business valuations are usually calculated using seller discretionary earnings (SDE), and SDE typically includes your compensation as an add-back. Once you’re employing staff, however, you’d switch to calculating your valuation on revenue or EBITDA (earnings before interest, taxes, depreciation, and amortization).
Do buyers consider a high search engine ranking in their valuation?
Yes, search engine ranking is one of many factors buyers consider when deciding what multiple to apply to your revenue or profit. A strategic acquirer, for example, might calculate a valuation based on how much time and effort it would take to build that ranking. But for most buyers, the biggest impact on your valuation will be your financials.
What is the acquisition course?
You can access a free acquisition course that teaches everything you need to know about acquisitions when you list your business for sale on Acquire.com. Or, you can get one-to-one coaching from our in-house M&A team. Drop us a line at email@example.com to see if we can help you get Acquire’d.
What CIM items should we prepare for?
Here’s an overview of what goes into a CIM including examples. For more help, email firstname.lastname@example.org and we’ll help answer any CIM questions you have (and even provide a template for you).
Is there an Acquire.com public dashboard showing average metrics across completed acquisitions?
Not at the moment, but I love that idea! Right now, you can find everything you need to know about past acquisitions in our multiple reports.
What’s the minimum size of the businesses being listed?
We don’t specify a size, but as a starting point, you should at least have some paying customers, a working website (with active traffic), and the facts and figures to justify your asking price. Anything outside of that is a VERY difficult sell on Acquire.com.
We’re looking to sell off a division of our company as an asset – is this possible on Acquire.com?
Yes! So long as it’s an asset sale, you can sell off a company division on Acquire.com.
Have you had success with CPG founders successfully selling their business on your platform?
Yes, many CPG founders have got Acquire’d on our platform. We interviewed one last year, Fortuna Burke, who sold her ecommerce vitamin brand on Acquire.com. Read her story here.
As an early stage company, is there a limit on the asking price where revenue may not be high but there’s great potential?
We don’t set a limit on your asking price, but if we think it’s high based on past acquisition data, we might ask you to review it or provide additional justification. Buyers generally favor current performance over projections, so you’ll maximize your valuation if you earn the numbers to justify it.
Are most buyers based in the US?
Many of our buyers are in the US, but Acquire.com is a truly global platform with buyers on every continent.
I run a SaaS business in Bangladesh – can I sell to an international buyer?
Yes! Founders from all around the world, from Pakistan to Morocco, have sold their businesses to international buyers on Acquire.com. Here’s a guide to selling to an international buyer.
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.