Rapid Road to Sale: From LOI to Final Offer (April 2024 Webinar Recap)

Imagine getting your dream offer for your business you’ve listed for sale. How do you increase your chances of closing? And on the flipside, what if you’ve listed your business for sale but have no interested buyers? Do you know the tactics needed to turn the tide?

Today, you’ll learn how to attract the best offers and then take your favorite over the finish line. Hear insights from Acquire.com founder and CEO, Andrew Gazdecki, along with General Counsel, James Graves, and M&A Advisor, Rainier Nanquil. Watch the full webinar below or skip to the highlights.

Who Are Your Presenters?

Andrew Gazdecki, Founder and CEO of Acquire.com

I’m Andrew Gazdecki, founder and CEO of Acquire.com. I’ve been an entrepreneur my whole life. I bootstrapped my first business, Bizness Apps, to $10 million in annual recurring revenue, which I later sold to a private equity firm in a life-changing acquisition. Since then, I’ve sold two more businesses, bought one, and founded the world’s largest startup acquisition marketplace.  

I’ve been on both sides of the M&A table, as a buyer and a seller, so I know how complex and difficult acquisitions can be. I started Acquire.com to fix the complex acquisition process and make it easier for founders to get acquired, and it’s my pleasure to share my knowledge with you today.

James Graves, General Counsel at Acquire.com

I’m James Graves, and I’ve been the general counsel at Acquire.com for about two and a half years. I’ve been practicing law since 2015, working at F5 Networks, Amazon, and a few private law firms before arriving at Acquire.com. Throughout my career, I’ve worked in defense litigation, M&A transactions, startup law, and more. The biggest transaction I’ve handled was over $170 million.

Rainier Nanquil, M&A Advisor at Acquire.com

I’m Rainier, one of the in-house M&A advisors here at Acquire.com. I have over a decade of experience in M&A, capital markets, and investment sales. In that time, I’ve handled over a billion dollars worth of deal volume for various markets. I know a great deal when I see one, and I’m delighted to share how buyers will evaluate your business and give you tips to hopefully achieve your acquisition goals.

What Is Acquire.com?

Acquire.com is the best online marketplace to buy and sell SaaS startups. Combining expert M&A advisory and technology, our services help you get Acquire’d fast and maximize your exit. 

Since 2019, we’ve helped over a thousand founders sell their businesses, closed over half a billion dollars in deal volume, and registered over 400,000 buyers. Live internationally? No problem – we’re active in over 100 countries and every continent except Antarctica.

Pre-LOI – Getting That First Offer

Getting your first offer, or maybe lack thereof, gives you an indication of whether you’re on the right path or need to correct course to achieve your acquisition goals.

Why Is the First Offer So Important?

Getting the first letter of intent (LOI) in an acquisition is crucial—it not only moves things along but also makes your company look hot to other potential buyers.

This early interest often sparks a fear of missing out (FOMO), which can bring in more offers and ramp up the excitement. You can use this initial LOI to negotiate better terms or even bump up your valuation, building momentum and market interest from start to finish.

What to Do If You’re Not Getting Offers

Successfully attracting offers hinges on competitive pricing and market values. Effective communication and responsiveness also help keep potential buyers engaged. Additionally, offering flexible terms that mitigate buyer risks can significantly enhance the appeal of your business. Seek expert guidance to optimize your listing and negotiate terms to increase the likelihood of receiving offers.

Post-LOI – How to Get Your Preferred Offer to Close

What happens after signing an LOI?

After receiving a letter of intent (LOI), the real work begins to ensure a successful close. The process typically involves negotiations, rigorous due diligence (technical, financial, and so on), drafting the asset purchase agreement (APA), and escrow to securely manage the exchange of funds and assets.

Be transparent and anticipate issues. Surprises, rather than problems per se, often derail deals at the last moment, particularly when emotions run high as the closing date nears.

How to ensure your offer closes

Turning an LOI into a successful exit requires communication and planning. Disclose funding and legal requirements, engage experts early, and verify buyers’ financial capabilities. Structured due diligence and regular check-ins are crucial to keep everyone aligned to the same goal, ultimately increasing the likelihood of a successful transaction.

Want to get acquired?

Let us help talk you through it! Andrew, Rainier, and James are all available as part of the M&A team at Acquire.com and can support you along your acquisition journey. Get started by listing your business, and once you’ve submitted it, we’ll be in touch to prepare your exit plan.


Q&A

If I like the offered price but not the terms, should I still accept the LOI?

It depends on what you want to do post-acquisition, how much risk you can tolerate, and whether you think this is the best offer you’ll get. Buyers tend to only offer all-cash deals to exceptional businesses that they’re confident will earn a return. They usually pay less in all-cash deals to offset the additional risk. 

If you can stay on in the business for a while, you’re confident in its future success, and you like and trust the buyer, agreeing to terms like earnouts, holdbacks, or seller financing can ensure you maximize the value of your exit. An LOI starts negotiations, so feel free to suggest alternative terms before accepting.

How do I know when to accept an offer or wait for a better one?

Your Acquire.com acquisition expert or M&A advisor will help you set a deal schedule that sets deadlines for offers and other stages of your acquisition. This can help you decide when to wait or accept an offer while also encouraging buyers to send their offers before the deadline or risk losing out. That said, if the offer checks all your boxes, it might make sense to take it before the buyer cools off.

How do you manage buyer relationships when you get multiple offers?

Your deal schedule sets deadlines for expressing interest, receiving offers, due diligence and so on. When you share this with buyers upfront, buyers know where they stand and what to expect at each stage. All you then need to do is regularly check in with interested buyers to keep them engaged and motivated to make offers. You should also inform interested buyers when new offers come in to foster competition.

What do you mean by price strategically?

Pricing strategically is determining a range of valuations that you’d accept for your business and then listing at the lowest point to maximize buyer interest. With a bigger pool of buyers, you attract more offers, which gives you leverage to drive your valuation into the upper range you’d be happy to accept. Price is just one consideration – the right terms (such as all-cash) might justify accepting a lower purchase price.

I got an offer but the buyer hasn’t secured financing yet – should I accept it?

That would be risky. When you accept an offer from one buyer, you say no to all other buyers. What happens if your buyer can’t secure financing? You’ve then wasted weeks on the deal and might not be able to reignite interest from the buyers you rejected. Better to confirm financing is in place before signing anything or accepting the offer.  

How often should I check in with interested buyers?

At least weekly, but more often on bigger or more complex deals, or if there are multiple parties and assists to the acquisition. You want to avoid surprises and deal stagnation, and the best way to do that is proactively check in with buyers to make sure everything is alright or to answer their questions. 

If I sell to an international buyer, would they expect me to create a new entity in their country?

It depends on where the buyer is, whether they can operate your business from their home country, and whether they want to expand into their home market. For expert advice, speak to your attorney or contact your acquisition advisor for more guidance. You wouldn’t want to incorporate in another country before your deal closes, and the buyer is probably the best person to handle it as its their country and market.

What’s the average multiple at which most startups get acquired?

Please see our biannual multiple reports for the average multiples at which startups got acquired.

What’s the price for taking help if you are not getting offers?

All our acquisition guidance is free and included as part of your listing and closing fees.

What do you advise if a site has great niche content but has only started marketing to drive traffic?

You stand the best chance of getting acquired if your company is profitable with recurring revenue. If you've yet to acquire paying customers, or your revenue is low, you're probably better waiting until you've grown the business a bit more before listing. That way, you'll justify a much better valuation and will drive more buyer interest.

How are intellectual property rights transferred after the letter of intent has been signed ?

When you enter the closing stages of your acquisition, you'll itemize the assets, including intellectual property (IP), to be transferred in the asset purchase agreement (APA). Your APA might also include an intellectual property assignment agreement that describes the transfer of IP to your buyer. Never transfer IP until the APA has been signed and the buyer's funds have been verified in escrow.

How can we determine what type of buyer to pitch and what features and benefits to emphasize?

Your acquisition advisor will work with you to answer this question – a lot of it depends on the features of your business and your acquisition goals. For example, if your IP is particularly novel or useful, you might try to find a strategic buyer. Or, if your business's weakness is SEO, you might pitch to marketers. 

By far the most common buyer on Acquire.com is the financial buyer – someone who views the acquisition opportunity as investment capable of generating a return for them or their investors. As a result, you might want to emphasize your financial performance and growth opportunities.

What does technical due diligence typically look like?

Check out this article on technical due diligence from Acquire.com CTO, Dave Morton. Although it's written for buyers, it explains the most common technical due diligence areas that buyers will review. This article from Arlandis Word of Acquire Ignite, a technical due diligence firm, might also be useful.

What’s the difference between an earnout and seller financing?

An earnout is where a buyer makes payment of a portion of your purchase price conditional on hitting certain performance milestones post-closing, such as a revenue or profit target. If you don't hit those milestones, you don't get paid. Earnouts can help you negotiate a higher purchase price and are common where you plan to stay on in the business.

Seller financing, on the other hand, is where you agree to let the buyer pay a portion of the purchase price in instalments over a set period. This can also help you negotiate a higher purchase price since the buyer doesn't need to find as much cash upfront. That said, ensure you check that the buyer and business can meet the repayments.

Can you help us upload metrics to our listing?

Yes! Follow these instructions while listing your business or ask your acquisition advisor for help.

Can you describe the typical buyer?

Buyers come from all corners of the M&A market, from private equity to venture capital to portfolio investor-operators and beyond. Most are financial buyers looking to invest in a business for a return. 

What are the binding scenarios of the acquisition process?

There are three legally-binding stages of the acquisition process. One, when you sign an NDA with the buyer to protect the information you share between you. Two, when you accept a letter of intent (LOI) that includes binding conditions such as a no-shop or exclusivity clause. And three, when you sign an asset purchase agreement (APA), which binds you to close the acquisition as described in the APA.

Are all deals based on financial performance?

Most are, yes, though we do see the occasional strategic acquisition of IP or other assets. That said, even in strategic acquisitions, financial performance can indicate how successful or effective the strategic asset has been, which helps justify a higher asking price.

Do Shopify dropshipping businesses sell on Acquire.com?

Yes, large, profitable eCommerce businesses are popular. If you're ever unsure if your business will sell, speak to our acquisition experts. We don't list businesses unless we're confident they'll sell.

What happens if I don’t meet earnout milestones or the seller can’t repay financing?

If you don't meet a milestone to get paid in an earnout, you don't get paid. If the buyer can't repay a seller-financing instalment, you might extend the repayment period for the buyer to help them afford repayments (in the worst case, you might seek payment through the legal system). 

I’ve listed my business but not had much buyer interest – what should I do?

Please scroll up to "What to Do If You’re Not Getting Offers" section and watch the video for some great tips. Or, speak to your acquisition advisor for help.

If my SaaS continues to grow while my business is listed, should I update my asking price?

In most cases, no. Buyers apply a multiple to your annual profit or revenue to establish a realistic valuation. Your business should continue growing and hitting targets, but short term improvements won't really affect your asking price unless something fundamental has changed in your business (such as expansion into a new market, for example).

How often do pre-revenue startups list and sell on Acquire.com?

Very rarely. Buyers on Acquire.com want to see profitable, revenue-making businesses. Marketplaces like Flippa are better for listing pre-revenue businesses.

How many LOIs would give a fair representation of the market value of my company?

Anything more than one would give you a sense of the market, and the more LOIs you attract, the more robust a representation you'd have of the market. The largest, most profitable SaaS startups typically see 50+ NDAs after listing, some 100+. To maximize buyer interest in your company, speak to your acquisition advisor for an exit plan.

Can fund-raising take place while selling a business?

It would be very difficult to do both simultaneously given their competing aims. It might be better to raise funding before selling to accelerate growth, which could mean a higher valuation when it's time to sell. That said, bootstrapped founders get to keep all their exit proceeds rather than splitting them between investors. It all depends on your goals.

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. 

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