- Litigator? I Hardly Know Her!
- What Are the Risks of Selling a SaaS Business Online?
- How Does Acquire.com Protect Your SaaS Acquisition?
Are you worried about risking your assets when selling your SaaS business online?
Most founders are. Your buyer will likely be a stranger whom you never meet in person. Your first interaction? A brief message with their request to view your private listing information.
And once you bridge that unfamiliarity gap, who’s to say they’ll uphold their end of the deal? Or that they won’t copy your ideas (and source code) and run off to start a competing business?
Worries like these can sour the acquisition process and even prevent you from getting Acquire’d. And while we can’t remove every risk, we’ve built several security guardrails to give you peace of mind.
From non-disclosure agreements to buyer vetting to our world-leading escrow partner, you can safely sell your SaaS business on Acquire.com knowing you’ll get what you expect in return.
Off platform, however, you lose those guardrails.
Most of the fraudulent activity I catch as general counsel at Acquire.com is crude and easy to spot (even without a legal background). To avoid risking your assets:
- First, do your due diligence on the person you want to do business with.
- Second, make use of our tools and safety measures.
- And finally, when in doubt, give us a shout – we’ve got your back.
We’ve written about the benefits of exclusively transacting on-platform before, so I won’t repeat that advice here. Instead, you’ll learn how we assess, monitor, and defend against acquisition risk so you can negotiate the best possible future for yourself and your business.
But first, let’s rewind a bit to learn how I earned my scam-busting stripes. You’ll discover what a general counsel does (and how I became one), why Amazon doesn’t mind a little litigation, and why working on the Theranos case wasn’t nearly as exciting as it sounds.
Litigator? I Hardly Know Her!
It’s true: I never wanted to be a litigator. I chose law because I enjoyed abstract analysis, not arguing cases before a judge. Transactional law seemed like a good fit. After graduating from Gonzaga in Spokane, near where I grew up in Walla Walla, I started law school and took all the IP, M&A, and contract law classes I could. Anything that would help me become a transactional lawyer.
Despite my efforts, I did end up litigating early in my career, which I now credit for helping shape my approach to law, risk, and everything else.
First was during my Amazon internship, where I worked on the same floor as Jeff Bezos. Amazon would almost always be under litigation. Regulators just couldn’t keep up with the company’s pace of innovation. I spent most of my time researching statutes and precedents for things no one had encountered before.
While my time at Amazon was brief, just nine months, I learned that risk is always present (no matter how big or successful your business is). You learn to evaluate and prepare for it. Amazon, for example, might accept paying a fine if it means taking action that benefits their business. Deciding which risks to tolerate and for how long is just one of the many things I do as in-house counsel at Acquire.com.
After passing the bar, I took a break in South America. On my return, out of cash and needing to pay the bills, I became a review attorney for a large law firm in Seattle. If you don’t know what a review attorney does, count yourself lucky – it’s probably the most boring job in the world. You basically sift through mountains of documents for anything pertinent to the case you’re working on. Stuff an AI could probably do in seconds. I was essentially clicking a mouse for a living in a white-collar assembly line.
It wasn’t very fulfilling, and they don’t tell you which case you’re working on, which, in hindsight, might’ve made the job more interesting. Five years after leaving that role, I discovered I’d reviewed documents for the Theranos case. Another lesson: even the most exciting cases involve mundane but essential work.
Eventually, I connected with someone on LinkedIn who offered me a job at Lee Smart, a defense litigation firm. I tried cases in federal court, defending dentists, doctors, and lawyers from negligence claims. It wasn’t the role I wanted, but it was better than clicking through documents for eight hours a day.
In the meantime, I contacted a friend from Gonzaga who worked for Carney Badley Spellman. I asked if he had any openings and luckily got a role in the M&A department, where I met Andrew Gazdecki, the founder of Acquire.com (then MicroAcquire) and one of our clients. With 300 startups on the books, my day-to-day was similar to what I do now, but for hundreds of startups with their own novel issues.
One day, Andrew asked for my help with an investment round. We hit it off, and many conversations later, he offered me a job as general counsel. Acquire.com was doing amazing things, and I wasn’t ready to spend the next five to ten years grinding my way to partner. I accepted Andrew’s offer, and here I am.
What Are the Risks of Selling a SaaS Business Online?
The main risk of selling a business online is that you don’t get paid for your assets. That’s the big one, right? Sure, a dispute might arise after closing that you can resolve later, but without getting paid, you’re stuck without assets or funds. In other words, your deal was a disaster, leaving you materially worse off.
Before the advent of computers and the internet, acquisitions happened in person. You’d drop into the acquirer’s office with your shares, and they’d hand you a check. Job done. Digital assets are another story. You’re unlikely to transfer security codes, credentials, domain names, source code, and so on in person.
Your buyer might be on another continent, in a different timezone, and paying in another currency. Technology has made Acquire.com a truly global marketplace. It’s also why you should take extra steps to create goodwill with the buyer and verify they’re real and not a bad actor.
Another risk founders complain about is a potential buyer copying their idea (or source code). For example, you might need to share sections of your codebase during due diligence to finalize your deal. We can’t eliminate the risk of someone copying your idea, but we’ve taken steps to minimize it.
First, any buyer requesting access to your private information must sign a mutual NDA. If they use or share your data without your permission, you can take legal action against them. But I’d also recommend holding back on any seriously sensitive information, such as truly innovative source code, until you’re sure the buyer is someone you can trust.
Ideas are not assets, sadly, and if you’re worried about someone stealing a thought you’ve had, remember that execution is everything. Very few original ideas exist nowadays, and it’s likely that someone has had similar thoughts and not executed them (or done so poorly). Without execution, ideas stay ideas. For everything else, buyer due diligence, NDAs, and escrow give you all the protection you need.
Do Similar Risks Apply to Buyers?
In some ways, buying a business is riskier than selling one. As a seller, you only need to get paid for your assets. A buyer needs to get the assets they paid for and verify they’re as you described them. Then they have to monetize those assets to earn a return on investment.
As a result, don’t be offended if buyers ask 100s of questions during due diligence or want an earnout, holdback, or seller financing to offset acquisition risk. These deal components help to mitigate the risk of investing in your business, and the more comfortable buyers are, the better the deal you’ll negotiate.
We also help buyers by combing through your listing to ensure your numbers are legitimate, you’ve verified your identity, your website is valid (and not built last week), you’ve uploaded a photo on your bio, and connected your LinkedIn account. Yes, it’s a little more work for you, but it gives buyers the confidence to offer you a better price and terms.
How Does Acquire.com Protect Your SaaS Acquisition?
Close Your Acquisition Safely With Escrow
Using Escrow.com to close your acquisition guarantees you get paid. How? The buyer has to put up the cash for the acquisition first. Escrow.com verifies it and then instructs you to send your assets. Once the buyer verifies your assets are as you described them, they instruct Escrow.com to release your funds.
Escrow.com is free and built into the on-platform acquisition process, with step-by-step instructions explaining what to do and when. You receive emails at each stage, so you never miss an update. And if Escrow.com isn’t a good fit for your deal? Ask us to connect you with another provider (free).
Yes, it might take a little longer to close with an escrow service, and yes, there are a few extra bits of admin to do, but I’m sure you’ll agree that both are worth it to protect your interests.
Vet Buyers to Find the Right Match
Doing due diligence on buyers is essential to avoid risking your assets in an acquisition. We help you do this in several ways, including a “pay to play” subscription fee that weeds out scammers and spammers. You also enter into mutual NDAs with buyers you engage with to protect any sensitive data you share.
Next is the buyer profile. We ask every buyer to verify their ID and available funds. You can then be sure that the buyer contacting you is legitimate and has the financial liquidity to acquire a business. You can also view connected LinkedIn profiles to evaluate their background and verify the claims they make.
Verify Your ID and Business to Build Trust
Maximizing interest in your business is the easiest way to increase your valuation. When buyers believe your business is legitimate, they’re more likely to make an offer. To help, we’ve introduced business verification into the listing process. Like ID verification, it only takes a few minutes.
You enter a few business details and then upload an incorporation certificate to our verification partner, Persona. Verification takes a day or two, and then we’ll add a verified business badge to your listing. Buyers can instantly see you’re the real deal and feel confident pursuing acquisition talks.
Use Our Tools to Negotiate a Fair Deal
From letters of intent (LOIs) to asset purchase agreements (APAs), we’ve made it easy for buyers to send and finalize acquisition offers. Our legal document builders use balanced wordings so neither party gains an unfair advantage, which levels the dealmaking field and keeps everyone honest and collaborative. We can also step in to answer questions or help you resolve disputes.
When you take your acquisition off-platform, buyers may negotiate unfairly and exploit legal documents to win an advantage. They might use non-standard legal wordings or add restrictive clauses and covenants. To avoid risking your assets, stay on-platform when selling your business.
Our Experts Have Got Your Back
Probably the most effective way to protect your assets when selling a SaaS business online is to enlist expert help. When you sell on Acquire.com, you gain a SaaS acquisition specialist who’s helped 100s of founders close safely.
Your acquisition advisor will overhaul your listing so it attracts the right buyers. They’ll coach you through every stage of the acquisition process, including vetting buyers and negotiating with them. Finally, they’ll walk you through the escrow process so you close with the cash you expected from the acquisition.
Lean on our acquisition success team, and don’t be afraid to ask questions or seek advice. We’ve decades of M&A experience between us, and we’ve seen every type of deal go down. Many in the team are former SaaS founders who know the market inside and out.
Selling your SaaS business online needn’t risk your assets. With our tools and expertise, and due diligence on your part, getting Acquire’d is safe and easy. Let us know if we can help with your acquisition by signing up for your free seller account today.
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.