Selling Your Startup - Alejandro Cremades - E-Book

Selling Your Startup E-Book

Alejandro Cremades

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Beschreibung

Learn how to sell your startup from an acquisition expert Many entrepreneurs dream of the day their company is acquired and they secure a perfect exit. But information about the process of getting your business acquired usually comes from expensive investment bankers who typically advise late-stage startups. In Selling Your Startup, serial entrepreneur Alejandro Cremades delivers an accessible guide on how to sell your startup. With first-hand experience as a fully exited entrepreneur, investment banker, and lawyer, Cremades describes the tips and tricks startup founders need to sell their early-stage to growth-stage business. In this book, you'll discover: * The role that investment bankers play in the acquisition process, how they add value, and how to break down their fees * Preparing your company for sale, including compiling a pitch book, putting its finances in order, and building a target list of potential acquirers * How to get to a Letter of Intent, perform due diligence, and reach a purchase agreement Perfect for entrepreneurs of all kinds, Selling Your Startup is a must-have roadmap to the practical realities of company acquisition and contains proven guidance on crafting your perfect exit.

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Table of Contents

Cover

Title Page

Copyright

Dedication

Acknowledgments

Foreword

1 Seeding What Would Grow into Panthera Advisors

Accelerated Growth through Acquisitions

Inbound Interest and a Path Forward

Choosing My Wingman

Our M&A Journey

Launching Panthera Advisors

My Unwavering Commitment to Entrepreneurs

2 Getting Your Company Acquired

M&A Is Harder Than Fundraising

The Acquisition Process

Media versus Your Business: What You See in the Press versus Reality

Acquirer Expectations

Why Most Acquisitions Fail

3 The Role of Investment Bankers

What Is an Investment Banker?

Good Cop, Bad Cop

Why Bankers Add Value

Getting the Right Advice

Breaking Down the Fees

4 How to Plan Ahead

Consider the Reasons Why You Want to Sell

Tying Up Loose Ends

The Importance of Making Yourself Expendable

How to Make Yourself Expendable

5 Preparing the Company's Pitchbook

Packaging the Message

What Makes Your Company Unique?

Nailing the Value Proposition for Potential Acquirers

Defining Transition Plans for Potential Buyers

Crafting the Marketing Plan

Identifying a Powerful Flow and Structure

Acquisition Memorandum Template

Notes

6 Putting Your Finances in Order

Understanding Financials

The Importance of Key Metrics

Why Growth and Operating Assumptions Are Critical

Modeling Out a Powerful Five-Year Projection

Anticipating Questions on Numbers

7 Understanding Your Valuation

Variables Affecting Your Startup's Value

Common Methods of Business Valuation

How to Value Pre-revenue Startups

How to Increase Your Valuation Faster

Valuation versus Terms

Why You Never Want to Disclose Your Valuation

Avoiding High Valuations with No Rationale

8 Building the Target List

The Importance of Building the Target List

Ways to Identify Potential Buyers

Vetting Buyers for the Right Fit

Using Partnerships to Trigger Acquisitions

How to Make Contact with Interested Parties

9 The Communication Process with Buyers

Liabilities and Responsibilities

How to Handle Communications

Gauging Initial Interest

Nailing the Follow-Up

Finding the Decision-Maker

10 Preparing for a Successful First Meeting

Finding Out the Strategic Road Map of the Buyer

Agreeing On the Meeting Location

Setting Up the Agenda for the Meeting

Follow Up with Emails to Keep Them Warm

Understanding How to Address Concerns

Questions Potential Acquirers May Ask You

11 Getting to a Letter of Intent (LOI)

Why an LOI Is So Important

Breaking Down the LOI

Comparing Valuations

Measuring Suitability of the Potential Buyer

Hostile versus Friendly Buyers

Considerations before Signing

The LOI Template

12 Communication with Stakeholders

The Role of the Board of Directors

Keeping Investors Updated in the M&A Process

The Dos and Don'ts with Employees

Note

13 Negotiating the Price Tag

Price versus Terms

Communicating Outcomes

Pushing for a Deadline

Increasing Price with a Bidding War

Maximizing Value on the Buyer and Seller Sides

Thinking Like a Buyer

14 The Due Diligence Stage

Putting Together the Deal Room

Validating Your Claims

The Dos and Don'ts During Meetings

Managing the Flow of Information

What to Look for in the Potential Buyer

15 The Purchase Agreement

How to Review the Purchase Agreement

Terms and Clauses to Watch

Typical Purchase Agreement Outline

Lawyers and the Purchase Agreement

Choosing the Right M&A Lawyer

Dealing with Legal Counsel

16 Strategic versus Financial Acquisitions

Different Types of Acquisitions

Reasons for Strategic Acquisitions

How to Know What Drives the Buyer's Motivation

Why Revenues Take a Back Seat on Strategic Deals

17 Ways to Kill a Deal

Not Respecting the Buyer

Making Changes and New Demands

Lack of Commitment from the Team

How You Communicate with Employees and Customers

Withholding Information

Note

18 Legal Considerations

Regulations and Regulators

Due Diligence and Assumed Liability

Intellectual Property

Working Capital

Escrows

Contracts

Warranties and Indemnifications

Stockholder Approval

Noncompete and Non-solicitation Agreements

Stock versus Asset Sales

Buying Companies That Are Not Incorporated

Liens and Encumbrances

Note

19 Closing the Deal

The Anatomy of an M&A Deal Closing

Closing Preparations

Closing Times and Locations

Speed to Closing

Accounting and Taxes

Closing Checklist

Wrapping Things Up

20 Transitioning to a New Phase

Vesting and Revesting

Post-acquisition Integration

Looking Forward

Notes

21 The Emotional Roller Coaster during Acquisitions

Anxiety

Understanding the Process

Depression

Acceptance

Happiness

Glossary

About the Author

Index

End User License Agreement

List of Illustrations

Chapter 2

Figure 2.1 Business Acquisitions Process

Chapter 3

Figure 3.1 Banker Fees

Chapter 8

Figure 8.1 How to Make Contact with Interested Parties

Guide

Cover Page

Table of Contents

Begin Reading

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Praise for Selling Your Startup

“Don't sell your business until you've read this book. Selling Your Startup is an essential resource founders have needed for a long time. The world is awash with advice on how to start a business, but Cremades shares practical wisdom on how to play the end game.”

—Will Glaser, CofounderSold Pandora to SiriusXM for $3.5 billion

“If you thought product market fit, fundraising, and scaling your startup were challenging, M&A will make those efforts look simple. Alejandro perfectly balances both the science and art of M&A from the sell side for entrepreneurs in this book, bringing clarity to what can feel like an extremely complex process. If you're a founder or entrepreneur, add this to your must-read list.”

—Reggie Aggarwal, CofounderSold Cvent to Vista Equity Partners for $1.65 billion

“Securing the right acquirer for your business, on the right terms, makes all of the difference in your vision being realized, or it being stolen and crushed. Use this resource to get clarity on your ideal target buyers and optimize the terms for lasting success.”

—Kevin O'Connor, CofounderSold DoubleClick to Hellman & Friedman for $1.1 billion

“The multiples your investment in reading this book can deliver are off the charts. Beyond the difference in financial outcome it may have, it could make all the difference in what happens to your company and customers next, and the opportunities you will have as an exiting founder.”

—Duke Rohlen, CofounderSold FoxHollow Technologies to Ev3 for $780 million

“I know of countless startups who could have benefited from the advice that Alejandro has collated here. I'm happy that this book now exists, so I can recommend it in the future to companies going through the stressful and often uncertain M&A process.”

—Jack Smith, CofounderSold Vungle to Blackstone for $750 million

“This is an essential guide for all founders. From surviving due diligence to maximizing price and terms, to getting through the emotional roller coaster, not killing your own deal, and setting up a great new chapter in your life, put this book on top of your reading list.”

—Sandeep Akkaraju, CEOSold IntelliSense to Corning for $750 million

“I've cofounded and sold a number of companies in my career in the tech industry. It's always important to have great advice and counsel as you make these key transformative decisions. Alejandro's insight will help you develop better strategy and tactics to ace this pivotal part of the journey and get the most out of the opportunities and companies you create.”

—Drew Perkins, CofounderSold Lightera Networks to Ciena for $550 million

“You've put so much into starting a company you owe it to yourself to make sure the outcome is worth it. This book will help you make the most of your exit, no matter what the circumstances of selling your business are. From now on, I'll be recommending Selling Your Startup to every entrepreneur I meet.”

—Will Herman, CofounderSold ViewLogic to Synopsys for $497 million

“As you build your company and the various critical aspects—fundraising, which investors, culture, product market fit, and scale—put thought into what a successful exit looks like, as this does influence your success. This book will provide you information that can help you in your startup journey.”

—Sujai Hajela, CofounderSold Mist Systems to Juniper Networks for $405 million

“Once again Alejandro Cremades brings an incredible amount of much-needed knowledge to the startup community with this work of literature. This book is extremely useful to all companies and contains viable information that can set the stage for a successful M&A. No entrepreneur should be entertaining acquisition offers or even running a fundraising process until they've read this book.”

—Lior Elazary, CofounderSold EdgeCast to Verizon for $400 million

“Selling Your Startup is a must-read for all founders of funded startups. It is a credible resource that will help prepare entrepreneurs to skillfully navigate this often precarious part of the business cycle.”

—Milind Mehere, CofounderSold Yodle to Web.com for $340 million

“While every M&A situation is unique, many fundamentals are universally applicable. In Selling Your Startup, Alejandro Cremades breaks an often complex process down to the basics in a way that's both accessible and logical. Whether you're new to the world of M&A or simply looking to refresh your knowledge, this book is an invaluable read.”

—Jeffrey Glass, CofounderSold m-Qube to VeriSign for $250 million

“All great projects and startups begin with the end in mind. If your venture is a success, an exit is most definitely in your future. Selling Your Startup is a fantastic resource that the startup community has needed for a long time.”

—Craig Walker, CofounderSold GrandCentral to Google for $100 million

“Selling a startup is the most important decision in the life of an entrepreneur. I wish we had a book like this when we were in the process of selling our company.”

—Ander Michelena, CofounderSold Ticketbis to eBay for $190 million

“A startup is a very hard journey for any soul on this planet. Very very few startups get to IPOs and most need to get to a solid exit. Alejandro is demystifying the exit by giving everyone a cheat sheet to get the most from their hardships.”

—Ramu Sunkara, CofounderSold Qik to Skype for $150 million

“If you have done it right, so much time, energy, sweat, tears, and sacrifice go into creating and building a startup, so it's a tragedy when the outcome falls so far short of its potential because founders simply aren't prepared for this phase. This book finally turns the tables in favor of founders. No matter where you are in your startup, read this and know Alejandro has your back.”

—Dane Madsen, CofounderSold YellowPages for $100 million

“It's what you don't know that really hurts you in business. Until now, startup founders have been at an extreme disadvantage without access to this information. You owe it to yourself, your team, your investors, and customers to get equipped with this knowledge.”

—Iñaki Berenguer, CofounderSold Pixable to SingTel for $26 million and CoverWallet to Aon for an undisclosed amount

“A lot has been written about how to build and scale startups, but not about the process of selling them. Alejandro has compiled the collective wisdom of hundreds of the top founders with big exits and brings it altogether in this really one-of-a-kind book that is of immense value if you are ever going through this process.”

—Luis Sanz, CofounderSold Olapic to Monotype for $130 million

“Selling Your Startup is a must-read for the entrepreneur who needs to know the ins and outs of selling your business in the shark-infested waters of M&A. Alejandro's book provides you with the knowledge and insight you need to ensure you make the right decisions and optimize your opportunity. The emotional ups and downs of the process can be overwhelming so the key is to understand all your options throughout the process and plan your responses in advance so logic will prevail rather than the emotion of the moment.”

—Allan Hahn, FounderSold multiple companies for $1 billion+

“Startup founders suffer from a basic disadvantage when selling their startups. For most, it is the first time they're going through that process, while everyone else involved (corporate buyers, investors, lawyers) have repeated experience at the art of M&A. With this book, Alejandro is tipping back the scale and demystifying this process in a clear, down-to-earth, and detailed language. Highly recommended reading for startup founders and execs.”

—Eran Shir, CofounderSold Dapper to Yahoo for $55 million

CRAFTING THE PERFECT EXIT, SELLING YOUR BUSINESS, AND EVERYTHING ELSE ENTREPRENEURS NEED TO KNOW

SELLING YOUR STARTUP

 

 

ALEJANDRO CREMADES

FOREWORD BY BHAVIN TURAKHIA

 

 

 

 

Copyright © 2021 by Alejandro Cremades. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Library of Congress Cataloging-in-Publication Data

Names: Cremades, Alejandro, author.

Title: Selling your startup : crafting the perfect exit, selling your business, and everything else entrepreneurs need to know / Alejandro Cremades.

Description: Hoboken, New Jersey : Wiley, [2021] | Includes index. Identifiers: LCCN 2021021825 (print) | LCCN 2021021826 (ebook) | ISBN 9781119797982 (hardback) | ISBN 9781119798057 (adobe pdf) | ISBN 9781119798040 (epub)

Subjects: LCSH: Sale of business enterprises. | New business enterprises.

Classification: LCC HD1393.25 .C74 2021 (print) | LCC HD1393.25 (ebook) | DDC 658.1/64–dc23

LC record available at https://lccn.loc.gov/2021021825

LC ebook record available at https://lccn.loc.gov/2021021826

Cover design and image: Wiley

To my love and life partner, Tanya, and my daughters, Mila, Liv, and Alya, the greatest joys of my life.

Acknowledgments

This book would have not been possible without the love and support of my wife, Tanya. She has always been there for me through the ups and downs of being an entrepreneur. Without a strong and supportive partner, it is impossible to take the leap of faith and build something from the ground up. The way she handled some of the most challenging events that came our way has been a constant source of inspiration for me. I wish all entrepreneurs had someone like Tanya by their side to help them keep pushing even during the darkest days of entrepreneurship when it is most needed.

I would also like to thank my little daughters, Mila, Liv, and Alya. At the time of writing this book, Mila was four years old and Liv and Alya were three years old. Even though they wanted to play at all times, they were very understanding when Daddy needed to work. Girls, if you ever read this, know that seeing you grow into intelligent, strong, and compassionate young women has been the best part of my life and a great motivation. More than anyone else, you are the people that I want to make proud of me.

Thank you to my father, Bernardo Cremades, my mother, Leticia Roman, and my brother, Bernardo Cremades Jr. They have always been rooting for me no matter what since the very early beginnings of my entrepreneurial journey. They have been constantly reliable and picked up the phone whenever I would call them even if it was 1:00 in the morning.

Furthermore, I would like to thank my father-in-law, Robert Shereck, and my mother-in-law, Gisele Prive. In addition to their love and support, they have taught me some of the biggest leadership lessons.

Other family members who have been very supportive through my journey are Carmen Posadas, Evan Prive, Zack Prive, and Beatriz Larrea.

This book would have never made it here without my publisher, Wiley. Especially Zach Schisgal. He has been a joy to work with and the person who believed in this book when I pitched him the idea.

One special person that has always been there for me is my other half in business, Michael Seversen. He came into my life at a point of transition after the acquisition of my previous company. Since then we have been business partners and we've had each other's back. There are no words to describe my gratitude to and appreciation of him.

Moreover, I would like to thank other members of my team for their help: Saroj Aggarwal, Miles Carter, Bryan Epstein, Vimal Gerda, Sri Gunasekaran, Tim Houghten, Zachary Jameson, Russell Michelson, Susan Nichols, Collin Robert, Prashant Sharma, Deepak Thakur, and Kammy Wood.

I would also like to thank all the people who have been involved with my prior ventures: investors, advisors, employees, and customers. Most of my knowledge about acquisitions comes as a result of working closely with you.

Last but not least, I want to offer my thanks to all of my readers. I appreciate the faith you are placing in me by reading my book, and I hope my experience and insights will help you forge your best path forward on your journey of selling your startup.

Thank you all. I am very fortunate to have you in my life.

Forewordby Bhavin Turakhia

I believe it is our moral obligation to make an impact that is proportionate to our potential.

I have always had a passion for reading books and credit a lot to this habit inculcated into me during my early childhood. Reading enables you to shape your life from the wisdom and experiences of others. Stand on the shoulders of giants.

Growing up, I was a quintessential nerd—with a penchant for math and physics and a natural affinity for writing code from the age of 10. I was fortunate to find my passion early on and spent every spare moment in the computer room, when PCs were monochrome terminals with MS-DOS and 5¼-inch floppy drives. I devoured biographies with fervor and learnt much from the success and failures of Intel, Apple, Microsoft, Oracle, and countless others. It was clear to me then—I wanted to start my own company in this revolutionary new world.

Seven years later, I was raring to go, and along with my younger brother Div and $300 of borrowed capital from Dad, we started our first company—Directi—a web presence provider and domain name registrar.

Fourteen years later, we were number four worldwide, with 10 million domain names, a network of over 50,000 global resellers, and $70 million in revenues. Hari, then CEO of Endurance International and now a close family friend, approached us with an offer to buy Directi and I still remember to this day being very conflicted about it. However after six months of them courting us, and several deep strategic discussions, it made sense and we sold the company for $160 million—our first exit.

Div, my brother, had already independently started Media.net, which he then grew into a $900 million exit. And I had turned my attention to Radix (currently the number one new gTLD registry) and Flock (now Nova—competing with G Suite and Office and providing collaboration and productivity software to global users). Finally in 2015, I cofounded Zeta with Ramki Gaddipati—with a mission to make payments invisible and reimagine banking

I have never started any company with the goal of selling it. My startups were born out of my passions. I believe “frustration is the genesis of entrepreneurship”—and when entrepreneurs see something they would like to change, they go ahead and effectuate that change. If you are reading this book, perhaps you have already launched and built your own company or are in the process of starting up. As a successful business, however, most founders will receive one or more (bittersweet) opportunities to sell their company.

There are a countless number of books on starting up, running, and growing successful businesses. However, most of the material available on M&A comprises glorified media stories, and not much quality content has been published on this critical milestone of a startup's exit (pardon the oxymoron). There certainly wasn't anything like this when I was deliberating over my exit option.

I have bootstrapped or self-funded my entrepreneurial pursuits, and I have been in the fortuitous position of not having to raise capital for most of my past companies. If I had, however—Alejandro's book The Art of Startup Fundraising would have been my trusted guide.

With this new book, Selling Your Startup, Alejandro makes a great contribution to the startup community by addressing the less commonly covered subject of navigating the other end of the startup lifecycle intelligently. Understanding this process can enable you to meaningfully harvest years of hard work.

Whether you are a later stage startup receiving inbound offers or are encountering tough times and contemplating a distress sale, this book will help you build your business with the end in mind. It will help you master the art of the exit. If you foresee one in the near term, then this book will serve as your field guide.

It will walk you through strategies, preparation, paperwork, and processes. It will help you with a decision framework for your next chapter after. After monumental sacrifices, it is a travesty to see founders and teams end up with unfair outcomes during M&A processes. If you want your mission, team, and consumers to continue to flourish beyond an exit, and maximize the outcome for everyone in a win-win manner, then it's time to turn to the next page …

—Bhavin Turakhia

FounderZeta, Flock, Radix, CodeChef, Directi

1Seeding What Would Grow into Panthera Advisors

I first dipped my toes into the acquisition world while running my previous company, Onevest, which was backed by 14 different venture capital firms.

Building Onevest was a wild ride—full of terrible lows and exceptionally steep highs—but it became one of the largest communities of entrepreneurs, supporting over 500,000 founders in 234 countries.

Onevest and its portfolio of companies provided services such as cofounder matching, accelerator programs, a vibrant Q&A discussion board, key workshops on everything related to building and scaling businesses, and a platform where investors could meet and invest in startups.

It was a dynamic and deeply loyal community.

Accelerated Growth through Acquisitions

On the journey of building and scaling Onevest, part of its growth was organic, which we absolutely lucked out on, but the other part of its growth was attained through acquiring major competitors in the space.

In total, we acquired three of our direct competitors, which was bold and certainly risky, but it turned out to be a strategic move in the end. Two of those transactions, CoFoundersLab and FounderDating, were purchased in the millions of dollars and were a bit complex, given all the stakeholders who had a hand in the pot.

In one of those deals, we inherited investors who were not very sophisticated in these sorts of deals. A ton of back-and-forth negotiating ultimately shot the billable lawyer hours through the roof.

As newbie investors, they would either get stuck on standard terms or they would request things different from what was generally accepted in the market. That proved to be a painful but valuable lesson I will never forget. This specific experience is the reason I typically warn entrepreneurs to stay clear of non-sophisticated investors.

These kinds of investors can literally blow up a good deal, or at least significantly complicate things. Believe me, it can be frustrating and complete nonsense when you experience it firsthand. It's almost as if someone is throwing stones at their own glass house—but what can you do?

Yet those specific deals each came with important lessons that really helped me to understand how startup acquisitions work from an operator's perspective.

Acquisitions, to my surprise, were one hundred times harder than rounds of financing. And there's dealing with all types of emotions and egos, so mastering psychology is key.

Inbound Interest and a Path Forward

About eight years into building the business, Onevest started to receive inbound interest from companies that were drawn to our distribution capabilities, data, subscription structure, and access to the venture world.

The offers to buy the company couldn't have come at a better time. I had spent nearly a decade building Onevest with my wife, Tanya Prive, and at that time, she was pregnant with our second and third child (yes, identical twins!). But we soon found out the pregnancy held other surprises for us.

At six months, Tanya was diagnosed with twin-to-twin transfusion syndrome, a rare condition affecting the placenta in identical twin pregnancies where blood is transfused disproportionately from one twin (donor) to the other (recipient), causing the donor to have decreased blood volume and the recipient to be overloaded with blood, which often results in the death of one or both babies. With that diagnosis, Tanya was rushed into the hospital for an emergency C-section.

Our twin daughters were born at 28 weeks gestation, weighing in at 2.4 pounds and 1.7 pounds, respectively, which catapulted us into weeks, and then months, where our baby girls fought for their lives in the hospital. After 129 and 180 days, respectively, at the neonatal intensive care unit (NICU) at Mount Sinai in New York City's Upper East Side, they were finally discharged and able to come home. Our lives had changed, and I knew that stepping back from the daily grind was the right thing to do for myself and Tanya.

Before our girls came home, our four-month-old daughter, Alya, had to undergo heart surgery. As she was wheeled into the operating room, I was preparing the agenda for a board meeting on the four acquisition offers the company had received. I wanted to be near my daughter that day, but the offers left us no choice.

One of the acquisition offers had a 24-hour expiration date. It was December 19 and the members on our board were about to check out for their holiday vacations. It was literally the only time we could get everyone together.

I was a wreck thinking about all the things that could potentially go wrong with Alya's surgery, but I had to sidebar my thoughts to get our board aligned. We unanimously agreed that pursuing an acquisition was in the best interest of our stakeholders. But how did we get to these four acquisition offers in the first place? It all began with me finding Mike Seversen.

Choosing My Wingman

I instinctively knew it wasn't wise for me to tread the transaction path alone, so I began searching for a master banker who would help me navigate any merger and acquisition (M&A) landmines and optimize my chances at a successful exit. To have the best outcome, the deal needed to be viewed not solely as a financial acquisition (all based on revenues and EBITDA) but more as a strategic acquisition.

But in meeting after meeting, I was greeted by more or less the same person: a suit-and-tie Wall Street guy with little to no operating experience. After speaking with tons of potential M&A advisors, I was getting desperate. I knew the kind of person I needed to make the deal a success, and I felt as though I was looking for a needle in a haystack.

Finally, after endless research and asking around, I had a major breakthrough. I connected with Mike Seversen. He was in every sense of the word a true rock star. Sure, he had all the bells and whistles you would expect: Stanford undergrad, MBA Harvard graduate, and a 26-year career in the mergers and acquisitions space, but that wasn't what sold me.

Mike had a rare, heightened emotional intelligence, as well as the operational experience from running his own entrepreneurial ventures. I knew that if anyone could pull off this transaction, it was going to be Mike working with me as a team. I was strong on the business development side and relationship building, and Mike was a wizard of operations, numbers, and creative strategies. He was also keenly skilled in navigating big egos.

Once Mike and I were on the same page, we presented the plan to the board. As soon as the plan received board approval, we immediately got to work.

Our M&A Journey

We ended up with four letters of interest (LOIs) to buy our company. LOIs are the formal way acquirers tell you they are interested in buying your company and at what price, pending a due diligence process. (I'll explain these in more detail later in the book.)

So how did we generate these letters of interest?

First, we went ahead and prepared a list of all the companies we thought could show potential interest in acquiring Onevest. (We're talking here about a list with 300 leads.) We tried to cover every strategic angle we could think of that could trigger interest.

We wanted to target CEOs as opposed to your typical head of corporate development, who usually leads this type of initiative, because the path to a yes is far less risky when a deal comes through the CEO. We knew that if we penetrated the company via the CEO and were handed over to the corporate development team, the team wouldn't hesitate to report back to the CEO if it saw a good fit.

Once we populated our target list with outreach data, we went ahead and reached out to all of the CEOs. In parallel to reaching out to potential acquirers, we also put in motion the formal discussions with the firms that had already expressed direct interest in doing something strategic, which typically means an acquisition.

In essence, this ended up being a four- to six-month process from the start to narrowing down the seriously interested parties.

Out of the 300 leads, we had active conversations with at least 60 of them via phone calls and in-person meetings. From there, we had 25 companies that requested access to the acquisition memorandum (which is the document that lays out the story of your company and what's possible).

Ultimately, it was this process that led us to receive the four letters of interest. In partnership with our board, we ended up taking the LOI that we thought had the best terms and offered the greatest level of alignment with the acquiring management team.

From there, we went into due diligence for three months following the signing of the LOI, and we ultimately closed the deal, which was worth millions. But I can't tell you how many times the transaction nearly blew up.

When all was said and done on the due diligence side, we signed the legal paperwork, got approval from the shareholders, and made the announcement to the world.

Mike and I saw the entire process like a tennis match. He would volley the ball to me when I had to talk about vision or product, and I would volley the ball back to him when terms or negotiations came up.

It was good to remove myself from the difficult conversations about numbers, as well as important clauses in the agreement. This way, when things got tangled up, I could grab the phone and call the CEO directly to keep pushing things forward, sort of like good cop, bad cop.

One thing I knew for sure was that during this stressful process, Mike and I had each other's backs. From day one, we had implicit trust in each other, which I know was a foundational pillar of our success.

Funnily enough, similar to the feeling I had when I met my wife—a feeling of instant connection—I knew Mike was my other half in business. From that day forward, we never looked back.

Launching Panthera Advisors

After the transaction closed and we completed the transition period with Onevest, I called Mike and enrolled him into going into business with me.

I saw two things clearly. For one thing, Mike and I formed a very strong team. He had what I didn't have, and vice versa. But more critically, there was a clear gap in the market. No firm or expert owned the startup acquisition space.

In fact, when I was doing research trying to understand acquisitions for startups, it was like hearing the sound of crickets. Very little information was available to guide founders through this challenging and often complex journey. And I knew that if I had this problem, millions of others did, too.

Luckily, I was thrilled to find out that Mike was equally excited by the idea. As a result, Panthera Advisors was born, as well as the beginning of our journey as partners.

In our first two years, we represented clients in hundreds of transactions globally. Currently, 60 percent of our clients are in the US, and 40 percent of our clients are literally from every single part of the world.

When we get involved with clients, we become an extension of their team. We typically work with the CEO and management for four to six weeks preparing the strategy, the pitchbook with the financials, and the list of targets.

Once these are nailed down, we then go to market, and we're with the client in the trenches every step of the way—during meetings, calls, negotiations, and anything else that arises—until the deal closes.

My Unwavering Commitment to Entrepreneurs

As with Onevest, Panthera Advisors, hundreds of articles, YouTube videos, the DealMakers podcast, and The Art of Startup Fundraising, this book is the latest addition in my journey to empower entrepreneurs.

Ultimately, the intention of this book is to cover the startup acquisition information gap.

Getting your company acquired is an art. It is also different from fundraising. That's because in fundraising, you need to have everything figured out. With acquisitions, you need to have things unfigured out. Essentially, it's not your idea—the idea belongs to whoever is acquiring your business.

This book will equip and guide you through every step of the acquisition process so that you can optimize your chances of exiting your business and getting the best possible deal.

Let's get started!

2Getting Your Company Acquired

Do you have dreams of getting your company acquired for nine figures, ten figures, or more? Are you already fielding inbound interest in buying your company? Are you trying to stay ahead of the next step in your startup's life cycle? Or maybe you need to run a better process after a failed M&A deal.

Whatever the reason you picked up this book, no worries—you're covered.

Some founders and other key team members get involved with a startup specifically with the hope of quickly cashing out for a record-setting amount. Others swear they will never, ever sell their company, but one day discover that a merger or acquisition is actually the best path for fully realizing and maximizing their mission and vision. In some cases, if your startup is doing well, you will receive inbound offers out of the blue, and much earlier than expected.

In all of these scenarios, this book will help you understand the process, optimize the outcome, and survive the mental marathon.

M&A Is Harder Than Fundraising

Kudos if you've already read the prequel to this book, The Art of Startup Fundraising, and have subsequently raised a round of funding, or a few.

Whether you raised equity, used debt financing, or just bootstrapped your venture all the way up to this point, you've already gone through a significant learning curve. You've evolved as an entrepreneur, and you have probably learned much more than you thought you would. You've also learned how to get to market, find product market fit, hire and manage people, and much more.