Inaugural Buyer Education Webinar from April 6, 2022

This is the recap of Acquire’s inaugural Buyer Education Webinar. Our goal is to democratize startup acquisitions and want to help you get the basic understanding of the acquisition process to best prepare you for what’s ahead in your journey to (micro)Acquire a company in 2022!

Topics covered

  • Acquisition Search
  • Preparation / Strategy
  • Deal Terms / Making an Offer
  • Transaction Management
  • Transition Planning
  • Due diligence
  • Financing, escrow and transfer of funds
  • Allocation of purchase price
  • Buyer and Seller Disclosures
  • Close of escrow, training, and transition

Fun Stat

Attendee’s came from 27 different countries world-wide. Acquire is proud to serve such a diverse and global community.

Additional resources

  1. Download the deck presented during the webinar (PDF)
  2. Vetting Sellers
  3. Financing
  4. Due Diligence
  5. Tips and Advice

Q&A

What’s the best stage to buy a startup? After it becomes a unicorn or at what stage?

Answered Live on Webinar

Buying a startup in a domain, you don’t have much expertise in?

Andrew: If it’s your first acquisition we strongly recommend buying a startup that you have some expertise in. Your ideal first acquisition should be one where you can easily spot new growth opportunities.

Funding: Will there be more connections with debt or equity investors? The current lending options aren’t sufficient. When can we expect this?

Answered Live on Webinar

If you are trying to sell your company, is there any information that you would want to avoid revealing right off the bat?

Andrew: This is a broad question but any sensitive information like customer names, emails, access to your code base, are the big ones that come to mind.

I assume many buyers/sellers want to meet in-person. Do you find this is a best practice?

Andrew: Surprisingly no we don’t see too much of that anymore. With larger deals yes, but with acquisitions under say $10m you can accomplish almost everything over Zoom.

Do you have a case study in the presentation?

Andrew: We have many of them actually. Listed a few in the resources above but you can find a series of interviews we do with buyers and founders who have successfully transacted on Acquire here: https://www.youtube.com/playlist?list=PLO30Q8WzVLKPnZpIOIZ2sR817n24fNJFI

Can you show how the buyer profiles look to sellers? What can they see?

Roger: Take a look at the example below. The seller will see your name, bio, LinkedIn URL and your associated message at the initial request.

And, what’s the average deal size?

Andrew: Around half a million but we regularly see 4-5-6 and even 7-figure acquisitions on a near weekly basis.

Are there buyer groups or communities hosted / organized by Acquire for those buyers who are looking to buy for income / buyer-operator?

Not currently but we do have a Facebook community which you can join here: https://www.facebook.com/groups/microacquire

And we're starting to build out a subreddit group here:
https://www.reddit.com/r/microacquire/

Talking about having a full profile, are you planning on adding more optional details (like adding a link to website or Linktree etc) on the Buyer profile, as well a short description of what (as a buyer) we would be looking for, so potential sellers can see if there’s a fit with just looking at profile?

Andrew: Great feedback and yes, upgrading buyer profiles to enable better matchmaking is on the way this year.

If you have capital, but still want 70-80% seller financing, should you just be upfront from the beginning? Or how soon should you introduce that? I don’t want to scare people away, but also don’t want to lead them on.

Answered Live on Webinar

I come from a sales and customer success background. Do you see people similar to me buying businesses?

Andrew: Absolutely. We see people who love building startups but don’t have too much experience being Acquired by others with more experience taking a product from 1-10, scaling the startup.

Code review. Any platforms or trusted 3rd party means of doing this?

Andrew: Here’s a good article to check out on how to perform technical due diligence: acquire.com/blog/how-to-do-technical-due-diligence-on-a-saas-startup/

How many of the acquisitions have you seen developed outside of the US? E.g., growth in non-US markets, moved completely out of the US…

Andrew: We’ve had acquisitions facilitated on every continent with about 40% being outside of the US.

What’s the usual timeline of an average acquisition like? Days? Weeks? Months?

Andrew: Really depends. We’ve seen some deals close in weeks, months, and sometimes over a year. This all comes down to specific details of your company, valuation, and how prepared you are when speaking with buyers.

Does Acquire do any diligence on listing?

Answered Live on Webinar

How many acquisition happen with buyers from outside the US? Is that a limiting factor to sellers?

Answered Live on Webinar

Re: LOI’s – can you expand on what terms are binding?

Answered Live on Webinar

Scenario: Say you had $20k (savings), and wanted to use that to Acquire a business that you can start right away as a side hustle (small team/easy to manage and has at least $1-10k TTM rev/profit) with the potential to scale that business to a bigger company down the line. What would you recommend the best type of business to Acquire? SaaS, eCommerce, Marketplace etc..

Andrew: I would recommend a Shopify SaaS. These are typically the easiest to manage for first time buyers.

How do you review code? Are there services to connect you with someone who can review your code?

Answered Live on Webinar

Everyone’s situation is different and you can’t give specific advice, but are there some generalize you could speak to about allocations in asset sales and how the allocation affects taxes (both for the seller and buyer). For example, in the US, for a seller, “goodwill” is taxed at capital gain rates, but “software” is taxed at income.

Andrew: Here’s a good read on how to minimize taxes during an acquisition: appacquire.com/blog/how-to-minimize-or-eliminate-your-tax-liability-when-your-startup-is-Acquired/

How do you deal with international sellers from a legal standpoint? How can you enforce things in another country

Andrew: We recommend that you hire an attorney in the country where the startup resides as laws vary from country to country. Basically when in doubt, contact a legal professional.

Staggered buyout problems

Andrew: See here for common deal structures: acquire.com/blog/how-to-structure-a-saas-acquisition-deal-that-makes-you-and-the-buyer-happy/