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Getting a lot of the same questions so I just want to address them. 1) We will not receive another offer, there are no other offers possible. I can't fully exp

Getting a lot of the same questions so I just want to address them. 1) We will not receive another offer, there are no other offers possible. I can't fully explain this without blowing my cover, but suffice it to say we're very confident in this. It revolves around our extremely niche market. 2) A huge part of the reason we're afraid of blowing this deal is what I just stated in #1, since there are really no other exits for us. What makes us different than another tech startup is that we really are only interesting to a very very few, and this company is the only one who can afford us :)

firebones 16y ago
Reading between the lines, it sounds as if your market might have some overlap with, or technical dependency on, the acquirer's market and ecosystem--perhaps even only allowed to thrive at their pleasure. From the acquirer's motivation, it could be that they're trying to fill a niche they have no desire to invest in organically, especially if there's not a lot of growth in that niche. If it's as you say, I think the question to answer is "Can we stand to be employees again, in particular, as employees of this company?" If you can, then this starts to look more like a job offer, in which case you need to negotiate more cash up front and more favorable vesting terms. (This may also explain why the future employer says the tone will change if bankers get involved. They probably see this as a talent acquisition with revenue attached. Getting a lawyer involved makes sense no matter what.) If you can't see yourself as an employee, then my guess is that you're fearful that your market is going to go away (and the acquirer may suspect that you're road kill). In which case the thing to do is start trying to diversify outside the niche as the current niche revenue stream winds down. Is there time to do that? End of rampant speculation. Good luck.
ScottBurson 16y ago
I guess what you're saying is that keeping this as a lifestyle business is not attractive to you. I'm not sure why not, but let's go with that. How about selling it to someone who does want a lifestyle business? They can probably get a bank loan to buy you out, or they can pay you an annuity, or some combination of those. There are people who would be thrilled to do that (someone here has already expressed interest).
petervandijck 16y ago
Wild guessing here, but it is also possible that they are just trying to take your product off the market. Have you considered this?
aneth 16y ago
Based on these statements, and the very low offer, I have to conclude your business is about to collapse. You have no leverage if you have no options. If 3x over 4 years sounds good, you are already conceding that the company is doomed. Selling a doomed company for before it's bankrupt is wise. You have no other acquisition prospects and you business is about to start shrinking - I suppose you should take what you can get. Edit: Sorry I must be tired. This is a revenue multiple not income. Revenue multiples are not particularly helpful in valuing a company with a mature business model. Gross profit would be far more useful. At 20% margin this is 15x gross profit which is reasonable, particularly if you have no other exits. I'd take the offer after cleaning up the vesting (at least 50% should be immediate) and consulting a good lawyer who might find some fallback options.

firebones 16y ago

Reading between the lines, it sounds as if your market might have some overlap with, or technical dependency on, the acquirer's market and ecosystem--perhaps even only allowed to thrive at their pleasure. From the acquirer's motivation, it could be that they're trying to fill a niche they have no desire to invest in organically, especially if there's not a lot of growth in that niche. If it's as you say, I think the question to answer is "Can we stand to be employees again, in particular, as employees of this company?" If you can, then this starts to look more like a job offer, in which case you need to negotiate more cash up front and more favorable vesting terms. (This may also explain why the future employer says the tone will change if bankers get involved. They probably see this as a talent acquisition with revenue attached. Getting a lawyer involved makes sense no matter what.) If you can't see yourself as an employee, then my guess is that you're fearful that your market is going to go away (and the acquirer may suspect that you're road kill). In which case the thing to do is start trying to diversify outside the niche as the current niche revenue stream winds down. Is there time to do that? End of rampant speculation. Good luck.

ScottBurson 16y ago

I guess what you're saying is that keeping this as a lifestyle business is not attractive to you. I'm not sure why not, but let's go with that. How about selling it to someone who does want a lifestyle business? They can probably get a bank loan to buy you out, or they can pay you an annuity, or some combination of those. There are people who would be thrilled to do that (someone here has already expressed interest).

petervandijck 16y ago

Wild guessing here, but it is also possible that they are just trying to take your product off the market. Have you considered this?

aneth 16y ago

Based on these statements, and the very low offer, I have to conclude your business is about to collapse. You have no leverage if you have no options. If 3x over 4 years sounds good, you are already conceding that the company is doomed. Selling a doomed company for before it's bankrupt is wise. You have no other acquisition prospects and you business is about to start shrinking - I suppose you should take what you can get. Edit: Sorry I must be tired. This is a revenue multiple not income. Revenue multiples are not particularly helpful in valuing a company with a mature business model. Gross profit would be far more useful. At 20% margin this is 15x gross profit which is reasonable, particularly if you have no other exits. I'd take the offer after cleaning up the vesting (at least 50% should be immediate) and consulting a good lawyer who might find some fallback options.