5 ms·
I found anchoring on price early in the process has been helpful to understand who is serious and who is not. I've been through the process twice, well actually
by GoRudy 4y ago
I found anchoring on price early in the process has been helpful to understand who is serious and who is not. I've been through the process twice, well actually three times as the first time the deal fell through (we sold 20 months later). Some businesses simply are bought on a multiple of revenue or ebitda that is common in their industry and in that case I found it expedites the process to be clear on top line + adjusted ebitda and expected range of valuation.
I also negotiated salaries etc early in the process so it's all generally done at the same time before the term sheet.
- lmeyerov 4y agoSelling on revenue multiple is easier bc means leaving a lot of $ on the table: a good sale is in terms of the value to the acquirer, which can be a % of a massive #, not the immature revenue operations of some young startup . But if you don't super care, then based on revenue or next round are easy low standins -- basically the "BATNA". A lot of the reasoning in the article comes from the difference between being bought vs sold. Hiding lack of runway is clear there. The article repeats a lot of good standard advice & prioritization in general.
- berkle4455 4y agoSimilar. I wanted out of my startup to pursue a new avenue. I sold for 5x annual revenue and a 1-yr exit. All paid in cash over that one year.
- brianwawok 4y agoWhat was your growth rate when you sold? A company growing 100% YoY vs a company shrinking 10% a year make the 5x buyout very different sounding to me.,,
- berkle4455 4y agoOur growth rate was fairly modest by that point, about 10% YoY. That was mostly a result of me being greedy and taking cash off the table each year and running it as a lifestyle business.