6 ms·

Bench.co acquired after informing staff company was insolvent

IG_Semmelweiss 2y ago
Source https://techstartups.com/2024/12/31/bench-a-popular-accounting-platform-startup-suddenly-shuts-down-leaving-customers-in-limbo/ https://techstartups.com/2024/12/31/bench-a-popular-accounti...
- firebaze 2y ago
  https://news.ycombinator.com/from?site=bench.co https://news.ycombinator.com/from?site=bench.co
kstrauser 2y ago
Godspeed to any remaining/returning Bench staff who have to deal with a whole lot of righteously infuriated customers afterward. Ugh. That’s a degree of customer support I’d never want to have to handle.
- bruce511 2y ago
  Customers will likely benefit in the short term as they can likely complete the year with Bench. Signing up those customers for another year might be.... challenging. I guess they have a couple months to win back some goodwill though.
  - kstrauser 2y ago
    I can’t imagine the negative amounts of goodwill incurred from telling all your customers that they won’t be able to file their taxes.
ProAm 2y ago
Exfil all your data and find a new service. Not hard. Cost of business with any start up, be prepared to exfil in 3 mo at any time. Run into this over and over.
- btheunissen 2y ago
  I’d argue detailed accounting data is reasonably hard to package up into a nice format to easily import into a new system, especially having confidence that you migrated everything successfully without getting a nasty shock a few months down the line.
  - malux85 2y ago
    One of my first jobs was writing integration software for different accounting packages, and BOY OH BOY are you correct. Many (most) packages have an API, but transferring data in and out requires deep knowledge of systems, their special pricing rules, their tax rounding rules (which is also different for every country) and many many other things, it was difficult enough for someone with years of experience in this domain to get right, the chances of even a senior developer doing this properly without field experience is zero.
  - wdaher 2y ago
    We will do this for folks (moving from Bench to QBO) for free: https://pilot.com/bench-qbo-migration https://pilot.com/bench-qbo-migration (It's a nontrivial problem but there's at least a reasonable check—"Did the balance sheet, P&L, and cashflow statement generated by both systems match")
    - btheunissen 2y ago
      This is very cool! Nice to see there is something in the space to unstick some very stressed out Bench customers. Making sure everything reconciles definitely makes sense, I’ve worked on ledger systems in the past so I always look at these problems with a skeptical eye :)
deleted 2y ago
[deleted]
benatkin 2y ago
> Continuity of Service: Bench customers will continue working with the same expert in-house bookkeepers they know and trust. Translation: service is going downhill, but we're going to fight to keep you in your contracts. > Platform Stability: Customers will retain full access to the same powerful, intuitive Bench platform. See? We're spending money on you. Of course you have to keep paying, even if you hired another firm. > Data Security: All customer data remains intact, secure, and protected, with no disruption to historical records or ongoing service. Oh, and by the way, good luck exporting your data.
- m1sta__ 2y ago
  What an irrational and bitter utterance.
  - Kwpolska 2y ago
    It's not irrational if you keep in mind that Bench had done a hard and sudden shutdown 3 days earlier.
jnwatson 2y ago
I bet the acquirer got Bench for peanuts. It is worth quite a bit less than if they had made a deal 2 weeks ago, but I bet they paid a tenth.
- benatkin 2y ago
  Employer.com sounds like a brand for something like TriNet, which does payroll. I wonder if they're going to attempt to provide a service like that, and if that's a good business to be in. They seem to overemphasize the importance of a domain name like that, though. https://x.com/JesseTinsley/status/1861243509006848065 https://x.com/JesseTinsley/status/1861243509006848065 https://en.wikipedia.org/wiki/Business.com https://en.wikipedia.org/wiki/Business.com
  - umeshunni 2y ago
    Employer.com is owned by recruiter.com (NASDAQ:RCRT) which itself seems like a holding company of some sort, possibly owned by Nixxy Inc: https://nixxy.com/investor-relations/ https://nixxy.com/investor-relations/ From their website: Nixxy acquires cornerstone businesses in established markets and evolves their operations with cutting-edge technology and data-driven insights.
    - jonas21 2y ago
      Apparently, Recruiter.com rebranded to Nixxy, Inc. in September [1]. Since then, they have issued a vague press release on their "strategic focus" [2], spun off a company called CognoGroup which "will focus on AI-driven projects aimed at enhancing human potential." [3] and acquired JustGot2HaveIt, Inc., a wholesale gift business that sells things like tote bags and candles [4]. The company lost $13.3M on revenue of $135,886 in Q3 [5]. [1] https://www.nasdaq.com/press-release/recruitercom-group-inc-announces-rebranding-and-company-name-change-nixxy-inc-2024-09 https://www.nasdaq.com/press-release/recruitercom-group-inc-... [2] https://www.nasdaq.com/press-release/nixxy-issues-shareholder-update-strategic-focus-and-acquisition-progress-2024-10-17 https://www.nasdaq.com/press-release/nixxy-issues-shareholde... [3] https://www.nasdaq.com/press-release/nixxy-announces-cognogroup-spin-plans-2024-10-18 https://www.nasdaq.com/press-release/nixxy-announces-cognogr... [4] https://www.nasdaq.com/press-release/nixxy-signs-letter-intent-acquire-privately-held-company-wholesale-gifts-business https://www.nasdaq.com/press-release/nixxy-signs-letter-inte... [5] https://app.quotemedia.com/data/downloadFiling?webmasterId=102691&ref=318723599&type=HTML&symbol=NIXX&cdn=d7e685ceb34411b5e767f7d9af93391d&companyName=Nixxy+Inc.&formType=10-Q&formDescription=General+form+for+quarterly+reports+under+Section+13+or+15%28d%29&dateFiled=2024-11-14 https://app.quotemedia.com/data/downloadFiling?webmasterId=1...
ternnoburn 2y ago
I wonder if there was an opportunity for the workers to buy the company. Even for pennies on the dollar.
- dosinga 2y ago
  if they are cash flow negative, that won't really help
- bruce511 2y ago
  Why would they want to? Since it can't afford to keep the lights on, and pay staff, and likely has debts, what possible upside would they be hoping for? There's this idea that companies would just be fine if it was owned by the workers. The truth though is much more complicated than that. Companies fail because they run out of cash. Who owns it is immaterial at that point. Are you suggesting the workers should not take salaries while they get it back on its feet? Secondly, when you buy a company you don't get access to their working capital/ cash reserves. (By definition that's just buying cash with cash). So on top of the cash-free purchase price you still need to chip in working capital, debt payments and so on. Changing ownership in a company requires a LOT more money than just the sticker price.
  - pseudosavant 2y ago
    Ownership structure affects things earlier. This is too late. I’ve seen equity financed companies get “bought” by highly leveraged private equity only to be saddled with 9 figure annual interest payments suddenly. Making them unprofitable overnight. That couldn’t happen with employee ownership unless the majority of employee shares voted that way.
    - bruce511 2y ago
      So what's happening there is that the sellers are turning a long-term asset into short-term cash. The buyer is doing one of two things; either borrowing against future profit (ie taking on debt, then using profits to service the debt - a strategy that works well as long as profits can be maintained) Or they are fooling a lender into paying off the old owners, selling off the assets, and then leaving the debt unsecured in the failed business. Although typically the debt is secured elsewhere etc. To the (fired employee of the now failed business) it seems like the loan caused the company to fail, but in this scenario the company was purchased to sell the parts. The company had already failed, the owners walked away, and the new owners got to be the bad guys. Sometimes the lenders are the suckered here, but usually things are structured so the loans are in fact covered. There are other advantages to taking profit out as interest. So simply redirecting profits into interest isn't necessarily bad for the company or owners.
deleted 2y ago
[deleted]
moonlion_eth 2y ago
Selling an insolvent company is pretty common especially in an acquihire situation
- monero-xmr 2y ago
  Why didn’t they hire an investment banker? If they were going to be acquired for $1 anyway, the muddled and sudden shutdown simply lost a huge number of their customers. This was moronic, they could have at least did an orderly bankruptcy and proceeded business-as-usual. Whoever is running this should never run stuff again. None of my failed businesses failed suddenly, we knew they were going to fail well before they did. We made life saving maneuvers but understood it was likely end-game.
  - ajb 2y ago
    Rumors on twitter are that they got rugpulled by a creditor calling in the debt, under T&Cs, rather than running out of money with predictable timing. Eg see: https://x.com/pitdesi/status/1873872070331032051 https://x.com/pitdesi/status/1873872070331032051
    - jmvoodoo 2y ago
      A creditor calling debt because you violated your covenants is not a rugpull. That's how creditors insure they can be paid back before you predictably run out of money.
      - ajb 2y ago
        Well, I can see how it might be a rugpull or it might not. It depends on what the terms were and what the motivation was for invoking them. I don't have a dog in this particular fight. Did they actually formally file for insolvency before the new buyout? If they did then there eventually should be an impartial report on this, otherwise we might never know exactly what happened.
    - dustingetz 2y ago
      tldr: that $60M series C was actually 37M + 23M venture debt from SVB who called the loan! (That is not a rugpull, that is exactly what the venture debt contract prescribes for this exact situation) Top tweet reply is Matt Levine’s take (edit: wrong matt levine) Additionally, fmr SVB employee replies: "SVB Canada’s loans were sold to National Bank who has some tech lending chops but no where close to SVB nor the flexibility."
outside1234 2y ago
So much for accurate financials and peace of mind!
ChrisArchitect 2y ago
[dupe] https://news.ycombinator.com/item?id=42549343 https://news.ycombinator.com/item?id=42549343
m0d0nne11 2y ago
Were there any staffers with founder's stock or other equity who might have been played with this maneuver?

Source https://techstartups.com/2024/12/31/bench-a-popular-accounting-platform-startup-suddenly-shuts-down-leaving-customers-in-limbo/ https://techstartups.com/2024/12/31/bench-a-popular-accounti...

firebaze 2y ago
https://news.ycombinator.com/from?site=bench.co https://news.ycombinator.com/from?site=bench.co

kstrauser 2y ago

Godspeed to any remaining/returning Bench staff who have to deal with a whole lot of righteously infuriated customers afterward. Ugh. That’s a degree of customer support I’d never want to have to handle.

bruce511 2y ago
Customers will likely benefit in the short term as they can likely complete the year with Bench. Signing up those customers for another year might be.... challenging. I guess they have a couple months to win back some goodwill though.
- kstrauser 2y ago
  I can’t imagine the negative amounts of goodwill incurred from telling all your customers that they won’t be able to file their taxes.

ProAm 2y ago

Exfil all your data and find a new service. Not hard. Cost of business with any start up, be prepared to exfil in 3 mo at any time. Run into this over and over.

btheunissen 2y ago
I’d argue detailed accounting data is reasonably hard to package up into a nice format to easily import into a new system, especially having confidence that you migrated everything successfully without getting a nasty shock a few months down the line.
- malux85 2y ago
  One of my first jobs was writing integration software for different accounting packages, and BOY OH BOY are you correct. Many (most) packages have an API, but transferring data in and out requires deep knowledge of systems, their special pricing rules, their tax rounding rules (which is also different for every country) and many many other things, it was difficult enough for someone with years of experience in this domain to get right, the chances of even a senior developer doing this properly without field experience is zero.
- wdaher 2y ago
  We will do this for folks (moving from Bench to QBO) for free: https://pilot.com/bench-qbo-migration https://pilot.com/bench-qbo-migration (It's a nontrivial problem but there's at least a reasonable check—"Did the balance sheet, P&L, and cashflow statement generated by both systems match")
  - btheunissen 2y ago
    This is very cool! Nice to see there is something in the space to unstick some very stressed out Bench customers. Making sure everything reconciles definitely makes sense, I’ve worked on ledger systems in the past so I always look at these problems with a skeptical eye :)

deleted 2y ago

[deleted]

benatkin 2y ago

> Continuity of Service: Bench customers will continue working with the same expert in-house bookkeepers they know and trust. Translation: service is going downhill, but we're going to fight to keep you in your contracts. > Platform Stability: Customers will retain full access to the same powerful, intuitive Bench platform. See? We're spending money on you. Of course you have to keep paying, even if you hired another firm. > Data Security: All customer data remains intact, secure, and protected, with no disruption to historical records or ongoing service. Oh, and by the way, good luck exporting your data.

m1sta__ 2y ago
What an irrational and bitter utterance.
- Kwpolska 2y ago
  It's not irrational if you keep in mind that Bench had done a hard and sudden shutdown 3 days earlier.

jnwatson 2y ago

I bet the acquirer got Bench for peanuts. It is worth quite a bit less than if they had made a deal 2 weeks ago, but I bet they paid a tenth.

benatkin 2y ago
Employer.com sounds like a brand for something like TriNet, which does payroll. I wonder if they're going to attempt to provide a service like that, and if that's a good business to be in. They seem to overemphasize the importance of a domain name like that, though. https://x.com/JesseTinsley/status/1861243509006848065 https://x.com/JesseTinsley/status/1861243509006848065 https://en.wikipedia.org/wiki/Business.com https://en.wikipedia.org/wiki/Business.com
- umeshunni 2y ago
  Employer.com is owned by recruiter.com (NASDAQ:RCRT) which itself seems like a holding company of some sort, possibly owned by Nixxy Inc: https://nixxy.com/investor-relations/ https://nixxy.com/investor-relations/ From their website: Nixxy acquires cornerstone businesses in established markets and evolves their operations with cutting-edge technology and data-driven insights.
  - jonas21 2y ago
    Apparently, Recruiter.com rebranded to Nixxy, Inc. in September [1]. Since then, they have issued a vague press release on their "strategic focus" [2], spun off a company called CognoGroup which "will focus on AI-driven projects aimed at enhancing human potential." [3] and acquired JustGot2HaveIt, Inc., a wholesale gift business that sells things like tote bags and candles [4]. The company lost $13.3M on revenue of $135,886 in Q3 [5]. [1] https://www.nasdaq.com/press-release/recruitercom-group-inc-announces-rebranding-and-company-name-change-nixxy-inc-2024-09 https://www.nasdaq.com/press-release/recruitercom-group-inc-... [2] https://www.nasdaq.com/press-release/nixxy-issues-shareholder-update-strategic-focus-and-acquisition-progress-2024-10-17 https://www.nasdaq.com/press-release/nixxy-issues-shareholde... [3] https://www.nasdaq.com/press-release/nixxy-announces-cognogroup-spin-plans-2024-10-18 https://www.nasdaq.com/press-release/nixxy-announces-cognogr... [4] https://www.nasdaq.com/press-release/nixxy-signs-letter-intent-acquire-privately-held-company-wholesale-gifts-business https://www.nasdaq.com/press-release/nixxy-signs-letter-inte... [5] https://app.quotemedia.com/data/downloadFiling?webmasterId=102691&ref=318723599&type=HTML&symbol=NIXX&cdn=d7e685ceb34411b5e767f7d9af93391d&companyName=Nixxy+Inc.&formType=10-Q&formDescription=General+form+for+quarterly+reports+under+Section+13+or+15%28d%29&dateFiled=2024-11-14 https://app.quotemedia.com/data/downloadFiling?webmasterId=1...

ternnoburn 2y ago

I wonder if there was an opportunity for the workers to buy the company. Even for pennies on the dollar.

dosinga 2y ago
if they are cash flow negative, that won't really help
bruce511 2y ago
Why would they want to? Since it can't afford to keep the lights on, and pay staff, and likely has debts, what possible upside would they be hoping for? There's this idea that companies would just be fine if it was owned by the workers. The truth though is much more complicated than that. Companies fail because they run out of cash. Who owns it is immaterial at that point. Are you suggesting the workers should not take salaries while they get it back on its feet? Secondly, when you buy a company you don't get access to their working capital/ cash reserves. (By definition that's just buying cash with cash). So on top of the cash-free purchase price you still need to chip in working capital, debt payments and so on. Changing ownership in a company requires a LOT more money than just the sticker price.
- pseudosavant 2y ago
  Ownership structure affects things earlier. This is too late. I’ve seen equity financed companies get “bought” by highly leveraged private equity only to be saddled with 9 figure annual interest payments suddenly. Making them unprofitable overnight. That couldn’t happen with employee ownership unless the majority of employee shares voted that way.
  - bruce511 2y ago
    So what's happening there is that the sellers are turning a long-term asset into short-term cash. The buyer is doing one of two things; either borrowing against future profit (ie taking on debt, then using profits to service the debt - a strategy that works well as long as profits can be maintained) Or they are fooling a lender into paying off the old owners, selling off the assets, and then leaving the debt unsecured in the failed business. Although typically the debt is secured elsewhere etc. To the (fired employee of the now failed business) it seems like the loan caused the company to fail, but in this scenario the company was purchased to sell the parts. The company had already failed, the owners walked away, and the new owners got to be the bad guys. Sometimes the lenders are the suckered here, but usually things are structured so the loans are in fact covered. There are other advantages to taking profit out as interest. So simply redirecting profits into interest isn't necessarily bad for the company or owners.

deleted 2y ago

[deleted]

moonlion_eth 2y ago

Selling an insolvent company is pretty common especially in an acquihire situation

monero-xmr 2y ago
Why didn’t they hire an investment banker? If they were going to be acquired for $1 anyway, the muddled and sudden shutdown simply lost a huge number of their customers. This was moronic, they could have at least did an orderly bankruptcy and proceeded business-as-usual. Whoever is running this should never run stuff again. None of my failed businesses failed suddenly, we knew they were going to fail well before they did. We made life saving maneuvers but understood it was likely end-game.
- ajb 2y ago
  Rumors on twitter are that they got rugpulled by a creditor calling in the debt, under T&Cs, rather than running out of money with predictable timing. Eg see: https://x.com/pitdesi/status/1873872070331032051 https://x.com/pitdesi/status/1873872070331032051
  - jmvoodoo 2y ago
    A creditor calling debt because you violated your covenants is not a rugpull. That's how creditors insure they can be paid back before you predictably run out of money.
    - ajb 2y ago
      Well, I can see how it might be a rugpull or it might not. It depends on what the terms were and what the motivation was for invoking them. I don't have a dog in this particular fight. Did they actually formally file for insolvency before the new buyout? If they did then there eventually should be an impartial report on this, otherwise we might never know exactly what happened.
  - dustingetz 2y ago
    tldr: that $60M series C was actually 37M + 23M venture debt from SVB who called the loan! (That is not a rugpull, that is exactly what the venture debt contract prescribes for this exact situation) Top tweet reply is Matt Levine’s take (edit: wrong matt levine) Additionally, fmr SVB employee replies: "SVB Canada’s loans were sold to National Bank who has some tech lending chops but no where close to SVB nor the flexibility."

outside1234 2y ago

So much for accurate financials and peace of mind!

ChrisArchitect 2y ago

[dupe] https://news.ycombinator.com/item?id=42549343 https://news.ycombinator.com/item?id=42549343

m0d0nne11 2y ago

Were there any staffers with founder's stock or other equity who might have been played with this maneuver?