Selling Your Startup. Alejandro Cremades
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!
2 Getting 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.
Acquisitions can be fantastic. In many cases, they can be the best outcome for everyone involved. They can be good for you and your family, your cofounders, your team, your investors, and even your customers. They can be game-changing for so many people. In fact, some hyper-successful serial entrepreneurs will continue launching startups to create ongoing positive outcomes.
But even if you like challenges and learning new things, mergers and acquisitions are not easy.
In many ways, they are like fundraising. There are several crossovers in terms and terminology, tasks, and the materials you'll need. But there are also new concepts, factors—and paperwork—to master.
Mergers