
Ask HN: How to pursue acquisition? - throwaway334455
I run a one-person company in the cloud &#x2F; ops space and over the past year have gone from $0 to $200k in annual recurring revenue. I have not taken any funding. The major cloud providers (aws, google, azure) are starting to expand to my product space, however, and I&#x27;m increasing concerned with my long-term prospects.<p>I think it might make sense to pursue acquisition&#x2F;aqui-hire, while my product and expertise can still add value to these cloud providers. I would really appreciate advice from the HN community on how to achieve the best possible outcome, including how to proactively pursue acquisition&#x2F;aqui-hire at a large company. Thanks!
======
eastdakota
Companies get bought, not sold. The best way to get bought is, first, to get
on the radar of some potential acquirers. Not by saying: "Hey, come buy me!"
But, instead, by trying to find a way to partner. Get some product manager at
the company you think might be a good acquirer interested in what you're
doing. Go in fully intending to do a partnership not a sale. Often, especially
when you're small, the partnering company will just say: "This is easier for
us to just own ourselves." That's what's precipitated every acquisition we've
done.

In the case of a strategic buyer — like the big cloud companies you've
described as possible acquirers — they're _highly_ unlikely to care about your
revenue, customers you have, or the tech you've build. They're much more
likely to care about you as you've proven you can build something and
understand the market at least enough to get people to pay you. The old rule
of thumb in acquihires was $1M per engineer. That moves around, but is likely
a good mental guide post.

I'd be deeply skeptical of hiring any banker to represent you. Frankly, it's a
mark against any acquihire target we may consider — and I've heard the same
from the heads of corp dev at all the big cloud providers. And I'd be even
more deeply skeptical of any banker that would take you on. If you had
$20M–$200M in recurring revenues and were growing 20% YoY, that's when you
start to get in the hire-a-banker-to-broker-a-sale range. And, even then, it's
_much_ more likely to be driven by the acquirer than the company looking to be
acquired.

Finally, if you've built a business with reliable cash flows and steady
growth, the most likely place that you'd actually be able to sell it and keep
it running is to a small private equity (PE) firm. There are a number of PE
firms that have sprung up to buy up small "lifestyle" SaaS companies. Some of
the smallest ones are started as "search funds" to go find a small business
and help it grow. Start talking publicly about your revenue and growth rates
and they'll inevitably come knocking on your door. Again, always better for
them to call you than for you to call them.

Depending on your churn and growth rates I've seen PE firms offer 1x – 10x
revenue for small SaaS companies recently. That's a big range, but, taking the
mid-point (5x), and taking your $200k in sales, you're again around $1M — same
as the rule of thumb above.

Congratulations on building something real that people are willing to pay for.
Good luck!

~~~
throwawayAZX
This is good advice. A banker is overkill for the level of revenue you are at.
PE is a good option

~~~
godzillabrennus
I’ve talked with PE folks about this and your revenue is too low from what
I’ve heard.

I think an acquihire would be better for you.

~~~
mbesto
PE guy here. This is correct. The only way you would get bought at your
revenue level is for a strategic portfolio company add-on. Unfortunately not
too many PE firms play in the field of "cloud / devops" technology solutions
so your opportunities are going to be really limited.

That being said - Rackspace might be a good fit.

------
nicodjimenez
At that scale you can definitely get acquihired (hired + a starting bonus) as
an engineer - if THEY find YOU. Best way to do that? Market presence!

If you don't want to run your company anymore, selling the company might be
more trouble than it's worth. You won't get THAT much cash for it, and you
might end up at a engineering job that doesn't suit you, with golden handcuffs
so you don't leave. That's the risk. After you're done working at the
acquiring company, you'll just be another engineer, with a nice extra line on
your resume most engineers don't have.

On the other hand, at the acquiring company you could find a business
cofounder and if you want to, start another company, with more cash in your
pocket, and more credibility with investors. That's the upside! But you'll be
assuming that you're going to have a better idea in the future than the one
your currently have.

Anyway this is all hypothetical. If you want corp dev people to find you, you
need visibility in the marketplace. That means SEO, blog articles, etc.

~~~
mi100hael
I was with you until

 _> But you'll be assuming that you're going to have a better idea in the
future than the one your currently have._

"Ideas are cheap, execution is everything."

~~~
tango24
Not sure what you mean here? Your comment seems to support the OP’s premise.

~~~
mi100hael
The "but..." phrasing of OP's premise makes it sound like a gamble. My point
was that starting a successful business isn't about hoping some fairy grants
you a perfect product & business plan. Coming up with an idea is the easy
part. Executing on your idea is the hard part, and that's entirely within your
own control.

~~~
nicodjimenez
I completely disagree. Ideas are extremely important. A mediocre idea with
perfect execution won't get you very far. If Bezos had tried to build online
store builders ala Viaweb - instead of THE online store - he would have a net
worth at best of 1/10000 of where he's at now. Good ideas are exponentially
better than mediocre ideas.

~~~
mi100hael
Founders of billion dollar businesses are extreme outliers with uncommon
vision & a healthy dose of luck.

Besides, Yahoo bought Viaweb for about $50MM, and Shopify is a billion dollar
company of its own. If $10MM or $50MM isn't successful, then I'll be happy to
fail.

------
samingrassia
I highly recommend Joe/Mark at quietlightbrokerage.com.

quietlightbrokerage/FEinternational.com/empireflippers.com all share the same
buyer list FYI

I would suggest reaching out to each and finding out who you are comfortable
with.

I would also suggest taking a look at: centurica.com/website-buyers-report

This will give you a sense of the multiple on SDE you are likely to get. Lots
of credit available to buyers right now so its a great time to sell,
specifically saas.

Good luck

------
greysteil
Getting to $200k ARR is an amazing achievement, particularly in just one year
and without funding.

I can't advise you on pursuing an acquisition, but I'm in the same boat as you
- I run a one-person company making $65k ARR after 16 months of hard labour. I
know how tough it is doing it on your own, and how easy it is to question
yourself when you don't have the external validation of an employer,
investors, etc.

Are you sure you wouldn't be better sticking with it? After a year of working
on something on your own all of your biases will be towards selling - if
you're not sure then it's almost certainly the wrong choice. Have you looked
at doing something like YC / Startup School, even if you don't want to take
investment? Having any kind of external validation will help. You should also
almost certainly take a few days off and recharge, if you haven't already - I
find it hard to do that but whenever I do it helps.

------
privateSFacct
$200K in recurring revenue - is pretty much the annual employee cost of a
single average position at the companies you mention all in (office space,
salary, benefits, indirect staff overheads (HR/Accting etc)).

In other words, to them, your business is very small. Other than aquihires -
at a 5x multiple, $1M, does aws even go through the acquisition cycle for that
type of business unless there is a much larger market presence - ie, a big
free product side to your business?

If you want to sell its going to be to a different class of buyer.

You may be surprised at how sticky your customers are if you have an OK
product even if the big players move in though. You might not get tons of new
ones, but folks hate moving.

~~~
ryanSrich
Yeah unfortunately $200k is entirely meaningless. In fact, any revenue sub
$100m is pretty much meaningless to a large CSP like AWS.

For OP's business the price would be 100% strategy driven - ex: you've
garnered some marketing attention, you've built some novel IP, or you've hired
some hard to come by talent.

~~~
derefr
> In fact, any revenue sub $100m is pretty much meaningless to a large CSP
> like AWS.

What if OP is severely undercharging for their services? They could be
providing a service that a bigcorp could charge $100k per (enterprise)
customer for, at consumer prices.

I’d think acquirers would be _very_ interested in acquiring—and then
killing—the product in such a case, to remove memory of its price-anchoring
influence from the market ASAP before introducing their own much-more-
expensive one.

~~~
privateSFacct
That's very unlikely. What can happen though is OP is giving away a ton of
service (think github or instagram) and so a big firm can think long term on
monitization.

------
jbchoo
Fight on. Take on the competition. My suggestion is to take a good vacation
break and re-energise. After which, take on the competition and emerge
stronger than your competitors. Fight on!

One of the comments has a great point: "You won't get THAT much cash for it,
and you might end up at a engineering job that doesn't suit you, with golden
handcuffs so you don't leave."

~~~
Drdrdrq
This! What have you got to lose? Worst case, you close down and get an
engineering job, which is the same as if you went for aqui-hire - except that
you miss the chance to build something great. Don't worry about the big guys,
there is always enough space left in various niches. But do take a break
first, and find some support somewhere (indiehackers?).

------
callmeed
I sold a business through FE International (mentioned in some comments here).
If you’re going to sell through a broker, I can’t say enough good thing s
about them. Very professional and great to work with.

The only downside with going the broker route in general is looking like
someone who isn’t wanted. Some will perceive you as having a lack of bizdev/PR
skills, being in an unsexy/dying space, etc. You won’t get the big revenue
multiple price that you would if tech companies were fighting for you.

Also start getting your financial and technical affairs in order yesterday.
There will be a ton of due diligence whatever route you go and the better
prepared you are, the smoother it will go. Retain an attorney as well.

Good luck. Happy to answer questions privately via email.

------
_d8fd
Why not just milk it until the money train dries up or you are rolling in
cash? Just because one or more companies offer the same product doesn't mean
you're going to squashed. What will tank your business is losing focus &
giving up before you needed to.

~~~
batiudrami
Depending on what exactly it is it might be quite time consuming running the
business, not to mention stressful to not have a reliable paycheque. An office
hours job with salary might be starting to look desirable.

------
throwawayAZX
Congratulations! (I am using a throw away id because I'm in the middle of an
M&A process myself). In my case, we have orders of magnitude more revenue, but
some of the fundamentals of an acquisition process are the same. I have no
experience with brokers (good or bad). If your goal is to sell to the cloud
vendors themselves, you need to first develop a relationship with the relevant
people on the other side. This is someone in product, not corporate
development. 200K ARR may be too little for a proper acquisition so an acqui-
hire may be the way to go. Two books that you need to read are "Venture Deals"
(it is mostly about fundraising but has a concise, relevant section at the
end) and "The Magic Box Paradigm" which is a great, surprisingly unknown book.
You may want to check his talk online
[https://www.youtube.com/watch?v=Mq98YvFzn6o](https://www.youtube.com/watch?v=Mq98YvFzn6o)
for a summary. Also, read Elad Gil's blog posts on M&A. All in all, you are in
a great position, having bootstrapped to that level of revenue with no
investors. That's impressive in and of itself. Good luck!

------
schwax
Chaos Monkeys by Antonio Garcia Martinez tells the author's story as his
company is acquired by Twitter and he goes to work for Facebook. It's an
really entertaining read and he includes a bunch of asides on how the Silicon
Valley M&A pipelines work (or at least his perspective on how they work).

[https://www.amazon.com/Chaos-Monkeys-Obscene-Fortune-
Failure...](https://www.amazon.com/Chaos-Monkeys-Obscene-Fortune-Failure-
ebook/dp/B019MMUAAQ)

~~~
neom
I must say I cannot agree with this book being a good read. If condescending,
narcissistic, misogynist is your thing, I suppose maybe. Only book I have ever
returned on Audible.

------
staunch
Someone summarized the dynamic well with the idea that "companies are bought,
not sold".

The best sellers of startups are actually investors themselves. Some of them
are very good at selling portfolio companies into bigger organizations. They
have the contacts, relationships, and favored position as semi-third party
negotiators. They've often worked at these companies themselves and know how
to get them feeling the FOMO.

You might want to find some investors that have recently sold companies to
your target companies and see if they want to invest in yours. Many investors
say they don't like "flipping" companies but the reality is that some of them
very clearly do.

------
unrealchild
First, congratulations on growing your business to this point! Most don’t make
it that far!

Second, to echo some of the advice here, networking really helps. You likely
have some connections at shops that do something similar and may be able to
strike up a relationship with leaders and bring it up organically.

Another route is to identify your “best”/“most dedicated” client and approach
them about bringing your services in-house. Depending on the nature of your
business this could provide this client a diversified product offering if
there is some synergy with their core competency; worked for us.

Regardless, best of luck!!

------
lubujackson
Echoing others, FE International is an established broker that is respected on
both sides and will help you get all your financials in order. They also offer
paperwork help to buyers, so they really do a great job on both sides. Having
gone through a sale of business without them, it is an extremely annoying
process that will consume your efforts for far longer than you think.

That being said, the businesses mostly being sold are either dropshipping,
content with ad/affiliate rev. or the occasional SaaS, usually in a tidy
package. It sounds like you might fit in thst last category, but your space
might be too complicated for an easy sale. Usually people there are buying
businesses without staff and take them over after a brief handoff. So if the
business knowledge is key, it might not be valued appropiately there.

You could always split the difference and target 5-10 companies you think
might want to buy you. Get a person on the phone if possible and let them know
you are preparing to sell your business "in the coming months" and plan to be
listed on FE International. Simply ask them if they would like to be notified
when the sale is on.

Now you might hear crickets, they might say "ok" or they might decide to buy
you right away. No matter the outcome, you will be in a better position to
gauge the interest level if you try to sell.

------
cmullen
Former founder, software investor and banker. Email me directly for some free
advice on this one. You’ve got some options and good approaches - I can point
you to some friends who work at shops that help companies like yours.
Cameron.mullen@gmail.com

------
threeseed
One option that may help is to use LinkedIn to find the key decision makers,
figure out their email address (almost all companies have a fixed naming
convention) and then put them in a Facebook Custom Audience group. Then just
keep targeting them so at least they are aware of who you are and what you're
doing.

The key people to target are lower level engineers, program managers as well
as the VPs in charge of their respective cloud platforms.

~~~
werber
You can target by e-mail address?

~~~
cm2012
email, first, last, city, phone, any combo of the above.

------
sudhirj
Get yourself featured on Indiehackers, publicize your numbers and your story
(you can leave out the feeling of impending doom), and mention that you're
open to a sale. You should get enough offers pretty quickly.

If you want a broker, lots of other comments here mention patio11 and the
broker he used for Bingo Card Creator, he recommended them very highly.

------
majani
To answer your question, exits.com is a great resource for people seeking
smaller acquisitions.

If I may insert a personal opinion, I feel like for single person businesses,
the potential upside is so great for you that it's going to be hard to find a
buyer willing to make you an offer you can't refuse. I'd advise you ride this
one out into the sunset. It's a subscription business, you could definitely
squeeze at least 5 peak years out of it before it starts to fizzle out. Maybe
you could move somewhere cheap and maximize the profits

~~~
te_chris
I've seen this first hand. I worked at a product studio that had a few
businesses which were costing nothing but generating >$20kUSD per month. I'd
set up the business to be as no-ops as possible, so it can basically run
itself, reap the profits. Next, take all this other advice and sell, sell,
sell yourself to MS/GOOG/AWS.

------
nextstep486
I forget the name of the company but there is an Irish company broker that
seems to be the main player in broking deals of this sort.

If you ask at the Indiehackers forums someone will know which company I mean.

~~~
citrablue
Is it FE International? My only awareness of them comes from patio11, who
speaks very highly. (And I enjoy getting their newsletter that lists
properties for sale...)

[https://feinternational.com/](https://feinternational.com/)

~~~
nextstep486
Yep that's the one.

------
muzani
Revenue doesn't really matter that much. IMO a lot of bigger companies acquire
when:

1\. You build something that is difficult for them to build themselves.

2\. You are a threat to their business model. Doubly so if an acquisition
would merge well with their model.

This is the key sentence: "The major cloud providers (aws, google, azure) are
starting to expand to my product space..."

If they're expanding there, they're going to need to spend marketing. They
need to overthrow the incumbent. They want expertise in the field.

You mention multiple companies. That means that there are a few competing for
the spot!

I would recommend being a bit of a thorn in their side, in the sense of market
share. This is usually what sparks acquisitions of smaller companies. Don't
actually be a thorn personality wise, but make your company visible.

You may want watch for conferences etc in the field and accidentally bump into
them. I've once met all my major competitors in the same event.

Going out and saying "I want to sell" doesn't work well, for the same reason
it's not a good way to get a date. You want to open up the conversation with
the right person. "Oh, my business is making a quarter million dollars a year.
But it's so tiring running a business. I wish I could just work in a company
and focus on the tech."

A fundraising trick is to meet all the potential acquirers in the same week.
It's a lot harder to do with this, but it could help.

------
johns
I’ve been through this and happy to discuss privately and confidentially.
Email is in my profile.

------
gojomo
Make sure you're on the radar of biz-dev/partnership/product-management people
at your potential acquirers. Check through your existing professional contacts
for potential warm intros. And, your customers – product managers at the
target orgs may already be trial users of your product. Perhaps even put some
contact method in your throwaway profile here, so anyone at
AWS/Google/Azure/etc seeing this can reach out.

If you're not naturally a sales-y networker/glad-handler/negotiator, if you
have a trusted friend/colleague who is, you might want to bring them in as an
advisor/junior-partner, incentivized to find & close a deal. Of course, this
may not be natural for a solo builder like yourself, and includes some danger
of bringing in a value-subtractor. But, someone with the right incentives,
industry knowledge, & negotiating prowess could pay for their 'commission'
many times over.

------
andreygrehov
If you're in New York by any chance, FE International is hosting a public
happy hour tomorrow at 307 W 47th St @ 6pm
([https://www.facebook.com/events/267494074059745/](https://www.facebook.com/events/267494074059745/)).
Could be an opportunity.

------
encoderer
I’m surprised you haven’t received inquires. We get about one a month to
acquire Cronitor.

If your objective has been to keep quiet about your success to avoid
competitors, possibly reevaluate if that is the best strategy for acquisition.

Consider an outright sale at something like 24-36 months current mrr. Don’t
acquihire for the wrong company.

------
foobaw
Pitch your company to key decision makers in various companies to build
exposure. Attend conferences and network with relevant people - grab a drink
or dinner and discuss ideas and maybe acquisition talks can organically start.

------
martinflack
Maybe run searches for announcements, webinars, talks, howto's about the
related products, where you can see employee names. Ideally Product Manager or
Product Director titles; but folks in marketing or evangelism who know the
product area will know who those people are. Then reach out - LinkedIn is an
option.

The product owners in the most related area would be in a position to consider
your idea and advocate in the best way internally if it makes sense. If you
have a call or meeting, prepare yourself about what things you might like to
keep confidential until things progress a bit, in case they do not.

------
corporateslaver
How about I run it for you give you a big percentage of the profit?

------
Jack000
My SaaS has similar revenue and I've thought about selling to fund other
projects. In the past year 3 large companies cold emailed me about selling -
one of them twice from different departments, but after a bunch of emails back
and forth none of them went through with it (I've been asking for 5-10x yearly
revenue)

I'm not sure if I'm asking for too much or if they're on a fishing expedition,
but for now I'm content just running things myself and growing revenue.

~~~
philsnow
5-10x is on the high side for multipliers that I've heard of. 3x is fairly
common.

~~~
Jack000
my thinking is basically: I'm not trying to sell, they're trying to buy - I
don't need a quick cash infusion so not selling is my default, but if they
want to convince me to sell they should be willing to pay a premium on top of
market rate.

~~~
philsnow
I don't disagree. You're not likely to get a 300% premium over market rates,
and you're okay with that. Sounds like everybody wins :)

------
scapecast
So first off congratulations to creating a business that makes customers pay
$200K per year. That's amazing. There are companies out there that raise many
$M, hire a bunch of engineers, and still don't get there.

I may be able to add a perspective here since I've worked on both sides of the
table, in Corp Dev (before) and as a founder (today).

If you want to find an exit for your company, then it's "just" another sales
process. That means you need to define your process, set a timeline, and
create urgency among potential buyers. That means filling your pipeline with
lots of prospects. In a way, it's like fundraising - you're trying to sell (a
part of) your company.

Key is that you have a large top of the funnel - more people will say "no"
than "yes". And for the ones that say "yes", you want to make sure that you
have leverage, i.e. more than one offer.

Here's the rough process that I would pursue if I were in your shoes:

==========

\- create a long list of companies that may be a good fit / home for your
product (20+ companies)

\- find their CEOs and their emails (e.g. via a freelancer on Upwork)

\- get a warm intro (best), otherwise reach out cold

\- prepare a general pitch (market changes, need for your product, etc.)

\- do you homework to understand how your product would fit into their
portfolio

==============

The first contact should only be about the potential opportunity - "xyz
thought what I'm doing may be a good fit for your company. If I sent you a
short deck, would you spend a few minutes looking at it?" \----> if yes, send
and propose a 30 min chat

Do this for as many good potential buyers as possible, all within a few days.
Schedule the coffee / call for the week after. Prepare that deck that you can
send if somebody is open to talk / meet.

in the deck:

=============

\- describe a big change in the market that has created a need for YOUR
product

\- make sure you nail the "why now?"

\- explain your product's secret sauce and why it's unique

\- show your traction, customer logos

\- explain your economics (e.g. "ASP $18K / year")

\- show what the business can look like if you join forces

\- put a price on it

============

Keep this deck small. 6-8 pages max.

Make sure you communicate that you're looking to find a buyer within the next
6-8 weeks (urgency), and that you're talking to a few good companies (fear of
missing out).

If you feel there's a fit, and the other side believes that too, work with the
CEO to identify & involve the stakeholders on their end (e.g. VP of Product,
VP of Engineering). Make sure that happens as a follow-up within the next week
of your chat / coffee with the CEO.

If they all decide it's a fit - agree on the process and timeline it will take
to close. They'll need to get approval from their board, etc. to get this
through. So much can go wrong here. People go on vacation. There's an
important release. The quarter is ending, and they missed their quarter.
That's why you need many potential parties in your deal.

So:

first contact --> call / meeting --> get ok from stakeholders --> come to
decision "is this a fit"? --> agree on closing steps

Reg. the price - there are few well-known small PE buyers out there that will
pay your 1x revenue regardless of what your business is. Take that as the
bottom of the valuation. To get something that's higher - you'll need
competing parties for the deal.

But I doubt that anybody will buy you for the revenue. $200K is too little for
any company to matter, regardless of small / big. So the important part is to
communicate the potential, and your value-add as an individual contributor for
say the next 12-24 months. But you don't know until you try and ask :-)

Hope this helps. and then look at
[https://www.intermix.io](https://www.intermix.io) to and let me know if we're
a potential fit :-)

~~~
ghein
This is a very good and detailed list, includes some of the things that I did
in my sales process.

One thing to add is that for each company you should reach out to MANY people.
CEO is a key target and the prototypical person to be involved, it's just that
depending on the culture, structure, and personal preferences the best person
to get involved is different at each firm.

So do research on the Founders, the Board, major investors, CEO and other
C-level execs, head of Biz Dev, head of Corp Dev, head of Product Management,
and all of the biz dev and corp dev teams. Reach out to them through your
network or directly but blanket the organization if you're going in cold or
don't here back from a referral to the CEO within a few days.

------
howitworks
An entire industry of brokers exist to match online business owners with
buyers and do these types of transactions regularly.

patio11 has used and spoken highly of FE International (you can see his blog
or search HN)

But other brokers like e.g. Quiet Light Brokerage also exist.

It should be noted that these types of transactions have nothing to do with
the typical Silicon Valley advice or narratives you'll read about acquihires.

------
franciscop
The product seems pretty location-independent, have you thought/is it even an
option for you about moving somewhere cheaper and keep working on it? Might
just give it a go and if revenue keeps growing you might have quite a bit
saved in the bank in a couple of years.

------
wmab
Firstly congrats, that's great that your business has driven so much ARR with
1 person and no funding! Based on your question I assume that you haven't sold
a business before so here's some things to think about, ultimately before even
deciding whether a sale makes sense for you. This is a timely post, my company
had an acquisition offer that we ultimately rejected so I have some insights
FWIW. A brain dump:

1\. Only engage in acquisition talks if you're very serious. They consume a
lot of time - negotiating will become your new job. The view is don't talk to
Corp Dev unless you're serious [1] (this is very true) 2\. Really you should
sell when you don't want to sell [2]. Firesales will produce a minimal $
outcome. The upside is it's a complete package - a sale is still a sale
(successful entrepreneur/exit), you're getting something for the business,
it's a good resume story especially if you're a first-time founder. You'll
also get a good job at the acquirers business 3\. The market price isn't based
on some X of your ARR, it's whatever someone is willing to pay you, so $200k
ARR sounds great (congrats btw), but it's what you're worth to them. 4\. Asset
sale vs stock sale - generally businesses want your assets not your stock,
whereas the tax for you (assuming you owned you stock >1 year) will be less
via a stock sale, you'd be double-taxed from an asset sale so really try
against this way [3] 5\. Tax is a big consideration. In CA, long term capital
gains is ~30% vs ordinary income ~50% 6\. Form & timing of consideration -
form: cash vs equity - cash is king, but any public company stock should be
seen as liquid (blue chips you mentioned would be great stock for
consideration). Also timing of the purchase price is huge. Typically they'll
try to defer it over a long period of time (2-4 years) as an earn-out to
incentivize you to stay there. Earn-outs might also have milestones you need
to hit in order to get the payouts too. 7\. Costs of selling. You'll need a
lawyer and maybe a CPA and you'll generally pay their bill, so this could
easily hit > $50k (if the negations fall through you'll owe whatever work your
lawyer has done to date too) 8\. Negotiations are all about leverage. If
you're selling your company then they will hold a lot of the leverage, so be
aware when you're agreeing to the letter of intent that after that moment,
normally clauses/ points will only get worse for you. What you have going for
you though but the sounds of things is that you don't need to sell, you're
just thinking of selling - ie, you're revenue creating, hopefully profitable,
so it's not like you'll run out of cash during the process. Always aim for a
30 day close to minimize the drag on of the deal.

Assuming you do want to sell, then avenues to go down could be: 1\. Do you
have any large customers? Large customers might be a good source of potential
suitor, they already like your product (they pay for it), you have
relationships with them. Always frame it as looking at deeper partnership
opportunities (this is what businesses call it when they're skirting around
the word "acquisition") 2\. The team that do M&A in a business are called
Corporate Development, so LinkedIn for these guys at all the big potential
suitors you can think of, set up coffee (they might be interested because that
is literally all their job is - you're doing half their legwork for them). 3\.
Who are your competitors? Search them on on Crunchbase for any sales and see
what companies are buying. 4\. You haven't raised any capital but do you have
any VC links? These guys can offer invaluable advice, even if they're not
interested in funding you / you aren't looking to raise they normally have
some great angles for you so you should hit them up - they are also (a good
one) some of the most well connected people, so can put out feelers for you/
makes intros. You never know, they might persuade you to take their money to
take on aws etc...

Let me know if you had any questions on it, interested to hear your thoughts!

[1]
[http://www.paulgraham.com/corpdev.html](http://www.paulgraham.com/corpdev.html)
[2] [https://justinkan.com/the-founders-guide-to-selling-your-
com...](https://justinkan.com/the-founders-guide-to-selling-your-
company-a1b2025c9481) [3]
[http://www.marinercapitaladvisors.com/resources/publications...](http://www.marinercapitaladvisors.com/resources/publications/asset-
sale-vs-stock-sale.html)

~~~
whack
The formatting in your post is messed up, so I hope you don't mind me fixing
it here:

 _1\. Only engage in acquisition talks if you 're very serious. They consume a
lot of time - negotiating will become your new job. The view is don't talk to
Corp Dev unless you're serious [1] (this is very true)

2\. Really you should sell when you don't want to sell [2]. Firesales will
produce a minimal $ outcome. The upside is it's a complete package - a sale is
still a sale (successful entrepreneur/exit), you're getting something for the
business, it's a good resume story especially if you're a first-time founder.
You'll also get a good job at the acquirers business

3\. The market price isn't based on some X of your ARR, it's whatever someone
is willing to pay you, so $200k ARR sounds great (congrats btw), but it's what
you're worth to them.

4\. Asset sale vs stock sale - generally businesses want your assets not your
stock, whereas the tax for you (assuming you owned you stock >1 year) will be
less via a stock sale, you'd be double-taxed from an asset sale so really try
against this way [3]

5\. Tax is a big consideration. In CA, long term capital gains is ~30% vs
ordinary income ~50%

6\. Form & timing of consideration - form: cash vs equity - cash is king, but
any public company stock should be seen as liquid (blue chips you mentioned
would be great stock for consideration). Also timing of the purchase price is
huge. Typically they'll try to defer it over a long period of time (2-4 years)
as an earn-out to incentivize you to stay there. Earn-outs might also have
milestones you need to hit in order to get the payouts too.

7\. Costs of selling. You'll need a lawyer and maybe a CPA and you'll
generally pay their bill, so this could easily hit > $50k (if the negations
fall through you'll owe whatever work your lawyer has done to date too)

8\. Negotiations are all about leverage. If you're selling your company then
they will hold a lot of the leverage, so be aware when you're agreeing to the
letter of intent that after that moment, normally clauses/ points will only
get worse for you. What you have going for you though but the sounds of things
is that you don't need to sell, you're just thinking of selling - ie, you're
revenue creating, hopefully profitable, so it's not like you'll run out of
cash during the process. Always aim for a 30 day close to minimize the drag on
of the deal.

Assuming you do want to sell, then avenues to go down could be:

1\. Do you have any large customers? Large customers might be a good source of
potential suitor, they already like your product (they pay for it), you have
relationships with them. Always frame it as looking at deeper partnership
opportunities (this is what businesses call it when they're skirting around
the word "acquisition")

2\. The team that do M&A in a business are called Corporate Development, so
LinkedIn for these guys at all the big potential suitors you can think of, set
up coffee (they might be interested because that is literally all their job is
- you're doing half their legwork for them).

3\. Who are your competitors? Search them on on Crunchbase for any sales and
see what companies are buying.

4\. You haven't raised any capital but do you have any VC links? These guys
can offer invaluable advice, even if they're not interested in funding you /
you aren't looking to raise they normally have some great angles for you so
you should hit them up - they are also (a good one) some of the most well
connected people, so can put out feelers for you/ makes intros. You never
know, they might persuade you to take their money to take on aws etc..._

------
Vicvicvic
Congrats!

I work for a venture firm in SF, we would be interested in buying the company
in cash, or at least having that conversation. We've run companies like
PagerDuty in the ops space.

Look forward to chatting! Here's my personal - yyzvictor@gmail

------
ghein
I've sold a company in your space. Reach me on gmail

gramerhein at...

------
duxup
Kudos on building that man. That's some awesome one man stuff.

------
sbr464
Interested in seeing how it works out for you, good luck! Write a blog post
when done.

I think there is a lot of potential in this space for a new platform. I think
it’s an actual good potential use of social scoring to encourage a solid
community.

------
GoRudy
Keep it running and start another project?

~~~
amazert
Its easier said than done. Generally a project needs our serious attention.

------
pknerd
A _Show HN_ should work you too.

------
anoncoward111
Why not consider running it as a non-profit? If the service is truly desired,
people will donate to it if you respect user rights better than AWS or etc

------
nerfhammer
try replying to some recruiter spam explaining your situation and see how they
respond. some of them may try to connect you with whoever would be involved in
that sort of decision making at their company.

------
pertsix
Just email the respective business development folks at the companies
expanding into your space.

