Founders Lounge

As a solopreneur, I recently received a meeting request from a member of a large company's M&A department, which I've scheduled for next week. My educational software product, targeting a niche market, brought in sales of approximately $600,000 last year. However, after deducting expenses such as advertising, freelancers, App Store tax, and hosting fees, my net proceeds amounted to $480,000. This marks a significant year-on-year increase of 395%. Currently, in a growth phase, I have several related projects in the pipeline that are likely to further boost sales.

I've agreed to meet with a potential buyer from a prominent private equity firm, but I'm uncertain about what to anticipate. I'm eager to understand their expectations and the type of offer they might present. However, I also have reservations about whether this meeting will be productive. Ideally, I wouldn't feel comfortable accepting anything less than 8-10 times the revenue. I'm unsure if my expectations are unrealistic or if they align with industry standards. Any insights or advice would be greatly appreciated.

Hi Taryn, I'm the former M&A director of a tech company turned serial founder. 

I suggest having the meeting! You don't have to anticipate. 10x revenue in your case would be peanuts for a Private Equity Firm. Don't put your expectations on the table. Let them offer a ballpark of the price.

You have a fantastic business, but it might make sense for you to sell. If it doesn't work, you'll still learn about what the market sees in your company and the objections to acquiring it. I'm advising other founders on how to make their companies an object of desire for acquisitions. Let me know if I can help.

Fernando

As a solopreneur, I recently received a meeting request from a member of a large company's M&A department, which I've scheduled for next week. My educational software product, targeting a niche market, brought in sales of approximately $600,000 last year. However, after deducting expenses such as advertising, freelancers, App Store tax, and hosting fees, my net proceeds amounted to $480,000. This marks a significant year-on-year increase of 395%. Currently, in a growth phase, I have several related projects in the pipeline that are likely to further boost sales.

I've agreed to meet with a potential buyer from a prominent private equity firm, but I'm uncertain about what to anticipate. I'm eager to understand their expectations and the type of offer they might present. However, I also have reservations about whether this meeting will be productive. Ideally, I wouldn't feel comfortable accepting anything less than 8-10 times the revenue. I'm unsure if my expectations are unrealistic or if they align with industry standards. Any insights or advice would be greatly appreciated.

As a solopreneur, I recently received a meeting request from a member of a large company's M&A department, which I've scheduled for next week. My educational software product, targeting a niche market, brought in sales of approximately $600,000 last year. However, after deducting expenses such as advertising, freelancers, App Store tax, and hosting fees, my net proceeds amounted to $480,000. This marks a significant year-on-year increase of 395%. Currently, in a growth phase, I have several related projects in the pipeline that are likely to further boost sales.

I've agreed to meet with a potential buyer from a prominent private equity firm, but I'm uncertain about what to anticipate. I'm eager to understand their expectations and the type of offer they might present. However, I also have reservations about whether this meeting will be productive. Ideally, I wouldn't feel comfortable accepting anything less than 8-10 times the revenue. I'm unsure if my expectations are unrealistic or if they align with industry standards. Any insights or advice would be greatly appreciated.

Hi Taryn,

My name is Ellisha Blechynden and I am a corporate attorney, specializing in M&A transactions. In my experience, if its 8 or 10 x EBITDA, this is in the realm of what is realistic for a software company. But with these types of transactions nothing is set in stone - its all a negotiation. You may want to consider having a valuation done for your company.

You may also want to think about putting a Non-Disclosure Agreement in place for the conversation with the potential acquirer. Or if the potential acquirer pushes back on this, be really careful on what you share with them before an NDA is in place.

Hope this helps. Happy to discuss further if you like.

Best,

Ellisha Blechynden

ellisha@blechyndenlegal.com

As a solopreneur, I recently received a meeting request from a member of a large company's M&A department, which I've scheduled for next week. My educational software product, targeting a niche market, brought in sales of approximately $600,000 last year. However, after deducting expenses such as advertising, freelancers, App Store tax, and hosting fees, my net proceeds amounted to $480,000. This marks a significant year-on-year increase of 395%. Currently, in a growth phase, I have several related projects in the pipeline that are likely to further boost sales.

I've agreed to meet with a potential buyer from a prominent private equity firm, but I'm uncertain about what to anticipate. I'm eager to understand their expectations and the type of offer they might present. However, I also have reservations about whether this meeting will be productive. Ideally, I wouldn't feel comfortable accepting anything less than 8-10 times the revenue. I'm unsure if my expectations are unrealistic or if they align with industry standards. Any insights or advice would be greatly appreciated.