Is there a marketplace to sell a start-up?

Devin Dufenhorst Regional Account Manager at Abbott Diabetes Care

February 19th, 2016

I have a start-up that is 3 years old and I have taken it as far as I can and would like to find a either a person or company that would like to acquire the IP, website, and mobile apps. How do I do this?

Jacob Mullins CEO @Exitround

February 19th, 2016

Hi everyone, I'm Jacob Mullins (@jacob), CEO of Exitround.com a software powered network for M&A, based in San Francisco, backed by Shasta Ventures, Sherpa VC, TechStars, 500 Startups and other great Silicon Valley venture firms.

In essence, we use marketplace dynamics and algorithmic recommendation software to more efficiently introduce interested Buyers and Sellers of companies who may not know each other.Sounds like a few of you have heard of us, let me explain who we are/what we do as well as correct a couple perceptions from some comments above.

We are primarily a self-serve platform where you build an "anonymous profile" of your company and our recommendation technology provides you with suggested corporate acquirers who are interested in your space. This is a free service. Hundreds of Buyers login to the platform on a weekly basis and look through the anonymous profiles, where they can request more information from an "anonymously" listed company. The owner of the company gets to approve or decline the request from the prospective Buyer. Again, this is an entirely free service, to get a list of potential Buyers in your space as well as receive inbound leads.

There is an optional premium level service where you can pay a monthly fee in order to "outbound" pitch Buyers who are in our network. These fees are $99 and $499 per month, depending on the number of Buyers you want to reach out to.

The primary business model is a success fee, the greater of: 1% of the transaction, or $20,000 per person (if an acqui-hire), the fee is paid by the Buyer.

By the numbers:

Over the past three years Exitround has completed over 70 successful M&A deals. Deal sizes have ranged from $100,000 to $85,000,000, with the majority falling below $15,000,000.

There are over 4,000 companies selling on the platform today which range from the smallest being two people with a product and no revenue, to the largest being an enterprise software company doing $50,000,000 in revenue with a positive 12% EBITDA.

There are over 30,000 active Buyers in the Exitround network, a large portion of who are "non-traditional" Buyers outside of the typical technology space, such as Red Bull, Live Nation, Fender, Westfield, to name a very small sample. (Here's an article relating to such: businessinsider.com/the-year-of-the-tiny-tech-acquisition-2015-1) These Buyers both proactively search, and are prompted to come in a view companies when there are Sellers that fit their specific areas of interest.

For Sellers on the platform, 2/3 of sellers receive at least one request from a potential buyer - note 1/3 of companies receive no interest from Buyers. Of the companies that do receive at least one request, on average they receive 2.7 (or nearly 3) requests from an interested Buyer.

Here is a Quora thread of an Exitround user who went through a transaction successfully:https://www.quora.com/How-is-the-experience-of-getting-acqui-hired-through-Exitround

For more general information about M&A check out our blog exitround.com.

For data on Tech M&A in the world below $100,000,000 transaction size (where 88% of transactions happen), download our report here: exitround.com/data

To check out Exitround for yourself and build a free anonymous profile, go here: exitround.com/seller.

For a handful of companies who are revenue generating and positively profitable over $25,000 MRR with a stable base of customers, we have specific interest today from some "nano-PE" firms interested in doing roll-ups, so contact us.

Feel free to email me with any questions [removed to protect privacy].

Thanks!

Angelo Sorbello Entrepreneur

May 3rd, 2017

Both Exitround.com and Flippa.com are great to sell your startup

Chris Seline

February 19th, 2016

@Jacob: 30,000 active buyers but only 70 transactions in 3 years? I wish you guys luck because I think the world needs an Exitround, but these numbers do not seem promising to me. I balked at the $500 per contact fee when I used the site, has the fee structure has changed? The idea of paying $500 to send an email when you had no idea if it would be read or not was not appealing.

John Cabri

Last updated on July 19th, 2017

You may have already sold your company, so this information may not be useful for you (hopefully it will be for others). I have worked with five companies that were either early stage or turnaround that marketed themselves for acquisition. I led the process for three of the companies and was closely involved in the other two. Of the five companies, four received offers and three closed. And while each of exit processes was unique, there are some common characteristics.

Here's my experience . . .

1. I am assuming that any investors (other significant stakeholders) are on board with your plan. However, you need to ask what will happen if the offer price is well below any discussions that have been had between you and the investors/stakeholders? Make sure that communication with these constituents is often, especially the communication of any information having to do with terms.

2. It is a time consuming, frustrating, business-encroaching process. It will take up most/all of your time.

3. If you have employees, expect them to find out. This is important to manage if you want the employees to remain with the company throughout the process. They will have many questions.

4. Leverage anyone you know (or can be introduced to) that has been through the process (whether using an IB or not).

5. Do you have a lawyer? Are they heavily versed in M&A? There are a lot of clauses (changing all the time) that acquirers insert that may not be in your best interest.

6. If you don't have updated, audited financials get that done. Make sure the books are squeaky clean.

7. Will the key employees move on to the new company? Is it an acqui-hire situation?

8. How defensible, unique is the IP? Be prepared for technical due diligence.

9. Most companies won't pay anything, or very little, for potential market (revenue). If you have no revenue, see #s 7 & 8.

10. What are the synergies with the potential buyer's product portfolio? Their market? How will the acquisition of your company be accretive to the buyer?

11. Cast a wide net. For four of the companies that I was involved in the offering process (one utilized an IB), we created at least 50 potential acquirers with "our" expectations for accretion and acquisition synergies. We developed a playbook and told each of the individual, unique stories to each of the 50 (or more) potential buyers. You need to quickly find a balance between what (how much and when) you disclose and what you hold back?

I've probably omitted some pertinent steps in the process. Oh, one more thing, never, ever lie or materially fudge information. If you get caught in a lie, everything you have presented will be questioned. This will likely cause potential acquirers to just walk away from the deal.

In the end, if I were doing it today (even though I've done it five times), I would seriously evaluate and strongly consider a platform like Exitround, especially for a company similar to the ones I worked with that had an expected value of less than $25M.

kraig Into ICOs, fintech and saas

May 27th, 2017

If you have employees, you can also consider an Employee buyout (Sometimes you can get grants/loans secured against future income for the employees to buy your shares off you)