‘Twas a thrilling two years scaling my baby, Virtualis (also previously known as Sales Kiwi), and one I’ll forever remember. Despite many challenges, we managed to build a beautiful and thriving business – one that reached $3.5M in annual recurring revenue, with a team that was forty members strong.
While I learned so much through the process of scaling, I also learned a great deal from selling the company. I had so many questions throughout the process, and my hope is that by sharing them, it will help those of you who are either considering selling their company, or who are just looking to get into the mind of someone who went through the acquisition process.
Keep reading to learn exactly what I was thinking during the months-long process pre/during/post-selling.
When looking back at when we started the company, my cofounders and I had such an adrenaline rush, we didn’t set the right foundation. We should have answered the following questions together at the start:
It may seem like trying to run before walking, but these are such important questions to align on from the very beginning. Having these answers will set you up for a clear, if sometimes broad vision on what the outcomes should be.
The issue we ran into during the acquisition process largely centered around expectations. We all wanted different outcomes when it came to things like the terms, timing and the deal structure. While we couldn’t have forecasted our goals entirely so far out, we would have been set up better had we had a better understanding of each other’s wants from day zero.
I signed my lease to move to Los Angeles for the business, and not even a week later, was in active discussions to sell the company. You never know the timing. As much as it would be nice to put a date on the calendar for when you might want to sell your company, timelines are never certain and are always changing.
While this may seem obvious, I only share my experiences to show the magnitude of how I thought I was moving to a new city to expand our business, only to be left with selling the company. Much like when working at a company and waiting for the business to IPO (i.e., Airbnb employees), the timing is never completely accurate. I’d bet that most companies who have sold did not predict when that would happen, especially when starting out. There are so many unknown and external variables which can shift this date closer or further out.
If you initially estimate it will take two weeks to go through the acquisition process once you start discussions with your acquirer, double that time. There is so much that goes into the process and due diligence on both sides, including:
It took us about two months to complete the entire acquisition process, with many long and silent days where it was just a waiting game. For someone that’s eager to get an Amazon package with one-day delivery, it’s a painstaking process to wait months for this - believe me. Mentally preparing to double your time always helps.
Something that I didn’t expect to happen, was feeling a sort of emptiness after selling my company. My entire sense of purpose flew out the window, especially having moved to a new city and thinking I was going to work there. I caution founders to have some sort of plan after selling their company. It doesn’t need to be a one-year plan, but a couple of ideas on how to occupy your newfound time should be outlined and thought about. For me personally, I’m spending some time on a few exciting projects I’m excited to share with you all in the coming weeks. Along with that, I’m able to read the books that were collecting dust on my shelf, and perfect my golf swing some more.
Speaking from direct experience, it’s never a certainty that you’ll sell your startup when you start discussions with an acquirer. Within the last year, I also had an ad-tech platform that I had built and was in discussions to sell to a creative agency. Then Silicon Valley Bank, my acquirer’s bank, collapsed. The collapse gave the acquirer cold feet, and we ended up pausing discussions – literally within a day of having the term sheet signed by all parties. This is not to discourage anyone looking to sell, but rather to open your eyes to the fact that unforeseen circumstances can kill a deal at any point. Rather than put all of your time and eggs in one basket when selling your company, continue business as usual, until everyone’s John Hancocks are inked and on the paper.
Now that my company has been acquired, I’m going to be spending more time writing, so if you have any questions or topics you’d like covered, please let me know.
On to the next chapter. Big announcement coming next week.
I’m sure you’re wondering: how can your startup be built around talented staff at $5/hr? Let me show you how.