How to negotiate and close deals?

  • Wire Details:
    • If the amount is below or around $500k: I recommend going with a simple asset transfer and a simplified payout deal: 50% upfront, and 50% after the transition period. There’s typically a simple invoicing to be put into place for this.
    • If the amount is higher: Get a lawyer and set up an escrow (or assimilated) account, with clear milestones in place. Best for a legal team to put the contracts together in this scenario.
  • Letter of Intent (LOI): Draft and negotiate the LOI, outlining the key terms and conditions of the acquisition. You can steal mine at the end of this page or, for a more sophisticated one, visit this page: https://blog.acquire.com/letter-of-intent-builder/.
  • Purchase Agreement: Work with legal advisors to draft a comprehensive purchase agreement. Ensure all terms, representations, and contingencies are included.
  • Financing and Funding: Secure the necessary financing through loans, equity, or other sources.
  • Closing the Deal: Sign the purchase agreement and complete the acquisition transaction. Transfer ownership and financial assets as specified in the agreement.
  • Deal Structuring: Keep in mind that the complexity of the contract must be coherent based on the acquisition size. For small acquisitions, sending a simple contract via email is enough.
Quick note: You can also get creative with your acquisitions. I wouldn’t have been able to pay for Typeframes entirely, so we found a deal where I would share a part of the revenue of Typeframes with the seller. That way, the risk is lower to me, and the seller can make more money.

A few things you can do to lower your risk:

  • Agree on revenue share to lower the initial cost
  • When buying a “traffic product”, partner first with a good tracking system or set up an affiliate link, and if the results are good, go ahead with making an acquisition offer.
  • Get financing from a bank or a company like https://boopos.com (great for SaaS acquisitions)
  • Add conditions such as “a 2nd payment will be done after 6 months if churn has been lower than X”.

Deal Structuring And Terms

Keep in mind the complexity of the contract must be coherent based on the acquisition size.
For small acquisitions, sending a simple contract via email is enough.
  • It shows you're not trying to rip off the maker and helps them trust you.
  • It’s best to cover all the terms and conditions in the contract upfront so there is no scope left for miscommunication.
  • Further due diligence can be done once the maker agrees to take up your offer.

An example of how I send an acquisition offer

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Tips For Your Post-Acquisition Phase

  • Integration and Synergy: Execute the technology, staffing, and customer transition plan. Foster collaboration and synergy between teams and products.
  • Monitoring and Optimization: Continuously monitor the performance of the acquired SaaS company. Track key performance indicators (KPIs) and adjust your strategy as needed.
  • Customer Retention and Growth: Focus on retaining and expanding the customer base. Optimize marketing and sales strategies.
  • Legal and Compliance Transition: Address any legal and compliance issues resulting from the acquisition
  • Final Steps: Fix and stabilize the product to be Production Ready. Get into a growth trajectory ASAP before just adding features. Then, focus on small incremental feat.

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