They Got Acquired - What to do when a buyer reaches out

November 26, 2024
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1. Seller success stories (like Season 1)
2. Advice for selling (short, 8-minute listens)
3. Coaching founders who want to sell
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What to do when a buyer reaches out 📨

One advisor we talked to recently said buyers are reaching out directly to sellers more than ever before.

This is smart on the buyer's part, because if a buyer can reach a seller at that moment when they’re open to selling, that buyer has a leg up on an off-market deal.

Yet sellers who are caught off-guard sometimes don’t advocate for themselves in the best way.

Sellers, if you hear from a buyer who’s interested in your business, a few tips:

✨ Don’t say yes to the first buyer who hits your inbox.

Instead, use that as impetus to run what’s known as a “process” — find an advisor to help you, get a proper valuation, and drum up multiple offers.

By doing this, you shift the leverage from the buyer to you. And having more than one offer is one of the best ways to drive up your sale price.

One of our podcast guests, Jon Hainstock, talked about this when we interviewed him. While his sale went smoothly, he said if he could go back knowing what he knows now, he would have shopped the business around more. Here's that podcast episode.

✨ Don’t fall for false urgency.

You’re in control of the timeline, so don’t let anyone rush you. Any deadlines a buyer suggests are likely created just to get you to move.

Remember, this is your process, and your business, and you have more to lose — or gain — than anyone else.

✨ Get a lawyer before you sign an LOI.

Too many founders think of a Letter of Intent as a casual show of interest. But it’s so much more than that.

While LOIs typically are not binding, the letter sets expectations that can be difficult to change later. You have the most leverage before you sign.

​This video interview with M&A laywer Andrew Ritter goes deeper into this topic.

So engage with your support group (specifically, a lawyer and/or an advisor) before agreeing to an LOI.

So how do you find that support? That's where we come in...

Need help choosing an advisor you can trust? 🤝

When it comes time to sell your business, you probably don't want to engage the broker down the street.

Your best bet is choosing an M&A advisor (basically the same thing as a broker) who has experience selling your type of business.

You also want an advisor who works on businesses of your size. Investment bankers, for example, won't take on a $2 million deal... but several of our partners do.

This is why we offer a free matching service, helping founders choose a good-fit advisor to work with.

Here's how it works:

1) You tell us about your business via this quick form.

2) We look through our short list of vetted brokers to identify those who have experience selling your type of company and who represent sellers of your size.

3) Optional: Sometimes we do a call with you to learn more about your business.

4) We introduce you directly to an advisor (or two or three, if you want options) so you have a warm intro. Ta-da!

Over the last two years, we've quietly referred hundreds of founders to brokers who can help them.

Here's what one of those founders said after he sold his business using the broker we recommended:

– Terrell Johnson, who sold Half Marathon Guide

This service is free for founders. Look forward to hearing from you!

What selling a majority stake looks like

Serial entrepreneur Dmitry Dragilev had already built and sold three online companies since 2012.

But his fourth time getting acquired was different.

This time, rather than “cashing out and cruising,” he treated the September 2024 sale of SEO software service TopicRanker as a fast track to growth, selling a majority stake so he could continue leading the company with the heft of a strong partner behind him.

“Building a company is a journey — there are two ways to do it,” he shared on LinkedIn. “You can scale yourself… or you can partner up,” he wrote. “I chose the second path.”

Dragilev founded TopicRanker in 2022 as a software to help companies identify how to improve their search engine results by identifying weaknesses on their website like keywords, article titles, word count and page load time.

The company quickly grew to more than 500 paying customers and 2,600 free users, and approached $800,000 in annual revenue.

Here’s how the sale unfolded:

​This SaaS founder used acquisition as a strategy for growth, while maintaining partial ownership​

See you next time,

Lexi Grant
Founder & CEO
​They Got Acquired​