justin mares
TRANSCRIPT
G R O W T H B Y A C Q U I S I T I O N
B Y J U S T I N M A R E S
H O W T O F I N D , N E G O T I A T E A N D A C Q U I R E S M A L L B U S I N E S S E S T O A C C E L E R A T E G R O W T H
@NEILPATEL
@jwmares
@jwmares
W H O A M I ?
1. Former Director of Revenue for Exceptional (acq’d by Rackspace for $10m+ in 2013)
@jwmares
W H O A M I ?
1. Former Director of Revenue for Exceptional (acq’d by Rackspace for $10m+ in 2013)
2. Co-author of Traction
@jwmares
W H O A M I ?
1. Former Director of Revenue for Exceptional (acq’d by Rackspace for $10m+ in 2013)
1. Former Director of Revenue for Exceptional (acq’d by Rackspace for $10m+ in 2013)
2. Co-author of Traction
3. Founder of Kettle & Fire bone broth and owner/operator of Fomo
G R O W T H B Y A C Q U I S I T I O N
T O D A Y W E ’ R E G O I N G T O TA L K A B O U T …
WHY?
Many reasons…
Many reasons…Upside
Many reasons…Upside
Data
Many reasons…Upside
Strategic implications
Data
Many reasons…Integration
benefits
Upside
Data
Strategic implications
Many reasons…Integration
benefits
Proven
Upside
Data
Strategic implications
Many reasons…Integration
benefits
Proven
Upside
Remove a competitive risk
Data
Strategic implications
Many reasons…Integration
benefits
Proven
Upside
Remove a competitive riskAccess to
customers
Data
Strategic implications
BUT
BUTyou don’t have to be a public
company to do this!
small acquisitions can help you achieve your growth goals.
an app that improves your site’s conversion rate
(please don’t share or tweet the next 2 slides)
Shopify app doing $20k MRR
Shopify app doing $20k MRR
we bought for $340k
WHY?
build when you can buy?
Traction
“Most startups don’t fail because they can’t build a product.
Most startups fail because they can’t get traction.”
- T R A C T I O N B O O K
“Most startups don’t fail because they can’t build a product.
Most startups fail because they can’t get traction.”
(yes I’m quoting my own book. Sorry)
- T R A C T I O N B O O K
Other reasons to buy, not build: - Customers (and revenue!) from day 1
- Avoid the product-market fit slog
- Trust
- Brand awareness
- Platform rankings (reviews, backlinks, etc.)
- Speed to market
MOST IMPORTANTLY
Copying is a time, energy and focus suck.
Had we built and not bought, Shopify would have been 1/5th of our focus.
(it would have been 100% of the previous owners’ focus)
Best we could hope for would be 80% Shopify penetration, after a LOT of hard work.
BUY > BUILD
how we found, negotiated and bought
(the inside story)
Saw a big conversion boost after installing
(7 days worth of data)
“If it did this for my site… it should work for others”
Opportunity!
“If it did this for my site… it should work for others”
Founder ready to move on
potential to build a platform and a new brand
more reviews
other integrations
optimize app store listing
cut churn
direct sales
new features
Tons of low hanging fruit
The first 7 days Took the founder to dinner, expressed interest
Signed NDA
Reviewed revenue data
Made an offer… for $280k
NO
$340,000?
$340,000?
my price, your terms vs.
your price, my terms
Day 20 - Verbally agreed to terms
Day 23 - Signed Letter of Intent
Days 23+ - Due Diligence
Diligence 60+ questions*
Code review
Metrics, revenue, customer review
Reviewed all tools and logins
*tweet me if you want access to these - @jwmares
Closed!!
*just 37 days after our first email to the owner.
your turn.
Growth byAcquisition
1. Find deals
Growth byAcquisition
FE InternationalDomCop
old websites open source tools old software tools (free or paid)
look for:small tools on app stores
blogs email courses / newsletters
browser extensions
get creative. there are tons of opportunities.
Growth byAcquisition
2. Negotiate terms
1. Find deals
my price, your terms vs.
your price, my terms
remember:
Growth byAcquisition
2. Negotiate terms
1. Find deals
3. Acquire
Lay out deal terms in Letter of Intent
Create a Delaware C-corp
Buy the assets via a Asset Purchase Agreement
*entire thing cost us less than $7k in legal
Growth byAcquisition
2. Negotiate terms
1. Find deals
3. Acquire
4. Grow!
Knock out low-hanging fruit
Raise prices
Fix bugs, institute customer support
Start with sales*
“what feature could we build that would make you ecstatic to pay us $500 a month?”
*the magic question
build that.
I N C O N C L U S I O N …
via acquisitionGrow
I N C O N C L U S I O N …
Growth byAcquisition
1. Find deals
I N C O N C L U S I O N …
Growth byAcquisition
2. Negotiate terms
1. Find deals
I N C O N C L U S I O N …
Growth byAcquisition
2. Negotiate terms
1. Find deals
3. Acquire
I N C O N C L U S I O N …
Growth byAcquisition
2. Negotiate terms
1. Find deals
3. Acquire
4. Grow!
I N C O N C L U S I O N …
AND
I N C O N C L U S I O N …
AND((most importantly)
I N C O N C L U S I O N …
AND((most importantly)
Crush It.
