7 Tips to Get Your Startup Acquired

7 Tips to Get Your Startup Acquired

Episode Transcript

Speaker 1 (00:00):
I was asked a question by a startup entrepreneur about
my tips for him on how to get his first
startup acquired. Clearly, the best thing for me to do
is write a blog post. So let's get into it, friends.
My first startup was acquired in early twenty fourteen. I

(00:21):
became a multi millionaire and financially free after my acquisition.
Then I built my first venture fund and then re
enslaved myself to powerful people that same year. Probably an
unwise decision AnyWho. Here are seven tips for those who
want to get their startup acquired. Number one, it's always relationships.

(00:43):
Startups don't get sold, they get bought. Read that again,
startups don't get sold, they get bought. Be a relevant
acquisition target and network it like hell all the time.
This could be channel partners or companies with whom your
product can integrate. As you're crossing the half a million

(01:03):
dollar mark in revenue, you want to ping your network
and let them know your growth. Focus on building, never
selling your network will bring you a buyer. Number two.
Sell when you don't want to sell, you can negotiate
a higher price. When you're focused on building, go for
the price of least regrets. Quote a price so high

(01:23):
that if they don't take it, you're good. If they
do take it, you're golden. Number three clinical record keeping.
I pride myself in books that are clinically clean and ordered.
No mixing of personal and professional spending or accounting here.
Reconciling your bank to your spend is not something you
want to get flagged on. Who can trust someone who

(01:44):
can't keep good financial books. Number four Be a big
fish in a small pond. Deliver a great product time
in and time out. Nobody cares if there's competitors. They're
competitors everywhere, asition targets are fire starters in mature industries.
Do one thing better than your competitors, and frankly, that

(02:07):
might be good enough to demand a higher valuation. Number five.
Crack the one to five million dollar revenue mark. Less
than this, and your product might not be a good
product market fit, and it might not be solid. You
haven't found your product market fit. If you're doing more
than five million dollars, well, then you might be too

(02:27):
expensive on a multiple. So let's hope you've been networking
like crazy as you're building up to the one to
five million dollar range and right now. I'm in a
great place because I'm helping three startups get into this
window right now, and it's super exciting positioning them for acquisition.
That's where we win. Number six Cash is king. You

(02:50):
deserve a payday. Negotiate enough cash that even if you
have to write off the stock component, it doesn't make
you salty and bitter. Shares our vaporware, they really are.
If you're going to hold shares, make sure you hold
your own shares because your own shares are more important
than the shares of the acquiring company. Get paid, take

(03:12):
the cash. You'll feel better about it, even if you
have to do a huge tax on it. And number
seven speed is a must. This is why I've been
training agile and scrum for the last two decades. It's
the greatest weapon for startups. Grow fast. You have a
premium price and the numbers go up. Thirty percent year
on year is good. Growth above fifty percent is fantastic.

(03:35):
Check for valuation multiples of other companies in the market
to get a benchmark, but at the end of the day,
you need to build faster than them. So final point,
did I say relationships? Of course, you may notice on
my X feed that I'm all over the world all
the time. More relationships mean more, opportunities mean more doors.
Opening means more. Warm introduction means more, more and more

(03:57):
and more and more. It doesn't matter if they're not
going to give you money. Networking with investors at all
times is a good thing that must happen. My first
startup was acquired because I began the work two years
prior into the investment world. You saw the picture of
my text to my wife in one of my first
investor meetings and conferences. I was like, I don't know

(04:20):
what's going on. But from that first investment meeting two
years later, that's when an acquisition individual and an entity
came to me and said, hey, we've been noticing, we've
been seeing you know. And that those two years prior,
in twenty twelve to twenty fourteen, that's where I was
networking with investor groups to let them know I was

(04:41):
building something and it had good traction, it was profitable,
it was making money, and eventually someone came in and said, Peter,
let me take it off your hands. You know, I
knew I had something worthy, but I didn't know what.
I didn't know, so I had to network and network
I did once again. And the reason I wrote this
blog post is because the past weeks I've been doing

(05:03):
meetings with investors, private equity, family offices, institutions, et cetera.
Even if they don't invest in my portcodes or invest
in the startups that I'm investing in. I'm so sick now.
I'm such a sick person, guys, that I ensure that
when I go on vacations to different destinations across the world,
I always include meetings with investors in that area from

(05:25):
my larger network. It's all about the networking. They know people,
These people can help you and so continue to build
fast in network more. That is what it's all about. Finally,
one of my portfolio investments helping business builders increase their
network so that they can win even bigger. Make sure

(05:46):
that you check them out. Their next conference is in
six weeks. All the best