The Gory Details of a SaaS Acquisition


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Some acquisitions are quick and painless. This one was not.

167 days later we closed another SaaS acquisition.

It's not as easy as Twitter makes it out to be. 

Here's the gory details of what it takes to get a deal done:

Day 1: First discovered on MicroAcquire, message sent

Day 3: No response, followed up with an email

Day 4: No response, followed up again with another email

Day 5: First response from seller

Day 6: The first call with seller / NDA signed / start of diligence

Day 14: 2nd meeting to answer tech / product questions. Offer made over email.

Day 15: Offer declined (especially given the deferred funds)

Day 21: Meeting to talk through offer, learned of two previous offers.

One he liked from two guys (one developer, one marketer) and a higher offer that he didn't like because it was from a financial buyer

Day 31: Meeting to talk through the new beta app and the state of product

Day 32: Second offer made over email

Day 33: Clarification on offer

Day 34: Seller asks how long the offer is good for, they want to negotiate paying off debt

Day 35: I said we are flexible, but no deadline

Day 36: Request for an arbitrary deadline. We said end of the month.

Day 49: Said they're still working through debt with his lawyer & public company they took money from

Day 54: Accepts offer by email, asks for LOI

Day 55: LOI sent over, target closing in a couple of weeks

Day 62: Their lawyer still reviewing, said ready to start DD in days

Day 67: Says debt has right of first refusal, deal dead, their lawyer dealing with it

Day 69: They learn right of first refusal actually doesn't apply here

Day 74: They say they want debt situation figured out and want to put deal on hold indefinitely

Day 84: Another meeting to discuss product updates and potential offer

Day 87: Third offer made with more creative payment structure to get to a higher total deal amount, deadline in six days

Day 103: Counter offer of higher price & more upfront

Day 104: The fourth offer made, we come up a little to get the deal done

Day 105: LOI sent over, goal to close in two weeks.

Day 106: Crazy LOI redlines from lawyer, earnest money requested to pay off loan

Day 107: We told them no to crazy requests, earnest money is an especially weird request when we are closing in two weeks. 

We say we are paying him more to get beyond the debt issue so

they aren't allowed to talk about it anymore. They agree to not talk about the loan anymore.

Day 108: Asks about our advice on loan again. Ask for a bunch of LOI changes. Doubling length of LOI. 

We talk on the phone again to calm him down and explain the APA is when all the legal language is finalized.

Day 109: LOI signed

Day 110: Tech and financial DD begins. Start APA draft using a previous deal as the base.

Day 116: APA draft sent to their attorney, goal of closing in two weeks before seller vacation.

Day 133: Finally got extensive redlines from their attorneys including a new collateral pledge that was longer than our original APA (12 pages).

Day 137: Call with the seller to review the final APA, we agree on terms.

Day 139: Signing day #1, the seller asks to delay closing 3 weeks for vacation, we ask for a week.

Day 147: Signing day #2, request for APA changes including allocating all price allocation to goodwill

Day 150: We give them reasonable changes and compromise on unreasonable ones

Day 151: Additional request for absolute control until seller note paid off to reclaim the money in case of default

Day 153: Call with the seller to calm him down, I express my displeasure with never-ending new demands after a deal was agreed to.

Day 154: Seller reaches out to my partner directly to reiterate requests

Day 159: We give in and send over updated docs with a plan to close the following day (signing day #3)

Day 160: Signing day #3, request for more changes, we give in and set Monday as the closing date

Day 164: Signing day #4, request for larger changes around control and our operating agreement (very weird)

Day 164: We give them one change and tell them the other request is unreasonable.

Day 165: We compromise on the unreasonable request.

Day 166: They ask for another final request which we give in on.

Day 167: Signing day #5, APA signed, money wired, company transferred.