The Closers M&A Playbook: How I Sold Grasshopper for $100m+

“people that come to you and say David here's what I'm going to do and here's why I'm going to do it and I'll come back to you when it's done right so those were those changes that happened there also the biggest changes that really happened through these periods paid advertising each of these periods we found a new marketing channel and put more and more money into it plain and simple right like people want to stand up here and give you complex things we paid more marketing dollars we”

“I I I I I have to say that I think there was a definitely a timing and luck factor to that we built a great company but someone way overpaid for it so tricks um and uh they've done very well now right so I think the company will do 85 million dollars this year and you know definitely will hit their 100 million dollar Target which was part of the metric that they decided on before they bought things um but they overpaid at the time um and that that really I think”

“um how how much do I have to resell right if I have to resell my entire customer base again and again that's much more risky much less valuable right so each of these metrics are the things in your business that make it more valuable addressable Market is really one that's interesting to me because a lot of people think about size of addressable market and I think quite honestly that doesn't matter for most of us in the room right unless you're doing hundreds”

“suggest thinking about all of these categories for how you can make your business most valuable for yourself and then how we on the other side of it think about these things so a few of the stuff that's not on the Matrix um necessarily but I did want to talk about from an m a standpoint um first like I mentioned at grasshopper we got out of the business we had a management team this was tremendously valuable to the acquirer for so many reasons first the transition was easy”

“conversation is a no-go go conversation we learned this from the the bankers we had involved to help us through that process so at grasshopper we sold the company in May um we closed the deal in May um six weeks later after we closed that deal an activist investor uh told Citrix they had to sell off all of their SAS business so we were weeks away from the deal not”

“Why David? Bootstrapped Grasshopper to an overnight success after 11 years, $30m+ ARR and sale to Citrix Bootstrapped Chargify to $3m ARR, investment from Mark Cuban and sale to Scaleworks Lost over a $1m building a “labs” concept within Grasshopper Investor in over 75 companies, mostly SaaS Grasshopper”

“Grasshopper Revenue Growth Wanted to stay bootstrapped, get cash Raised $15m of debt in 2013 2013 5 year payback period Poured it into known marketing 12% interest rate No warrants 3 months to negotiate”

“Over the next 20 minutes: How we measure addressable market I’m going to show you how I acquire companies: MARKET CUSTOMERS MONEY Why we care about competitors Are existing channels a real moat or not? How I use average order value (AOV) Importance of return on ad spend (ROAS) Spend on new customers, exp. opportunity Why revenue growth doesn’t always matter EBITDA multiples I pay Gross margin has to be above 70% for me to care”

“With Weights of 0, 3, and 5”

“Outside the Matrix: Get yourself out of the business (use assistants, create dossier’s) Build a strong and independent team Document all systems and processes do anyone could learn”