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Ask HN: Where to sell your profitable company

46 points by to_the_top ↗ HN
I am a student living in Canada, over the last 2 years I have built out a company in a niche market where at the time there were a couple of competitors (now around 5-6). 3 of them are VC funded.

I am doing this part time still and trying to earn my business degree but now I am finishing up and want to sell this business so I can try something new, the business generates around 2 million a year (CAD) in profits, so I am wondering what sort of 'investment banks' or people I should get in touch to sell this company.

I love working on this and would not mind working on it a more, the sad part is, being in Canada and not a active guy in the 'VC/Tech' scene so I don't know which route to take or who to approach.

24 comments

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to_the_top
Forgot to mention, I built it up myself and still maintain it myself only and that I am looking for a exit because I want to pursue something even bigger with the funds I get from selling this.
amirmc
You might want to edit your original post to include this info.
johng
Can't help you with finding a VC, but I can tell you that others will be interested in the following:

How will this business fare with you gone completely?

Is it something anyone can be trained to do?

If so, what barriers to entry are there to keep someone else from duplicating what you've done without buying you out?

to_the_top
The business is 80% automated, the rest is just maint. work such as: sys admin, emails, approving certain things etc. so yes someone can be trained very easily. Barriers to entry... none really in the sense we do not necessarily have much proprietary 'technology' except we have the users/the revenue/infrastructure in place.
alexsherrick
Hey I'll help with the maint if you are looking for somebody ;)
shafqat
Can you share what it is? I can atleast intro you to some of my investors if the business/product is compelling and you would at all be interested in taking some investment and continue working on it? Or you can email me (see my profile).
enjo
Go straight to your well funded competitors. They'll love the chance to talk acquisition more than likely.
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josefresco
No so sure informing your competitors that you want out is such a great idea. Depends highly on your market or product/service but I'd be weary of anyone approaching me with the same offer.
exline
I've got to ask why sell? If it generates 2 million in profit a year, it should be generating plenty of cash to bank roll your next endeavor.

Since you are the only one maintaining you can simply hire 2-3 people to do the work you are currently working and keep the rest of the profit. Most people here would kill to have a business that is generating 2 million in profit.

to_the_top
It could be an option, if you scroll to the bottom its to gain credibility and to start something even bigger, nothing else really.
lionhearted
Totally disagree. As soon as you're strongly think of selling, it means it was time to sell yesterday. If you can get anything fair, do it. Once your heart's not in it, it's good to move on and mentally cut ties. You won't be able to keep innovating if you're not mentally with it, and nowdays businesses can fall apart rapidly even if their founder is totally onboard, let alone if he's not.

People who have never built a successful business won't understand. As soon as you strongly feel it's time to sell, do it. Get out and build your next thing. Later you might regret it, that's natural, but better than having things decay on their own if you're not fully with it. My advice - yes, sell.

dmillar
Have you been approached by any VCs in the past? I would revisit that if possible.

In my experience, there is no shortage in VC contact for any, even modestly, profitable business online. So, I am sure you've heard from at least a small handfull.

apalmblad
Where in Canada are you based? Your options may vary if you're in a big market (TO, Vancouver, Montreal...) or not.

That said, I'd imagine your best route is to find local investor/angel/business-mentor types who can recommend a firm that specializes in getting companies acquired. I'm based in Vancouver, and my business partner has definitely had getting-to-know-you meetings with a law firm - recommended by an investor - that handles that sort of thing.

amirmc
I suspect the most likely buyers would be: (a) A competitor in the same space looking for market share or (b) A firm in an adjacent market looking to diversify

Those are only my initial thoughts and there are probably other ways of looking at it.

I'm guessing that one of the the three VC funded competitors could be a likely acquirer. Given that there are three of them, you might even be able to create a bidding war (assuming you have something worth bidding for, e.g tech, market insight/share).

I'd do some research on each of those companies to make sure you have something of value to them and then try to meet with the founders/CEOs informally, if possible.

run4yourlives
> the business generates around 2 million a year (CAD) in profits,

Are you serious? In Canada? Why in god's name would you sell this? Hire someone to do the dirty work for 50K and live off the rest until you grow old and gray.

Why would you even think otherwise?

lizzy
There are private equity groups that acquire companies with profits of this size. But I don't know the industry well enough to suggest names. I would try and get some names from any investment bankers you know -- maybe alums from your biz school if you don't know anyone personally.
paulhart
You say you're based in Toronto. Have a look at the people behind http://www.startupnorth.ca/ and get in touch with them, I'm sure they'd either be interested themselves, or would be happy to make some introductions.
SriniK
Talk to a bank who can represent you. Typically they come up with a pitchbook/deck and try to pitch to prospective companies. They charge anywhere between 5-7% depending on your business. Best way to get to a banker who can sponsor is to talk to a lawyer who is in the startup world.

If you want to send direct messages, do the pitching and negotiations yourself, try linkedin paid service.

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to_the_top
I have talked to td waterhouse private investment people and were going to be setting up a deal. Going to look for startup lawyers on linkedin in my area.
amorphid
Talk to Benjamin Yosko => http://www.instigatorblog.com. He is very approachable, lives/works in Montreal, and recently sold his startup. Tell him Captain Recruiter says hello.
jeffepp
Ping me, I know a few people who may be interested...