Ask HN: How to pull off an early acquisition for several million?

15 points by selltoday ↗ HN
Companies like socialmedian or socialthing have sold really early in their lifecycle, sometimes pre-funding. How did they pull that off? Was it just luck and running into the right person, or did they plan for it?

Here's why I'm asking:

We spent the last year building out a b2b platform that we launched this year and we've gotten a lot of interest, people are signing up, we have revenue, etc. We're not profitable, but we think we could be by end of 2009. We haven't raised any capital yet. Our long-term goal would be to sell the company to one of our larger potential customers. However, things are moving faster in this space than we anticipated, and a lot of the big customers are doing buy vs. build analysis now, so we're wondering if we can pull off a sale now for somewhere in the $2-5m range. The platform is solid and the founders have a lot of experience in this market, and we would go with the sale. A large company would probably buy us to use in house or offer to their clients, not for our revenue stream or customers, so the fact that we don't have a huge customer base may not hurt us.

We're identifying several hundred potential acquirers, but I guess the hard part is figuring out how to approach them and make the right connections. Do I start cold-emailing their corp. dev. folks? Do we try and hire a boutique investment bank? My sense is that this size transaction is too small for that. Just would be interesting to know how this has been done in the past.

Does anyone have any advice or experience in this area?

3 comments

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Number one... 2 bidders, bro. 2 bidders. remember that.

Number two... they got to know you. got to know you. so w/ your top 5 targets... approach for some sort of partnership. NOT ACQuisition! make some stuff up about how their product could work w/ yours, etc. white label. anything.... then, most co's that are bought for the small single digit millions are bought for the team. So make sure that your "new partners" know how kickass you are and how much all of you are exactly lined up on this opportunity, and how you'd die to make sure you captured this market. Do that with 2 bidders (2!) you;'re golden.

how many people>?

Good question. I wish more people responded to this.
I have advice, but no experience. And I'm afraid I can't give you life changing advice based on something my mind jumped on.