250MM Acquisition Instead of $10MM?

> I'd like to perform the steps necessary for a $250MM acquisition;

OK, first, perform the steps for $10M.

The steps to get to 250 do not begin differently than the steps to get to 10. So first get to 10. While you are on the way, research getting from 10 to 100. While you are on that path, research getting from 100 to 250. The best growth patterns I've been a part of always had that approach - have a long-term vision, but execute one step at a time.

If you haven't done a $10M or even $1M acquisition before, are you sure you know what you need? But ok, I'll bite, lets assume you do know.

You're saying "acquisition price", but let's just call it a valuation. Sure, they aren't exactly the same thing, but it's a fair enough proxy.

So, first off, take a look at what you're building. Can you list companies that would want to purchase it for $100M+? How many companies are in that list? Now, look at the financials of those companies, how many acquisitions have they done that are in the range of $100M? What did the companies they acquired at that price look like? Why did they pay what they paid?

Now, look at your product, and the potential market size, do you see similarities between companies that have been acquired by your target acquirers? Is the market you're targeting even big enough to offer enough value to these potential acquirers? If it is, how large does your company need to be to get that acquisition value? Or what edge does your company need to have?

Based on the information you have on this search, you now know what companies you may be targeting, what they've bought in the past, and you can start building relationships with these companies.

I'm going to suggest that almost no company gets bought without a relationship in place. It doesn't mean that you're partners, but you're unlikely to get a call in the middle of the night from a stranger asking to buy your company. It just doesn't work that way.

Acquisition valuation can be based on multiple factors, typically the acquiring company would be looking at either:

A) potential value - if the tech is innovative and novel but the company is not necessarily making a lot of profit, they may have a business plan to leverage the tech to generate more profit

B) actual value - the tech and company is mature, profitable and has an actual ROI value that can be calculated based on sales, revenue, margins etc.

They would also include:

C) team value - the company has a strong team and the value of the management and employees is considered

These are areas I would consider in your plan. In terms of what to learn, I would focus more on building a successful product that helps your customers, than focusing on the acquisition exit goal. You will have time to figure out how to get there when you've proven that you have a valuable company.

$100m+ acquisitions are rare happen by luck or done by unrelated entities.

It's essentially legal money laundering with pre-negotiated kickback-style relationships where all parties are on the same side of the table regardless of how it looks to unaware.

So having connections - OR hiring someone to facilitate the transaction via pre-existing connections can greatly accelerate the process.

Stop thinking of it in terms of selling a business but focus on growing the revenue or selling the product. In other words make something people want, 25 times more. The obsession about acquisition price before you even have a product shows you're more interested in making money for yourself than helping others solve a problem. If you sufficiently help others solve their problems you'll likely to be rewarded accordingly.

So if you plan to build a product and charge $10/mo you'll need to have 30,000 active users to sell the company for $10m using a common 33-month revenue multiple. So once you have 30k customers add 720k more to get to $250m.

"In other words, I can sit and write down all of the detailed steps that I would execute over the next 5 years in order to make that happen"

Unless you're already making $1 million in ARR, your cockiness is already a sign that an acquisition probably is unlikely to happen. Many founders who get their startup acquired almost always have this feeling of "Wow, I worked hard, but there were definitely no guarantees and a lot of luck involved". Sorry, but there is no guarantees in startup life.

I recently talked with founders who went through acquisitions, inculding ones by megacorps. They might have insight into how to navigate through this.

Can you send me an email (my email is in my profile) and I'll try to connect you if they're open to this?

I must talk with one of them in a moment, would you like me to mention this?

I can also try to connect you with people from the puchasing side (people who operated, and executed, multi-billion dollar acquisitions and companies)

Someone could take it make one call and sell it for 250m. You could sell it for 10 m. Someone else could get 50,000.

I think you are asking the wrong question. Your questions should be either:

How do I get the guy who can sell it for 250m to sell this

or

How do I become the guy who can get 250m.

If you think someone can build it differently to get to 250m find out who and bribe,hire,copy and learn from them.

A $250mm sale is lottery type sh+t. u can't plan it. 1:1mm odds. you're naive. $10mm is realistic while still highly unlikely. like 1:100 odds. just build a SaaS that makes $3mm a year (e.g 5k customers paying $49 a month or 300 that pay $1k a month).

Alan Kay said that the best way to invent the future it's imagining and work the steps backwards. So I would probably imagine what's an 250mm acquisition and start writing notes of how one would look like and then imagine all the steps back to the present.

You're overthinking this. Ship products, get customers.

they said u need at least one cofounder, I'm thinking about being solo founder too, is that good or should I find cofounder first?

Accounting, Corporate Finance