Churn Buster Gets Acquired
churnbuster.io
churnbuster.io
Anecdotally, there seems to be a wave of mini-acquisitions going through the small-SaaS-osphere this last year or so. I think it's an interesting development, partially do to the obvious reasons (money for founders is nice), partially as it frees up founders to move onto their next level, partially since these seem to be better digested than acquisitions in VC land, and partially just because it is interesting to see this side of the fence maturing a bit.
We're pretty excited about how we structured the deal, and it's definitely not the way things are done in Silicon Valley. Even down to the expectations of our investors. We're setting out to grow a profitable business with the goal of early and lasting distributions for investors...not with the goal of an eventual mega-exit.
Happy to answer any detailed questions specifically about the structure/acquisition process (negotiation/due diligence/lawyers/etc), something you know plenty about :-)
Also of note, we didn't use an escrow account, or a website broker. This probably saved about $20k-$30k. We had an advisor, JD Graffam of SimpleFocus, that helped coach us along the way based on his experience acquiring products like Ballpark App.
Legal fees were reasonable using a local attorney that another startup introduced us to (with experience in M&A).
Due diligence included reviewing ROI reports (how well the product works for clients), financial reports of the company (where does revenue stand, how fast is it growing), current customer lists, past customer lists, all support conversations (how happy are customers, how fast are support requests handled), and gathering listings of accounts in-use that would need to be transferred.
We decided on a purchase price before entering due diligence, but saved equity offerings until after the deal had closed. At that point, we brought in our investors, and offered Andrew a priced option to invest (at a higher valuation than the purchase price based on the expanded team and advisors).
If you don't have guidance from someone with experience, you should probably use a broker. And if you don't know the seller super-well, you should probably use an escrow company for the transfer of assets. In our case, we knew we were working with a stand-up guy based on our friendship with Andrew, and how wonderful he was throughout the entire process.
Let me know if I can answer anything else! Matt
I still remember the day I walked into Brian Smith's office in late 2010, at what would be my last corporate job, and he started talking to me about how we needed to start working on our own passive-income businesses, "like this patio11 guy on Hacker News." Your openness and transparency empowered me to pursue the path that I began pursuing back then. Without your transparency, I can't imagine how I would have found my way from that corporate gig to where I find myself today.
Thanks also for your willingness to work with us early on when we had to do special feature development to support your use-case. Those features ended up being a differentiator for us and helped us snag some really valuable clients since, and I'm not sure those businesses would have been so patient waiting for us.
Thanks again!
Over two years ago I was working on Stripe web hook emails for a client and spending way too much time tuning, tweaking, and maintaining them. Every little improvement was yielding even greater conversion rates and more money in the bank. At that point, I suggested that instead of paying me so much to maintain the in-house dunning system on their behalf, I could create a service that did the same thing but better, and charge them $200/mo instead. The plan was to subsidize the cost of development by selling the product to friends who were having the same problem. I've been working on it and growing it ever since.
I'm really proud of some of the incredible companies and brands I've had the opportunity to work with in the last two years, (some of them are listed on the new product homepage,) but I'm also really pleased to now be able to put the product into the hands of Matt, Joelle, and Ken and let them take it's growth from this point forward.
Happy to answer any questions anyone may have!
Matt here, new CEO of Churn Buster. We're so freaking excited about working with Andrew, and our other investor Rob Walling (getdrip.com).
Andrew has really built something special here and I think his excitement shines through in his announcement video.
If you have any questions about the acquisition/round of funding (it was pretty unique) or about churn, failed payments, etc. just post 'em here!
>> [Churnbuster] integrated pretty painlessly and basically gave us an accounts receivable department without having either myself or my sales rep having to spend lots of time calling $29 a month accounts to see if they were soft-canceling or just having transient billing failures.