Justin mares

G R O W T H B Y A C Q U I S I T I O N

B Y J U S T I N M A R E S

H O W T O F I N D , N E G O T I A T E A N D A C Q U I R E S M A L L B U S I N E S S E S T O A C C E L E R A T E G R O W T H

@NEILPATEL

@jwmares

@jwmares

W H O A M I ?

1. Former Director of Revenue for Exceptional (acq’d by Rackspace for $10m+ in 2013)

@jwmares

W H O A M I ?

1. Former Director of Revenue for Exceptional (acq’d by Rackspace for $10m+ in 2013)

2. Co-author of Traction

@jwmares

W H O A M I ?

1. Former Director of Revenue for Exceptional (acq’d by Rackspace for $10m+ in 2013)

1. Former Director of Revenue for Exceptional (acq’d by Rackspace for $10m+ in 2013)

2. Co-author of Traction

3. Founder of Kettle & Fire bone broth and owner/operator of Fomo

G R O W T H B Y A C Q U I S I T I O N

T O D A Y W E ’ R E G O I N G T O TA L K A B O U T …

WHY?

Many reasons…

Many reasons…Upside

Many reasons…Upside

Data

Many reasons…Upside

Strategic implications

Data

Many reasons…Integration

benefits

Upside

Data

Strategic implications

Many reasons…Integration

benefits

Proven

Upside

Data

Strategic implications

Many reasons…Integration

benefits

Proven

Upside

Remove a competitive risk

Data

Strategic implications

Many reasons…Integration

benefits

Proven

Upside

Remove a competitive riskAccess to

customers

Data

Strategic implications

BUT

BUTyou don’t have to be a public

company to do this!

small acquisitions can help you achieve your growth goals.

an app that improves your site’s conversion rate

(please don’t share or tweet the next 2 slides)

Shopify app doing $20k MRR

Shopify app doing $20k MRR

we bought for $340k

WHY?

build when you can buy?

Traction

“Most startups don’t fail because they can’t build a product.

Most startups fail because they can’t get traction.”

- T R A C T I O N B O O K

“Most startups don’t fail because they can’t build a product.

Most startups fail because they can’t get traction.”

(yes I’m quoting my own book. Sorry)

- T R A C T I O N B O O K

Other reasons to buy, not build: - Customers (and revenue!) from day 1

- Avoid the product-market fit slog

- Trust

- Brand awareness

- Platform rankings (reviews, backlinks, etc.)

- Speed to market

MOST IMPORTANTLY

Copying is a time, energy and focus suck.

Had we built and not bought, Shopify would have been 1/5th of our focus.

(it would have been 100% of the previous owners’ focus)

Best we could hope for would be 80% Shopify penetration, after a LOT of hard work.

BUY > BUILD

how we found, negotiated and bought

(the inside story)

Saw a big conversion boost after installing

(7 days worth of data)

“If it did this for my site… it should work for others”

Opportunity!

“If it did this for my site… it should work for others”

Founder ready to move on

potential to build a platform and a new brand

more reviews

other integrations

optimize app store listing

cut churn

direct sales

new features

Tons of low hanging fruit

The first 7 days Took the founder to dinner, expressed interest

Signed NDA

Reviewed revenue data

Made an offer… for $280k

NO

$340,000?

$340,000?

my price, your terms vs.

your price, my terms

Day 20 - Verbally agreed to terms

Day 23 - Signed Letter of Intent

Days 23+ - Due Diligence

Diligence 60+ questions*

Code review

Metrics, revenue, customer review

Reviewed all tools and logins

*tweet me if you want access to these - @jwmares

Closed!!

*just 37 days after our first email to the owner.

your turn.

Growth byAcquisition

1. Find deals

Growth byAcquisition

FE InternationalDomCop

old websites open source tools old software tools (free or paid)

look for:small tools on app stores

blogs email courses / newsletters

browser extensions

get creative. there are tons of opportunities.

Growth byAcquisition

2. Negotiate terms

1. Find deals

my price, your terms vs.

your price, my terms

remember:

Growth byAcquisition

2. Negotiate terms

1. Find deals

3. Acquire

Lay out deal terms in Letter of Intent

Create a Delaware C-corp

Buy the assets via a Asset Purchase Agreement

*entire thing cost us less than $7k in legal

Growth byAcquisition

2. Negotiate terms

1. Find deals

3. Acquire

4. Grow!

Knock out low-hanging fruit

Raise prices

Fix bugs, institute customer support

Start with sales*

“what feature could we build that would make you ecstatic to pay us $500 a month?”

*the magic question

build that.

I N C O N C L U S I O N …

via acquisitionGrow

I N C O N C L U S I O N …

Growth byAcquisition

1. Find deals

I N C O N C L U S I O N …

Growth byAcquisition

2. Negotiate terms

1. Find deals

I N C O N C L U S I O N …

Growth byAcquisition

2. Negotiate terms

1. Find deals

3. Acquire

I N C O N C L U S I O N …

Growth byAcquisition

2. Negotiate terms

1. Find deals

3. Acquire

4. Grow!

I N C O N C L U S I O N …

AND

I N C O N C L U S I O N …

AND((most importantly)

I N C O N C L U S I O N …

AND((most importantly)

Crush It.

C H E C K O U T F O M O - U S E F O M O . C O M

@jwmares

T H A N K Y O U !