3 lessons learned from selling to Facebook

Author

Brian Dukes
March 27, 2024

Welcome to another edition of The Wise Exit.

I'm Brian Dukes, Managing Partner at Exitwise.

In today's newsletter we'll cover:

  • 3 lessons learned from selling to Facebook.

  • How to value a SaaS business.

  • The emotional toll of selling your business.

Let's dive in!

Featured Founder 📰

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Name: Ben Lewis

Title: Co-founder of Tapjoy and Karma Science.

In a nutshell: Ben co-founded Tapjoy, a mobile ads platform that grew to over $10 million in monthly revenue. After a successful exit from OfferPal in 2010, Ben and his co-founder started Karma Science. This social gifting app was acquired by Facebook hours before the company went public in 2012.

Ben's entrepreneurial journey is a testament to the power of passion, perseverance, and seizing opportunities. From turning a simple idea into a thriving business to navigating the challenges of acquisitions, Ben's story offers valuable lessons for founders.

M&A Lesson 1: Timing is crucial, but you can't always predict it.

When OfferPal approached Tapjoy for an acquisition, Ben and his co-founder faced a tough decision. They could take the offer or raise more funding to continue growing the business.

In hindsight, Ben admits they might have made more money by waiting a few months, but, the decision to sell set them up for their next venture.

M&A Lesson 2: Selling your business can open doors for your next venture.

The success of Tapjoy enabled Ben and his co-founder to start Karma Science with ease. They raised millions from top-tier investors and assembled a talented team, all thanks to the credibility and network they built through their previous exit.

This highlights the importance of viewing entrepreneurship as a long-term journey, where each success can propel you to the next.

M&A Lesson 3: Integration into the acquiring company can be challenging but rewarding.

After the acquisition of Karma Science by Facebook, Ben spent four years working on various projects within the company. While it was a change from founder to employee, Ben embraced the opportunity to work on impactful projects, such as building a product database that generated billions in revenue.

His experience shows that a successful acquisition involves more than the deal itself. It also involves integrating the acquired company and creating value post-sale. And as it turned out, Ben created immense value post-sale for Karma Science, to the tune of billions of dollars.

Impressive stuff.

Featured Blog 📰

Determining the value of a SaaS company is crucial for understanding its potential and profitability. Whether you're looking to sell, expand to a new market, or scale your business.

However, valuation is never straightforward, and the metrics used to determine a company's worth are not an exact science. In fact, valuation multiples are ballpark estimates, not precise measures of a company's value.

In this featured blog post, we cover the three main valuation approaches: revenue-based, EBITDA-based, and SDE-based.

M&A Tips from Brian Dukes ðŸ’¡

Imagine building your business for half a century, then selling it and waking up the next morning to silence. The emotional toll can be massive, and doubt might creep in: Did you make the right call? What comes next?

To avoid this, plan ahead long before you exit the business. Lean on your advisors to craft a post-sale plan, especially regarding money and your post-transaction mission. What are your goals, your dreams, and your mission for your next phase of life?

Too many founders I talk to have a feeling of loss, and that's a tragedy. You've worked hard for years; it's time to enjoy it.

For more M&A tips from someone who's been there, follow me on LinkedIn.

That's it.

I hope you enjoyed this edition of The Wise Exit.

Tune in next Wednesday for more lessons and insights from the world of M&A.

Have a great rest of the week.

Best,

Brian Dukes, Managing Partner.