M&A lessons from Fanbytes 📝

Hello, and welcome back to another edition of The Wise Exit!

In today’s newsletter:

• Another set of M&A lessons, this time from Timothy Armoo - founder of Fanbytes

• Our conversation with Lloyed Lobo on his journey from refugee to serial entrepreneur 🎧

• Our round-up of interesting M&A transactions from the past week 💰

Let’s dive in!

Timothy Armoo was just 21 when he founded his influencer marketing agency, Fanbytes.

In the spring of last year, a little over five years after starting the company, Armoo and his co-founders sold Fanbytes to a larger digital media company, Brainlabs, for an 8-figure sum.

While the exit was, in Armoo’s own words, “pretty seamless and exciting,” the sale came with its own set of challenges and lessons that the founder shared in an article published in August of last year.

In today’s newsletter, we’re discussing three of those lessons, one’s that we’ve encountered time and time again in supporting founders through their exits.

M&A Lesson 1: Keep Your Data and Agreements Organized 📊

Maintaining a clean and organized dashboard for all of your important data will save you a massive headache when the time for due diligence rolls around.

Throughout the acquisition process, there are going to be a potentially-overwhelming number of priorities & tasks competing for your attention.

The last thing you want, as an added stressor, is to be piecing data and client contracts together from multiple, unreconciled sources when requests from the acquiring party come through.

Armoo shares his own experience:

“When we were in the process of selling Fanbytes, a lot of the stress came from our lack of a comprehensive data room. We were helped by having great lawyers who handled it, but we would have saved time and unnecessary stress had we maintained a data room earlier.”

M&A Lesson 2: Avoid Channel Dependence ❌

We’ve covered this particular lesson in past founder stories, but it’s worth repeating again due to how important it can be to achieving your ideal exit outcome.

Overreliance on one (or even two!) channels for user/customer acquisition can be a detrimental factor when looking for potential acquirers.

“Ultimately, if you haven’t shown you can acquire customers in at least three channels, your value risks being diminished,” says Armoo, ”and if your competitors have shown you up by succeeding with a multi-channel customer acquisition strategy? Very bad look.”

M&A Lesson #3: Connect With Potential Acquirers Early and Often 🤝

Armoo mentions the importance of “swimming in the same waters as your acquirers” long before you’re actively looking for an exit.

Not only will you form valuable connections that you can leverage in the future, but you’ll learn what these operators are looking for in businesses like your own.

Cashing Out: From Refugee to Global Entrepreneur 💪

Lloyed Lobo is an incredible, self-made entrepreneur.

As a Kuwaiti refugee and former engineer turned serial entrepreneur, Lloyed co-founded and built boast.ai, a company helping businesses access R&D tax credits and innovation incentives, to $10 million of ARR.

In our discussion with Lloyed, he shares:

• His views on how outsourcing the financial role to professionals helps when it's time to sell the business 💼

• How bootstrapping (vs. Venture Capital) allowed him to sell on his timetable 💰

• Why building community is a key differentiator and value driver in any business and even more when it's time to sell 🫂

M&A News 📰

• Newsletters: Newsletter startup beehiiv acquires ad platform Swapstack.

• Gaming: Roblox acquires voice moderation startup Speechly

• Restaurants: FAT Brands acquires Smokey Bones Barbecue from private equity firm Sun Capital Partners for $30 million

• Marketing: Performance marketing startup, Assure Media, acquired for $4M by retail powerhouse Labwire

That’s it for this week.

Tune in next Wednesday for another set of M&A lessons, and have a great rest of the week 👋