Predicting the market 🤔

Welcome back to another edition of The Wise Exit!

I’m Brian Dukes, a Managing Partner at Exitwise. 

In today’s newsletter, I’ll cover: 

• 3 lessons from Dan Reich about his exits from Spinback, TULA Skincare, and Troops.ai

• Everything about M&A financing: process, types, roles, and more

• How to make your business EASY to sell (dos and don'ts)

Let’s dive in!

Featured Founder

Dan Reich is currently the President & Co-Founder of DIBS Beauty (Desert Island Beauty Status).

Four months after co-founding the social commerce company Spinback, it merged with Buddy Media and was then acquired by Salesforce for $689 million.

His next company, TULA Skincare, was acquired by Proctor & Gamble in 2022. In the same year, his workflow automation software company Troops.ai, was acquired by Salesforce and joined the Slack team.

M&A Lesson 1: Finding complementary services

Back in 2011, Spinback was helping online brands measure how much money they were making from Facebook. As the company grew, Reich could see what value he provided to the market, but also where other companies complemented his service. 

He started partnership talks with Buddy Media, a software company that could benefit from his analytics, while acting as a referral engine for Spinback.

The companies agreed to merge, thereby offering a more complete service. This quickly attracted the attention of Salesforce and just over a year later, the new company was acquired for $689 million. 

M&A Lesson 2: Predicting the market

When Reich was considering merging Spinback with Buddy Media, he tried to predict what the market would want.

He knew that Facebook was about to go public at a $100 billion market cap. He remembers thinking, “the market may look at the space and say, ‘Who’s the leading B2B platform [already] monetizing this thing?’ And what’s that worth?

“Is it worth .5%, 1%, 5%? Even if it’s 1% we should probably [merge]” to become that leading company. That market expertise and foresight was correct, leading to the acquisition by Salesforce.

M&A Lesson 3: Build strategic relationships 

Dan often tells founders who are thinking about selling that “companies don't buy companies – people at companies buy companies.” 

With TULA Skincare, the CEO had been building relationships with potential buyers for at least two years prior to the acquisition. 

When TULA entered the M&A process, it was already known by insiders for its products, what the company stood for, and where it planned to go. This made it much easier to find the buyer match.   

Featured Blog 

50,000. That’s how many M&As took place in 2022. That’s 50,000 individual companies finding common ground. Any M&A deal is an exciting time — but the significant growth potential of these ventures often comes with a significantly high financing cost.

In this guide, we give you an in-depth template for strategic planning and share 4 types of M&A financing to help you choose the best option along the road to a successful M&A without any issues.

Read the guide: Everything About M&A Financing: Process, Types, Roles and More 

M&A Tips from Brian Dukes

How to make your business EASY to sell (dos and don'ts)

DO: Get your financials in order, make a list of potential buyers, and hire an M&A industry-specific expert.

DON’T: Lose focus on daily operations, rush the process, and forget about ongoing business expenses.

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

That’s all for now. 

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

Best,

Brian Dukes, Managing Partner