When to seek funding 💸

Welcome back to another edition of The Wise Exit!

In today’s newsletter: 

• 3 lessons from Patrick Campbell about his exit from ProfitWell 💸

• A brand new episode of the Cashing Out podcast 🎧

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

Let’s dive in!

Buyer Spotlight

Every week we feature 4 buyers who are looking to acquire businesses in specific industries:

• Buyer seeking industrial businesses, light manufacturing, field services and industrial distribution - with EBITDA > $4M.

• Buyers looking for tech-enabled services companies (B2B businesses with strong cash flow that have or could enable technology to gain an edge) - with EBITDA > $2M.

• Buyers seeking healthcare staffing companies, ideally nursing related, as well as IT/technical staffing - with EBITDA > $2M.

• Buyer seeking niche custom US-based fabrication and precision manufacturing - with EBITDA > $1.5M. 

If you’re interested in learning more about these opportunities, reply to this email and let us know!

Featured Founder

Patrick Campbell worked for the National Security Agency and Google before founding ProfitWell in 2012. 

ProfitWell helps SaaS companies reduce churn and increase their profit by managing their data in one place. It was bought by Paddle for over $200 million in 2022. 

M&A Lesson 1: Seek funding when your goals, business model and funding situation match

For Campbell, he knew he wanted to build a big company with big revenues. His goals and business model were clear and his company was running efficiently. This was the ideal time to seek funding.

Instead, he continued bootstrapping ProfitWell to 8-figures. Rather than making the more common mistake of seeking funding too early, he now thinks he waited too long.

If he had sought funding earlier, he believes it would’ve allowed him to go from a $200 million exit to a $1 billion exit. 

M&A Lesson 2: Plan for the worst case scenario

When Campbell was approached for a possible acquisition, he knew he should have a back up plan in case the deal fell through. 

His idea was to film the acquisition process as part of their marketing plan. This could then be used to create content, regardless of whether the sale went through.

In the end, the sale to Paddle was successful and they made a documentary about the process, gaining a lot of online attention.  

M&A Lesson 3: Establishing team trust after an acquisition

When Paddle acquired ProfitWell, the two teams were integrated. Campbell assumed the trust he had built with his own team would automatically transfer to the new company.

But he sees the newly-formed team like an arranged marriage: trust has to be built from the start between two teams who didn’t choose to be brought together.

Knowing this means leadership can plan for it before the teams are integrated, giving employees guidance so they can adjust more easily to a new way of working.

Cashing Out: Finding the Growth Drivers That Deliver M&A Success

George Sandmann is an attorney by training who has spent the past 30 years starting and growing companies. 

He founded Growth Drive to advise middle and pre-middle market businesses by providing tools and technological support.

In this episode, George talks about:

• Creating business engines that deliver predictable profits, cash flow, and sustainable growth

• Driving predictable, transferable value and a more lucrative M&A transaction

M&A News 📰

• M&A: Flippa.com, the leading marketplace for buying and selling online businesses, is acquiring Berlin-based BitsForDigits.com, a premier European M&A platform. 

• AI: Creative agency House 337 has acquired AI firm Vixen Labs, adding conversational AI tools to its roster of companies.

• Automotive: Private equity firm Sentinel Capital Partners acquires High Bar Brands, the leading manufacturer and distributor of aftermarket products for heavy-duty trucks and trailers.

• CRM: Salesforce acquires Spiff, a platform that automates commission management for sales teams.

• Fashion: Coupang will acquire Farfetch in a $500M deal, liquidating and delisting Farfetch from the NYSE and cancelling a previous deal between Compagnie Financière Richemont, Symphony Global and Farfetch.

That’s all for now. 

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