Acquiring a start-up?
April 04, 2025
by a searcher from INSEAD in Paris, France
redacted
I know this is far from the search fund model; buying stable cash-flowing businesses, but has anyone ever looked into acquiring a startup?
We have met a founder of a ~2M B2B SaaS company in the Energy space open to sell his company for personal reasons. The company has a great product with a ~60 customers few of them quite prestigious references, with very positive customer reviews.
Did any of you had experience in this space? Pros and cons? How would the finance work (acquisition + post acquisition investment for growth)?
I know this is far from the search fund model; buying stable cash-flowing businesses, but has anyone ever looked into acquiring a startup?
We have met a founder of a ~2M B2B SaaS company in the Energy space open to sell his company for personal reasons. The company has a great product with a ~60 customers few of them quite prestigious references, with very positive customer reviews.
Did any of you had experience in this space? Pros and cons? How would the finance work (acquisition + post acquisition investment for growth)?
from INSEAD in Seattle, WA, USA
Curious to learn what this business does in energy sector, but the companies I worked created products that were highly technical and specialized services for the utilities and energy companies. This meant, the potential buyers were not traditional searchfund model but a target for PEs and other large energy companies.
I've seen combination of stock + cash or all cash deals from various different cases.
from The University of Chicago in Chicago, IL, USA
Start-ups cannot support high debt (even if debt was available). Contingent price is also not feasible (even if seller is ok with it.). So, the alternative is high $ equity or retained % equity. I have modeled such situation many times on my software (www.BVXCloud.com).