How to Analyze a Tech Deal in this case ? Raised alot of $$ / Founder sick

July 15, 2024
by a searcher from Yale University - School of Management in San Francisco Bay Area, CA, USA
A fellow founder reached out that he wants to sell a company. It's slighlty relevant to what we do in terms of market so can help if we add it to our portfolio. Here's the issue
They've raised 3M in debt and have just over 1M in revenue. Product is almost breakeven but I think we can reduce the cost and have around 500-600k in profit.
While I have to look into agreements on how strong they've but how would you position this sale ?
Couple of options
- Have a asset sale. Buy it for 2X EBITA ( post we cleanup ) in first year. Restructuring etc and pay it over time. I expect it can be 1M atleast.
- Offer like 250k or something and take the risk
Any one has creative ideas when product is growing but still just have 1 M in revenue and slightly big payroll ( 1M/Year)
from Georgetown University in New York, NY, USA
from Queen's University in Toronto, ON, Canada