Shopify has an ecosystem that helps small business owners sell their products online. The ecosystem involves agencies, app developers and designers. It also includes those who deal in mergers and acquisitions (M&A). Below, we present you the story of one such entrepreneur, who bought one Shopify app and sold two in one year using MicroAcquire.
Varun Kundra is the co-founder of AfterSell, which provides “irresistible post purchase offers and checkout editing” for Shopify and Shopify Plus merchants. Recently, he took to Twitter to share his experience of M&A. From his experience, we can learn about four things to keep in mind before buying or selling a Shopify app.
This year, I bought a @Shopify app on @microacquire.
— Varun Kundra (@varkundra) August 30, 2022
I also sold two.
Here’s 4 things you need to know about micro M&A 👇: pic.twitter.com/iKfYWoTRu7
“This year, I bought a @Shopify app on @microacquire. I also sold two. Here’s 4 things you need to know about micro M&A,” Kundra said in a Twitter thread. MicroAcquire is a startup acquisition marketplace that provides profitable software companies with interested buyers. It claims to be a free and private service platform with no middlemen involved.
01/4 Buyers Tips
In the first point, Kundra emphasized on making the seller’s life easier. He suggested three things to consider for a buyer. He opined “you can compete on more than just money”.
The three points mentioned for buyers are:
- Communicate a clear and reasonable transition plan: Make sure you inform the seller about your intention behind the purchase of the app. A clear communication will not only convince the seller to agree to the acquisition but also help you decide a clear path forward with the app.
- Move fast once you’ve done your due diligence: Don’t waste too much of time after you decide to purchase an app and complete formalities. Soon you take possession, sooner you can upgrade or customise the business as per your requirements.
- Keep the legal simple, make your LOI/purchase agreement understandable: Legality is of foremost importance when it comes to M&A transections. Try to keep the documentation as simple as possible. The understandability of terms and conditions will allow you experiment with your new acquisition as per your choice.
02/4 Sellers Tips
In case you want to sell an app, “your product deserves the buyer that is willing to pay the most WITH the least headache,” said Kundra. “Let buyers bid each other up,” he added.
Kundra also suggested one must convert a private auction into a public one and convince buyers so much that they start to feel the fear of missing out. This will help you begin a bidding war and get a fair price of your product.
03/4 Time Vs Money
In the third point, Kundra explained what to choose when given a choice between time over money. “When I was selling our first app, there were two competing parties. One was willing to pay more than the other, but at the cost of excessive due diligence and a protracted selling process. In the end, we went with less money but more time and energy,” he advised the sellers.
04/4 Learn Basics
In his concluding words, Kundra emphasised on the need to learn the basics of M&A before starting to buy or sell start-ups. “I spent $200 to ensure I don’t lose $20,000. Before getting into the game, learn the basics. I took @ryanckulp’s Microacquisitions course. I learned all the ways a deal can go wrong and what red flags to be aware of,” the entrepreneur said.
The website mentioned by Kundra is microacquisitions.com. It offers courses starting with $249 on topics like “Buy, Grow, and Sell Small Companies”. Ryan Kulp is the conveyer of the course. He also works as lead marketing instructor at GrowthX and have founded Fomo.com.
What is M&A?
Mergers and acquisitions is a term used for changing ownership of a business organisation, by simply buying or selling it. The operating units of these businesses are either transferred to the new entity or consolidated with the buyer’s team. M&A transections are much useful for start-ups to grow or downsize business. For the betterment of business, M&A in some cases changes the nature of business to gain a competitive position.
