Walking Away From An 8 Figure Deal
January 3, 2020 |
About this episode
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Wes Winham was a co-founder and shareholder in PolicyStat, a software company that helps hospitals keep track of their Standard Operating Procedures (SOPs), including everything from dress codes to how to handle life and death procedures.
To read a transcript of this episode, click here.
Wes Winham was a co-founder and shareholder in PolicyStat, a software company that helps hospitals keep track of their Standard Operating Procedures (SOPs), including everything from dress codes to how to handle life and death procedures.
The platform was sticky with more than 99.9% of contracts renewing each year, which is why PolicyStat was quick to garner multiple offers of 3.5 – 4.5 times their annual recurring revenue of $5 million.
Winham and his fellow shareholders selected an acquirer, countersigned a Letter Of Intent (LOI) with a 45 day diligence period of exclusivity (i.e. “No Shop” Clause) where the PolicyStat stat team agreed not to continue to negotiate with their other suitors.
Negotiations were progressing well right up until they began discussing the terms of an earn-out. The tone of the meetings went from friendly to adversarial, which is when Winham and his fellow shareholders decided to walk away from life-changing money. In this episode, you’ll discover:
- How to compare and contrast LOIs
- The danger of letting an exclusivity clause expire
- Three secret hacks to evaluate the cultural fit with a potential acquirer
In the end, Winham and his partners re-started the sale process. They were successful in garnering another offer of almost four times annual recurring revenue because of how sticky their customers are. Have you got a recurring revenue model that keeps customers coming back each month? If not, we can help you think it through using The Automatic Customer Builder, which is step five in The Value Builder System – complete Module 1 for free by getting your Value Builder Score.
About Our Guest
Wes is a software entrepreneur from Chickasha (Chick-uh-shay), Oklahoma. He was employee #1 at a SaaS startup called PolicyStat. He lead product and engineering from $0 ARR to $5m ARR and a May 2017 acquisition. As the CEO of Woven, Wes is obsessed with better developer hiring by reducing bias. Wes lives in downtown Indianapolis with his wife and their 3 adorable pet rats.
