Inside Fidelity’s $80 million Acquisition of SkySlope
June 2, 2023 |
About this episode
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In 2011, Tyler Smith, one of the top three real estate agents in California, launched SkySlope, a software platform that enables real estate professionals to efficiently manage their transactions, documents, and communication in one centralized system.
Smith successfully bootstrapped the company to around $12 million in annual recurring revenue by 2016, attracting significant attention from potential acquirers. Among the interested parties, Fidelity National Financial emerged as the ideal fit, acquiring 67% of SkySlope in a deal valuing the company at over $80 million. In this episode, you’ll learn how to:
- Use a “put option” to limit your downside in acquisition.
- Deal with employees who feel unfairly treated in an acquisition.
- Avoid the feeling of vulnerability that accompanies the diligence process.
- Distinguish an IOI from an LOI
- Test market a new product effectively.
- Improve customer experience (CX) to grow your company.
- Identify the ideal acquirer for your business.
- Utilize a unique negotiation tactic to increase an offer from an acquirer.
- Ensure success moving from a Letter of Intent to a successful sale.
- Navigate the intricate journey of transitioning from a majority owner CEO to a minority owner.
Check out our article on Ways To Add $22 Million Of Value.
Show Notes & Links
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Definitions
Letter of Intent (LOI): A letter of intent (LOI) is a document declaring the preliminary commitment of one party to do business with another. The letter outlines the chief terms of a prospective deal. Commonly used in major business transactions, LOIs are similar in content to term sheets. One major difference between the two, though, is that LOIs are presented in letter formats, while term sheets are listicle in nature.
Source: https://bit.ly/3ppDnr3
Earn-out: Earnout or earn-out refers to a pricing structure in mergers and acquisitions where the sellers must “earn” part of the purchase price based on the performance of the business following the acquisition.
Source: https://en.wikipedia.org/wiki/Earnout
Due-Diligence: Due diligence is an investigation, audit, or review performed to confirm facts or details of a matter under consideration. In the financial world, due diligence requires an examination of financial records before entering into a proposed transaction with another party.
Source: https://bit.ly/3yYDfo5
Confidential Information Memorandum (CIM): A confidential information memorandum is a document prepared by a company in an effort to solicit indications of interest from potential buyers. The CIM is prepared early on in the sell-side process in conjunction with the seller’s investment banker to provide potential buyers with an overview of the company for pursuing an acquisition. The CIM is designed to put the selling company in the best possible light and provide buyers with a framework for performing preliminary due diligence.
Source: https://bit.ly/3Jukdt2
Preferred Preference: Preferred Preference means that amount equal to the sum of the Preferred Preference Per Share for all shares of Company Preferred Stock (including any rights convertible into, or exercisable or exchangeable for, shares of Company Preferred Stock on an as-converted, exercised, or exchanged basis) issued and outstanding immediately prior to the Effective Time, rounded to the nearest one hundredth (0.01) (with amounts 0.005 and above rounded up).
Source: https://bit.ly/3RSTtGH
Put Option: A put option gives you the right, but not the obligation, to sell a stock at a specific price (known as the strike price) by a specific time – at the option’s expiration. For this right, the put buyer pays the seller a sum of money called a premium. Unlike stocks, which can exist indefinitely, an option ends at expiration and then is settled, with some value remaining or with the option expiring completely worthless.
Source: http://bit.ly/3ItK5Fh
About Our Guest
Tyler Smith
Tyler Smith, founder and CEO of SkySlope, the leading digital transaction management platform in Proptech, has a successful track record in real estate, earning him awards from REALTOR Magazine and the Wall Street Journal. He started SkySlope in 2011, a technology aimed at simplifying the work of real estate professionals. The company, self-funded from the beginning, was later sold to Fidelity National Financial in 2017. In 2023, Smith ranked 90th in The Swanepoel Power 200 list, moving up 94 spots since 2020. A keen seed investor, Smith is constantly looking for B2B SaaS that boosts B2B businesses and B2C/prosumer products.
