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Inside 23andMe’s $400 Million Acquisition of Lemonaid Health | Built to Sell Radio

July 7, 2023 |  

About this episode


In 2013, Paul Johnson founded Lemonaid Health, one of the first digital healthcare platforms designed to offer virtual medical consultations and prescription services online.

While the company got off to a slow start, the pandemic accelerated the adoption of online healthcare. By the end of 2021, Lemonaid had agreed to be acquired by the DNA testing outfit 23andMe, for $400 million of cash and stock. In this episode, you’ll learn how to:

  • Establish a vesting schedule with a cliff provision when allocating company shares to safeguard your interests.
  • Use a convertible note as a financing tool for your business.
  • Strategically position your business to attract potential acquirers.
  • Maximize your chances of hitting an earnout.
  • Assess stock liquidity during the acquisition process.
  • Tell your team about your decision to sell.

Check out our full M&A Glossary

Show Notes & Links

Official Press Release




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Note: A note is a debt security obligating repayment of a loan, at a predetermined interest rate, within a defined time frame. Notes are similar to bonds but typically have an earlier maturity date than other debt securities, such as bonds.


Convertible Note: A convertible note is a way for seed investors to invest in a startup that isn’t ready for valuation. They start as short-term debt and are converted into equity in the issuing company. Investors loan money to the startup and are repaid with equity in the company rather than principal and interest. The convertible note is automatically changed into equity once a specific milestone has been reached, usually when the company is officially valued for later investments.


Vesting: A vesting schedule is an incentive program for employees that gives them benefits, usually stock options, when they have contractually fulfilled a specified term of employment with the company. The benefits can also be other assets, such as retirement funds. Vesting is a way for employers to keep top-performing employees at the company.


Cliff Vesting: Cliff vesting is when an employee becomes fully vested on a specified date rather than becoming partially vested in increasing amounts over an extended period.

Typically, plans have a four-year vesting schedule plan with a one-year cliff. Upon completing the cliff period, the employee receives full benefits.


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.


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.


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.


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.



About Our Guest

Paul Johnson

Paul, a UK native now living in Southern California, has revolutionized healthcare accessibility. As the founder of Lemonaid, the first U.S. nationwide telehealth app, he paved the way for direct-to-consumer medical services. After expanding Lemonaid to the UK in partnership with Boots, Paul is now leading the consumer teams at 23andMe. Outside of his pioneering work, he enjoys participating in professional-level pickleball tournaments.


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