Bootstrapping to a $200 Million Exit

Built To Sell Radio Episode #355

In 2012 Patrick Campbell founded ProfitWell to help SaaS companies increase revenue and reduce churn by managing their data in a single place.


After bootstrapping the business to 8-figures, Campbell decided it was time to raise money.


While he was seeking a financial investor, Paddle approached him with an acquisition offer. Soon after, in 2022, Campbell sold ProfitWell to Paddle for over $200 million.


In this episode, you’ll learn how to:

  • Avoid the biggest mistake when bringing on founders.

  • Incentivize employees using a surprising method.

  • Decide whether to raise money or sell your company.

  • Negotiate your way to the highest offer.

  • Create a competitive marketplace for your business.

  • Prevent the most critical error made during due diligence.

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More About Patrick Campbell

Patrick Campbell is the CEO of ProfitWell (formerly Price Intelligently), the software for helping subscription companies with their monetization and retention strategies. ProfitWell also provides free turnkey subscription financial metrics for over eight thousand companies. Before ProfitWell, Patrick led Strategic Initiatives for Boston based Gemvara and was an Economist at Google and the US Intelligence community. Email – pc@patticus.com


Definitions

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.


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.


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.


BATNA: BATNA is an acronym that stands for Best Alternative To a Negotiated Agreement. It is defined as the most advantageous alternative that a negotiating party can take if negotiations fail and an agreement cannot be made. In other words, a party’s BATNA is what a party’s alternative is if negotiations are unsuccessful. Source.


Founder Vesting:

Vesting of founder shares is one of the most critical and sensitive topics in a startup. If you have a startup that has more than one co-founder, then you must have a vesting agreement in place. When you raise capital from investors, one of the most important things that investors look for is the vesting agreement.


Founder vesting, is a process by which you “earn” your stock over a period of time depending on your performance and commitment to the startup. The company gets the right to buy back the stock if one or more of the co-founders leave. Source.


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