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Sold My Company Yesterday And Recorded It For You. $5m in Sales. $2.5m VC Raised.

by Nathan LatkaJanuary 28th, 2016

Too Long; Didn't Read

<em>When I was 19 I started Heyo.com from my dorm room at Virginia Tech. This is the story of how we grew it to many thousands of paying monthly customers, raised $2.5m in venture capital, and sold it yesterday to our #1 competitor.</em>

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When I was 19 I started Heyo.com from my dorm room at Virginia Tech. This is the story of how we grew it to many thousands of paying monthly customers, raised $2.5m in venture capital, and sold it yesterday to our #1 competitor.

The First Acquisition Email and My Suspicions

In Episode #171, Nathan breaks some big news regarding his business Heyo — he got an offer to sell it. Listen as Nathan discusses with his team the process and ramifications of potentially selling their business.

EP 171: We got an offer to sell Heyo from The Top Entrepreneurs in Money, Marketing, Business and…_Listen to The Top Entrepreneurs in Money, Marketing, Business and Life episodes free, on demand. Listen to The Top if…_www.stitcher.com

3 Key Points:

Transparency has the advantage of keeping everyone on Heyo’s team informed and learning. The downside is that they may feel anxious about what the future holds.
A big part of selling a business is considering its future profitability and potential.
When selling a business, it’s important to be sensitive to the feelings of the people who are invested in it. (Employees, investors, customers, etc.)

Time Stamped Show Notes:

00:00 — Nathan talks about when he first started his business with his mom.

02:02 — Early on building Heyo, Nathan resolved to be transparent about how offers were negotiated so that everyone on the team could learn from it.
04:28 — Nathan’s team got an offer to sell their five year old business Heyo by their competitor.
05:56 — In line with the founding philosophy, Nathan’s decided to be fully transparent about the process to his Heyo team.
07:22 — Chris Rieger, the head of operations at Heyo expresses his thoughts.
08:04 — Heyo has sentimental value to the team and still possesses long-term value in its future opportunities.
09:20 — Nathan’s concern with transparency is losing talented employees due to the potential acquisition.
10:10 — Nathan is also concerned that the business might become too comfortable and miss out on bigger opportunities.

Talk to Nathan Live: Click here to grab a spot live with Nathan on February 4th where he’ll answer questions about the acquisition and discuss whats next.

10:30 — A big part of deciding whether to sell Heyo is its future potential.
11:18 — Nathan doesn’t like the offer — he plans to reach out to other potential buyers get LOI’s (letters of intent) to leverage Heyo’s value.
13:37 — Christina, Heyo’s head of branch strategy joins the show.
16:01 — Nathan thinks that Heyo’s brand wouldn’t be shut down if acquired by their competitor, only reused.
18:01 — Nathan and Christina have faith in their team to find a new project if Heyo were acquired.
19:01 — Christina thinks that as long as they properly manage the communication to their customer base, the transition will be smooth for users.
21:48 — There are numerous people tied to the business — Nathan sees his business partners as life-long, not business long.
22:19 — The investors in Heyo is an important factor to consider in the acquisition decision.
22:44 — What do you guys think — should Nathan sell Heyo?

How We Created a Bidding War Among 4 Companies to Drive Up Deal Price

In Episode #177, Nathan talks more about selling his business Heyo and brings on Jim Risner of Votigo to talk about what makes Heyo desirable. Listen as Nathan comes to a decision regarding a dream he’s had since he was 18— selling a business before the age of 30.

EP 177: My decision. Should I sell Heyo or not? from The Top Entrepreneurs in Money, Marketing…_Listen to The Top Entrepreneurs in Money, Marketing, Business and Life episodes free, on demand. Listen to The Top if…_www.stitcher.com

3 Key Points:

Offers to buy a business may be a ploy to gain information by competitors. Often it’s prudent to hold off on any announcements before seeing a contract.
LOI’s aren’t created equally. Some of them are offers of pure cash while others include other things like stock in a publicly traded company.
Even after a signed LOI, many deals fall through. Due diligence is required for the actual exchange of money for a company.

Talk to Nathan Live: Click here to grab a spot live with Nathan on February 4th where he’ll answer questions about the acquisition and discuss whats next.

Time Stamped Show Notes:

01:00 — If you haven’t caught up already, one of Nathan’s biggest competitors has offered to buy Heyo.
01:26 — One concern is that the offer may not be serious, only a ploy for information.
01:51 — Ken Armijo calls in to offer advice: before taking the buyers seriously, wait until they produce a contract.
03:02 — Nathan plans to obtain LOI’s (Letter of Intent) from companies that might be interested in buying Heyo and leveraging competition to raise its price.

03:17 — Another Top Tribe listener weighs in on what Nathan should do with the company.
04:36 — Nathan called CEO’s to talk about Heyo’s desirability so he could better understand its selling points.
05:06 — Nathan talks with Jim Risner of Votigo, one of Heyo’s main competitors in the SMB space (Small Business Space) about obtaining a LOI (Letter of Intent).
05:51 — With one LOI in hand from Jim, Nathan began emailing other CEO’s to gauge other interest in Heyo. He obtained four LOI’s from interested companies.
06:30 — The LOI’s weren’t created equally — some of them are pure cash and others include stock in a publicly traded company.
07:27 — Jim Risner talks about Votigo and why they would want to acquire Heyo.
09:10 — Votigo’s been thinking about entering Heyo’s space for a while, expanding into the SMB market. Buying the company would be a big head start into the space.
10:21 — Bethany London calls in to express her thoughts that selling Heyo, a long-time dream of Nathan’s, might not be all that it’s cracked up to be.
11:34 — One of Nathan’s friends from Virginia Tech’s Pamplin School of Business offers his thoughts that Nathan may have outgrown Heyo.
13:58 — Nathan signed the LOI — he’s selling Heyo.
14:22 — Many deals fall through even after a signed LOI.
15:21 — Tune in next Monday to find out what happens. And also, call in to express your thoughts @ nathanlatka.com/talk

Due Diligence Hell and The Big Signature:

In Episode #184, Nathan continues to tell-all about the selling of Heyo. In this part, he focuses on ‘due diligence’ and the business post-acquisition.

Sold Heyo, Here's What's Next from The Top Entrepreneurs in Money, Marketing, Business and Life_Listen to The Top Entrepreneurs in Money, Marketing, Business and Life episodes free, on demand. Listen to The Top if…_www.stitcher.com

3 Key Points:

While waiting on due diligence, Nathan kept leverage and created a safety net by keeping Letters of Intent from other companies in case the signed deal with Votigo fell through.
Entrepreneurs often have strong intuition or ‘gut feeling.’ Sometimes it’s wise to trust your instincts or to find out why you’re feeling a certain way.
Nathan’s signed the deal to sell Heyo! What’s next for him? Find out on his webinar launching on Feb. 4th.

Time Stamped Show Notes:

00:00 — Nathan’s talks with Jim Risner, a co-CEO of Votigo.
01:30 — Nathan signed the LOI offered by Votigo.
01:53 — Jim talks about Votigo, a social marketing promotions platform.
03:22 — Nathan kept leverage and created a safety net by keeping Letters of Intent from other companies in case the signed deal with Votigo fell through during ‘due diligence.’

04:37 — Sue Zimmerman joins the show, one of Nathan’s first customers at Heyo.
06:41 — Nathan does The Top Podcast because he loves being out in front of people, not for the money.
07:38 — Joe Snider weighs in on what he thinks Nathan should do with his podcast now that Heyo is being sold.
08:56 — Autumn Beam of the Write Your Own Story podcast calls in.
10:05 — Nathan talks to Jim Risner about Heyo’s future post-acquisition — there are none to few changes planned.
11:09 — Nathan and Jim discuss red flags when it comes to business acquisition and due diligence.
12:40 — DJ Stephan, a highly accomplished entrepreneur and podcast listener calls in to advise Nathan.
15:03 — Nathan docu-signs the acquisition deal and sells Heyo.
18:29 — Get your mind in something, build it, hustle hard, ignore haters, and ride momentum to winning.
19:07 —Talk to Nathan Live: Click here to grab a spot live with Nathan on February 4th where he’ll answer questions about the acquisition and discuss whats next.