Hi Jow Forums I run an AI and data science consulting company and I am trying to purchase another company and their software that works in a different field.
There is great potential synergy between what my company is experts at and what this company currently does. However, the seller will not provide the current client list along with the purchase of the business/software. He also will not provide 3 references that use the software so we could confirm that the software is not broken or does not have a negative reputation.
The claim from the seller is that he doesn't want a random guy reaching out to his past clients, and that the price for the company is low so due diligence should not matter.
What are the thoughts on this? It is a pretty big risk to not contact any existing references as well as there is a capital risk by not being given the current clients because my company would not be able to upsell them.
For me, it's the McChicken. The best fast food sandwich. I even ask for extra McChicken sauce packets and the staff is so friendly and more than willing to oblige.
One time I asked for McChicken sauce packets and they gave me three. I said, "Wow, three for free!" and the nice friendly McDonald's worker laughed and said, "I'm going to call you 3-for-free!".
Now the staff greets me with "hey it's 3-for-free!" and ALWAYS give me three packets. It's such a fun and cool atmosphere at my local McDonald's restaurant, I go there at least 3 times a week for lunch and a large iced coffee with milk instead of cream, 1-2 times for breakfast on the weekend, and maybe once for dinner when I'm in a rush but want a great meal that is affordable, fast, and can match my daily nutritional needs.
I even dip my fries in McChicken sauce, it's delicious! What a great restaurant.
Josiah Cooper
Can't you just hire some corporate espionage person to do that kind of digging for you?
Luke Brown
Also, don't dwell on that company. Find another one.
Josiah Ramirez
Yes my team looked into it, but it is not a public facing software tool so it would waste a lot of time to do it.
Jace Gutierrez
>my team Hire a specialist. You want to buy another company. Don't be a cheapskate
Carter Myers
Due dilligence with solicitors specialised in tech will do the checks for you.
For a huge price
They cost like £150/hr in my experiecnce
Sebastian Fisher
This post helped me realize that I have an underlying traumatic experience in my subconscious. One that I've never properly dealt with becuase of my own ignorance towards its existence until just now. Thank you and go kill yourself.
The price of the entire company would not justify the cost to even pay my own employees their rate. My team does corporate technology investigation for our clients for $100 an hour.
Joseph Jenkins
get this fucking question out of here this is a shitcoin board son
Thomas Bell
What is it with 4channers who sound professional and come on here to ask intelligent questions, as though they expect an intelligent answer from the largely pimply-faced, moronic, and juvenile population that frequents this site?
Gavin Thomas
I also work in an AI firm, and happen to have quite a history transformation consulting for M&As
Try to answer the following simple questions: 1.what does the company you want purchase bring to the table exactly? What is the exact 'synergy''? 2. What data have you used to estimate the 'value' of this company? 3. Why would a software provider choose to not disclose clients? Especially smaller one tend to 'brag' about every single client they won...to me this sounds quit suspicious... If they are so worried about a ''random'' people approaching their clients, it indicates not the best client relationships... 4. Why are you asking this on Jow Forums out of all places?
Everything I know so far which is close to nothing tells me that you should put a hold on this acquisition and really take a few months to think this through.
Dominic Sanders
They are a product that has large amounts of customer data for each client. We offer the ability to also use AI on those sets of customer data. This means any of their existing clients could be upsold. Additionally, they only ever sold their software as a single install not as a monthly subscription. 2. The seller provided wire transfers which were redacted. This to me is not good enough as it could have been for anything. 3. Yes, that is what I said to the seller. 4. I dunno usually have it open in a tab.
We took time to think about it and I offered him 1/10th of the asking price. I was hoping Jow Forums would come up with a sneaky method to get them to agree.
Caleb Ramirez
>My team does corporate technology investigation for our clients for $100 an hour. If you can't do that basic research, I wouldn't hire your company if someone paid me for it.
Christopher Taylor
Hi user,
Need to know more about the investment thesis. how much of the value is supposed to come from each of [the tech, the team, the business model, continuing the earning trends]
Asher White
Did I say that we couldn't do it? I said that paying my employees to do it would not be worth it.
Please elaborate if you have a more clever way to do this than my web app expert, who informed me it would be a difficult task and take up a fair amount of time.
Zachary Reed
We would be purchasing the technology, none of their staff would be included.
The value would be in not having to have my staff develop this type of application, and converting it into a SAAS product that could have additional features provided by my original company.
Luke Peterson
Sounds quite interesting. As upselling is the potential revenue stream here, it is quite important to get a good understanding of the client list.
My tip is to never offer $ before completing due diligence to keep the other side interested and collaborative.
Michael Adams
i'm highly skeptical that tech without a team has any value. is it just serving as the embodiment / documentation of one or more trade secrets?
Julian Moore
Yes, that is why I am suspect of the seller.
We offered 1/3 of the asking price and received an acceptance. But it was later made clear that the client list was not included so I reduced the offer to 1/10 or to provide 3 of the clients just for confirmation the software was solid and the seller got mad.
The technology has intrinsic value because it represents wages that I would have to pay to have it built. The time to develop the platform is what has value other than the clients.
Oliver Russell
>> 14728472 well it can make sense if they are buying mainly data. For AI solutions data is the gold. If they get client data and approach the company with a pitch that essentially says "we already modelled your data and calculated the expected impact for your business @X$" it will sell much better.
Connor Nguyen
sounds like a fucking scam and entirely illogical. most likely they have no clients or software
Matthew Howard
>The technology has intrinsic value because it represents wages that I would have to pay to have it built. The time to develop the platform is what has value other than the clients.
This is fine if you're going to put it on maintenance life support but at that point the true value is the earnings generated which points to either a marketing strategy you need to validate or a client base you need to check the health of.
if you want to do significant forward development my experience has been that most team swaps don't actually save money on a multiyear timeframe. (again simple maintenance is fine)
Josiah Morris
But in order to update the software in future won't you need to invest in getting your team up to speed with it? I feel like you would need at least a few members from the team of the other company.
Bentley Sanders
It is a small webapp, not something insane or complicated.
Yeah that is what I was thinking, the seller was not making much sense.
