27 Feb Built to Sell Radio: How to Keep More Equity by Getting Customers to Fund Your Growth
In 2015, Brad Lorge founded Premonition, a technology company that offers logistics software to streamline a company’s delivery operations. Rather than the traditional approach of financing their start-up through rounds of dilutive funding, Lorge asked his customers to pre-pay, allowing the founding team to retain 80% of the equity in their business.
By March 2022, Premonition had grown to $3 million in Annual Contract Value (ACV) which is when it was acquired by Shippit for $20.5 million — an implied valuation of just under 7 times ACV. In this episode, you’ll learn how to:
- Calculate the difference between ARR and ACV and how each impacts the value of your business.
- Use customer pre-payments to finance your growth.
- Identify a short-list of potential strategic
- Approach an acquirer without appearing desperate.
- Utilize an unconventional strategy for accelerating an M&A transaction.
- Know when to accept equity in lieu of cash when selling your business.
