Unlocking the secrets of successful online business acquisitions…
How does one navigate the intricate world of mergers and acquisitions, especially in the ever-evolving tech industry?
In this episode, Andrew Gazdecki, founder of acquire.com, shares insights on building and operating the leading online platform for buying and selling online businesses.
Andrew reveals:
- The compelling story behind acquire.com’s unique domain acquisition
- Key strategies for launching and scaling a marketplace platform
- How acquire.com connects aspiring entrepreneurs with the right acquisitions
- The human element in M&A transactions and how it’s integrated into an online platform
- Emerging trends and innovations shaping the future of acquisitions in the lower middle market
Mentioned in this episode:
Transcript
Patrick Stroth: Hello there. I’m Patrick Stroth, trusted authority in executive and transactional liability and national practice leader for mergers and acquisitions for Liberty Company Insurance Brokers. Welcome to M&A Masters, where I speak with the leading experts in mergers and acquisitions, and we’re all about one thing here. That’s a clean exit for owners, founders, and their investors.
Today, I’m joined by Andrew Gazdecki, founder of acquire.com. Originally created in 2020 as microacquire.com, acquire.com is the leading online platform for buyers and sellers of online businesses to meet, negotiate, and close M&A transactions. And so you’re one of the big pillars in M&A for the lower middle market, Andrew. Great to have you here today.
Andrew Gazdecki: Yeah, thanks for having me on.
Patrick: Now, before we get into now acquire.com, we’ll get into that whole platform and everything. Let’s start with you. What brought you to this point in your career?
Andrew: Yeah, I’ll rewind maybe back to when I got in entrepreneurship, and that was in college. I knew I wanted to be an entrepreneur pretty early on. I started a job board that connected mobile app developers with businesses right when the iPhone came out, so no one knew how to make mobile apps.
And I kept seeing the same job posting made over and over and over, saying something like, I want a mobile app for my hotel. It’s a really nice hotel, high-end restaurant, that sort of stuff for reservations, view the menu. Very, very simple stuff, but people were paying like 50, 60, 75,000 to develop these apps at the time.
Patrick: Wow.
Andrew: And there were do-it-yourself website companies that were already live, and you could use those. I thought it’d be interesting to have something similar, but for mobile apps. So, long story short, I sold the job board and built a simple template for me to customize, and that ended up being a company called Business Apps.
And that was a drag-and-drop, no-code, mobile app builder for small businesses. And I grew that to about 10 million in recurring revenue, and acquired by a private equity firm when I was 29. And then just going through that experience of trying to meet buyers, trying to figure out due diligence, I worked with an investment bank at one time.
I just thought it’d be really interesting to have a platform where a lot of these parts related to getting acquired are just simplified. Everything from meeting the buyers, to going through due diligence, being able to streamline the legal doc creation, and the closing with escrow. So that’s what I built and been helping entrepreneurs ever since.
Patrick: There’s one thing I think about when you think about the most exciting events in business in a company’s life cycle. A lot of people would think, oh, IPO, it’s got to be the most exciting. And it’s like, well, that’s similar to being drafted in the first round of the NFL Draft. I mean, it’s exciting, but you really haven’t done anything yet. nd it’s like, okay, good, now prove yourself. When you get to, you know, selling a business. I mean, that can be life-changing, if not generational, for families.
And so to be part of that process, I think, is intoxicating, and it’s a great purpose of being. I also really respect that you took advantage of a technology at the time, and you didn’t let that define you, because as technology is always going to change, I mean everything ends, you were able to pivot and move on to other things. And I think that’s a great element that comes with it.
My daughter, who’s an artist right now, I mean, she, what is it, sketches all the time. But, I mean, she’s not sketching out of, you know, discipline or anything. That’s just what she does. So that’s just one of those magic the magic pixie dust and entrepreneurs is they keep going.
Now, when we look at acquire.com as you talk about, acquire.com start with this just because, I mean, that’s one whale of a URL that you were able to grab. I mean, in 2020 I would have thought that would have been taken a decade earlier. Talk about how you got that, and then we’ll get into acquire.com.
Andrew: It’s kind of a funny story. So we were originally microacquire, and as we started moving up market, we started helping larger businesses get acquired. We thought it would make sense to drop the micro for our name, so just acquire.com, and I’d actually talked to the owner of the domain maybe two years prior, and they wanted $800,000 for the domain.
I think that’s way too much. And, you know, we had a conversation, that was it. And then two years later, they just reached out to me, out of the blue. This is when, I think it was it was in 2022, when the markets were kind of turning down. It looked like we were headed into a recession. I assume they just wanted to sell it for, you know, personal reasons or something like that. It wasn’t being used, and they just said, are you interested in buying it?
I said, sure, but I can only pay 200,000 they said 300, and I said, 200,000, and we just made a deal right then. I was actually on a family vacation as well. So I was with my in-laws, and went back to meet up with the family, and I was super excited, and said, I just bought a domain for $200,000. Everyone looked at me like I was crazy, but it’s been a great investment in our brand.
Patrick: And I think as you approached this whole concept of having an online platform, I would have been just overwhelmed by the size of the marketplace. I mean, there are 1000s and 10s of 1000s of buyers and sellers out there. Talk about, how did you approach that and, you know, you broke up into little parts. Talk about the process, if you could.
Andrew: Of launching the business?
Patrick: Of launching the business. Yes.
Andrew: So with the marketplace, you’re going to have the initial problem of needing both buyers and sellers. So you’ve got to figure out which side you want to focus on. I chose to focus on sellers because I assumed if you have the best deals, I could maybe market those on social media, and that would naturally have buyers gravitate to the platform.
I originally started just cold emailing different startup founders. I would say, hey, are you looking to sell your business? And then most of them would say, no, don’t email me. I don’t want to sell. And then I actually just switched it. I just said, hey, do you want to acquire another business, or do you want to buy another business? I have a platform that allows you to buy and sell different startups.
And so just by switching that and being a little bit more polite with my response, founders that would normally want to sell, that’s when they would actually register on the platform, create a listing, and that’s what really got the flywheel going. And then after that, it was just a ton of just brute force marketing. Paid ads, social media marketing. We have a newsletter that goes out every single day. We set up our own podcast. We kind of just pulled out the book in terms of marketing.
Patrick: And, I mean, that’s one unique thing when you approach mergers and acquisitions. I did it for insurance a little later in my career, but you’ve got to do something. So you just pick one side of the table or the other. The buy side or the sell side. I did the exact same thing. It’s like, okay, well, let’s look at the sell aside, and let’s just focus there for a while.
If it’s not a fit, no problem. Just pivot. But there are a lot of folks who just are frozen by indecision on which way to go, because they want to make sure they don’t make a mistake. And you go forward with this. Now, acquire.com is the only online platform out there for this. Let’s talk about what does acquire.com bring to the table for M&A. Is it just a focus size of deals? Tell me.
Andrew: We tend to focus on transactions 5 million and below. We can do transactions larger, and we have. Just this last month, we closed a $10 million transaction. We had two different eight-figure transactions closing right now, but our buyer network is the best for enterprise value below 5 million. We have over 500,000 registered buyers.
So that’s probably the best thing we bring to the table is just sheer access to the largest buyer pool looking to acquire those types of businesses. And then when you list on acquire.com, we match you with buyers that are specifically looking to acquire a business like that. So, for example, if you’re a SaaS company doing 500,000 in revenue, it’s in the martech space.
As soon as you go live, we send alerts to 1000s of different buyers. So what all that ends up doing is you get more interest from buyers and then ultimately more offers from buyers, and that helps you get the best final terms and the best price as well.
Patrick: Services that are available. Because I keep thinking about M&A as it’s not company A buying company B, you know, Amazon buying Whole Foods. It’s one group of people choosing to partner with another group of people. So there’s a big human element. How does that factor in on this platform, or does it?
Andrew: In what ways? Give me an example.
Patrick: Are the buyers and sellers meeting face to face, like on a Zoom? How are they, you know, how are they interacting?
Andrew: Oh, yeah, absolutely.
Patrick: Explain the experience to me.
Andrew: It’s just a typical acquisition process. So you initially go live on acquire.com, and before that, we’ll meet with you. We’ll do things like prepare your business for meeting with a bunch of different buyers, so putting together a CIM, a confidential information memorandum. We’ll look at your P and L, we’ll recast that to add back certain expenses that might reflect a higher net profit number. In this area of the market, we call it seller discretionary earnings.
So we’ll prepare you, you go live in the marketplace. Once you go live on the marketplace, you’re in a sales process. So the more buyers you reach out to, schedule calls, you meet with them, that’s going to just give you an overall better experience. So we’ll work with sellers in terms of, hey, this is, you know, how you should reach out to buyers.
This is what to say on the initial meetings. And once that gets some momentum behind it, we’ll start fielding offers. So initial, you know, letters of intent. We’ll sometimes put a deadline in. So we’ll say, hey, we’re accepting LOIs until the end of April, as an example. Once that cut-off ends, then we lock the listing.
And whichever LOI the seller accepts, you start moving into due diligence. We have tools on the platform that help with due diligence and creating the asset purchase agreement. Then all that information flows into our escrow partners, and then you transfer the assets. You wire the funds into escrow, and if everything looks good, then you’re done.
Patrick: Are you providing any legal advice, or are there resources that people can access? What do you do on that front?
Andrew: Yeah, not direct legal advice. We’re not able to. So we have to be in a different party there, but we have a ton of different attorneys and law firms that we recommend and work with pretty closely. So we’ll make the recommendations, but we can’t actually be the legal representation.
Patrick: Okay, that’s understood. So, talk about, are there, you mentioned a couple, but some resources out there, because there are some, you know, a lot of founders, they’re really good at setting up a business or getting that together. They have no idea of how to sell it or how to market it out there. Talk to if somebody’s absolutely a newcomer to the platform. What are some of the things that you can bring to the table for them?
Andrew: I mean, I’d say just end-to-end acquisition support. In terms of helping them get the best price and best terms. Really making sure that we bring a lot of competition to the acquisition process. Meaning there are a lot of different buyers, and that allows us to help them maximize the acquisition.
Because at the end of the day, that’s what founders want, that’s what they deserve. So we could build different things, we can do different things, but that’s our core focus is driving as much buyer interest as we possibly can and guiding founders to really ensure that they get the best price and the best terms.
Patrick: I’m curious if you have, I don’t know if you were able to share numbers, but I mean in terms of either deal volume, aggregate numbers of deals, and an average range, size-wise. Give us a perspective of who is really enjoying the acquire.com experience?
Andrew: Totally. We’ve done over 1000 different transactions in over 85 different countries, and the total cumulative value of all the transactions is over half a billion. Fantastic,
Patrick: Fantastic. Okay, so your average transaction is 100,000, less than 100,000?
Andrew: It depends on the month, but around 500,000. It ranges between 300,000 to 500,000.
Patrick: Okay, and then these are online businesses, but can you give us a better, more defined profile on who is the ideal buyer or seller for acquire.com? Who are you trying to serve?
Andrew: Yeah, totally. Sometimes we’ll work with larger private equity firms. Maybe some names that some people here would recognize, or strategic buyers that might be competitors of sellers that we’re working with. But the majority of our buyers are individual buyers. So, high net worth entrepreneurs.
Maybe it’s a founder who just sold a business, and they want to buy cash-flowing startups, and they don’t want to start from scratch. Maybe it’s a VP at Zoom or something like that. They’re really talented in marketing. They don’t have startup ideas, and so they want to just buy a business to replace their salary.
So we’ve just created this really, really interesting market where we work with a lot of people who are interested in entrepreneurship through acquisition on the buy side. And on the sell side, it’s usually pretty small teams. It’s going to be usually one person, but sometimes, you know, 5, 10 at the most. Small teams, the businesses are highly profitable, really good margins.
So as an example, maybe it’s a SaaS business doing a million a year in revenue. Of that, 600 or 700,000 is going to be pure profit. Growth is maybe slow or it’s stagnant, so it’s more of a lifestyle business, and those acquisition targets receive numerous offers on the platform. So it’s that’s a decent example.
Patrick: This really simplicity is maybe someone like on Etsy or whatever as a hobby, and they monetize it. You’ve got people who have these online businesses, and they were doing it for a while, like you said, a lifestyle business, and then they are able to monetize it.
Andrew: I actually did a podcast earlier today with this really interesting wix.com add-on application. It was doing 500,000 a year. 400,000 of that was profit, and it was just a side project that some guy had. Another example would be someone grew a newsletter to a few 100,000 subscribers, hired someone to take over the content writing and the management of the newsletter. Those are great assets to get acquired as well.
Another example would be, there was one acquisition we closed last month where it was just two people that started an agency. They were doing about 2 million in top-line revenue. And of that, I believe, like 800,000 was profit. That’s another, you know, perfect fit. So it’s kind of everything. And then some are actually really, really small too.
Some can just be a product. Maybe they have, like, two customers, and they’re just trying to figure it out. They kind of run out of gas. They don’t understand marketing. Maybe it’s just not a fit for them, or they lose interest. Like one startup I was looking at today is just this really beautiful e-signature platform with proposals. It’s competing with PandaDoc and DocuSign.
They haven’t really figured out the customer acquisition strategy, and so those will get acquired for, you know, 50 to $100,000, depending on the quality of the product and the upside to it. So we have this interesting range of companies with product market fit, a working business, or even just, you know, a product that never really got off the ground, which could be great acquisitions.
One other thing I’ll add, too, is probably one of the coolest parts of my job is, it’s great seeing founders get acquired. I love that aspect, but it’s really interesting looking back, like a year or two later, after some of these acquisitions take place, and just seeing these businesses change hands, and just what each individual is looking to get out of it.
For the buyer, sometimes they just want a profitable lifestyle business. And seeing them being able to achieve that is super cool. And some people will buy businesses and 10x them and 20x them and resell them on the platform. So there’s, there’s a lot of interesting stories that we get to see.
Patrick: Yeah, one other thing that’s interesting, particularly here in Silicon Valley, but this is among entrepreneurs. Is very few of them, when they go ahead, they have their liquidity event, they don’t run off and buy an island and then hang it up. A lot of them, after a while, just go back out there again. I think that’s fantastic.
Andrew: One, one thing that I see a lot too that might be surprising is when some founders that we’re working with are actually in due diligence with us, they’ll be already putting offers on other startups on acquire.com. We’ve had some holdups where we need their deal to close, to get the capital to close another deal. So absolutely, entrepreneurs are, they’re never sitting still.
Patrick: Well, in addition to the great advances in technology, you know, M&A has accelerated in size, scope, and and number throughout the economy, not only here, but worldwide. One of the areas that’s been helpful in middle market, the larger deals is the insurance industry has enabled the participants to de-risk a lot of the financial risk that is involved in mergers and acquisitions.
They use a tool called reps and warranties insurance. There have been some products coming down market for smaller deals. I’m just curious, Andrew, good, bad or indifferent, have you guys had any involvement or experience with rep and warranty insurance?
Andrew: Yeah, we’re actually, we’re working on an acquisition right now where the buyer and seller, they were at disagreement with just very specific language around the reps and warranties. The seller wanted it really, or, excuse me, the buyer wanted it to be really, really specific, to give, you know, broad, you know, I can’t think of the word right now, but basically.
Patrick: They want it broadly worded to catch a lot.
Andrew: Right, to reduce their risk.
Patrick: Wide as possible. Yes.
Andrew: And the seller was not having it. They were literally willing to walk away from the call. I was on the call, there are tons of attorneys. They were arguing back and forth. And then actually, we looked at reps and warranty insurance to basically appease both sides. And because of that, we literally had the acquisition go through, and saved the deal. And it was awesome. They were literally willing to walk away. So it can be huge, especially as you get into life-changing money, seven, eight figures, yeah, it’s huge.
Patrick: And whee ‘m very proud about the innovation for reps and warranties. I would say that about 95% of middle market deals, these are priced $100 million enterprise value and up. Over 90% of those deals have this form of rep and warranty insurance. The challenge has been that type of policy has not been available to deals that are under 10 million in enterprise value because those deals were too small to underwrite and the cost of the insurance was just cost-prohibitive.
Hasn’t been a fit. That’s all changed. There’s a new product out there called transaction liability private enterprise, TLPE. It is underwritten by Lloyds of London, and it provides the sellers and buyers with the same kind of protection that the middle market companies get. And so if there is a financial loss as a result of a breach of the seller reps, buyer simply has to notify the seller of the breach.
Seller reports it to the insurance carrier. Insurance carrier comes over to the buyer and says, show us the breach. Show us your math. You had a $1.4 million loss. How’d you come up with that number? Once they see the receipts, you know the coverage is there. It’s great because the buyer gets remedy, the seller gets a clean exit, they can move on with the rest of their life.
And at a cost point of there’s a sliding scale, but it can be as low as $10,000 to $25,000 per million in limits. I mean, unbelievably affordable that has not been out there. The traditional M&A professionals who heard about sell sell-side rep and warranty policy. The old model was a very expensive, cumbersome product out there. That’s why everybody went buy side.
Now there is this new product. It’s called TLPE, and so we’re very proud, and we’re looking at something with you as a matter of full disclosure with acquire.com so very happy to be part of that. Andrew, well, you mentioned the podcast. Real quick, let’s talk about your podcast. Where can our audience members find it?
Andrew: Yeah, youtube.com/acquiredotcom, that’s spelled out. So acquire d o t c o m. I interview founders who sell on acquire, hear their story. How was the acquisition process? How can other founders prepare? How was the experience? What to expect. There are some cool stories, some really cool stories. It’s probably one of my favorite parts of the job.
Patrick: Yeah, I think is a lot of fun. Is either makeover shows that people like, or these almost rags-to-riches stories, and those are always a lot of fun. Now, Andrew, as we’re recording this, we just passed Liberation Day for America. So we’ve got all the news in the macro economy about tariffs and so forth.
A lot of what we’re doing is below that threshold. But in light of just everything happening in 2025 as we kicked off the year, what trends do you see going forward? Either for acquire.com or for M&A in the lower middle market?
Andrew: Sure, this past month, March was actually the best month we’ve ever had in terms of just pure revenue. But all metrics are up in terms of offers being sent, offers being accepted, just overall activity on the platform. NDAs is being signed, buyers registering, sellers registering. So I think it’s going to be a good year, but we don’t have the same sort of correlation with, say the broader markets. We had a good 2024 as well. But I mean, things are looking upward, so I think, I hope it continues.
Patrick: Yeah, we’re hoping. I mean, spring has just sprung out here, so I echo that with you. It was dead quiet, and I thought things would open up right after the election was decided, because that’s one uncertainty that it, you know, had been resolved. Not so much. I think everybody’s waiting for, like, a big, major pivot, and it to be tangible. But we’re beginning to see that momentum going in. You know, we could all hope for a nice, robust time again, with better economic times. At least the price of gas in California is coming down. So we like that.
Andrew: Yeah, yeah, not bad.
Patrick: Now, Andrew Gazdecki from acquire.com, how can our audience members find you?
Andrew: You can add me on LinkedIn, Andrew Gazdecki, or find me on Twitter, @agazdecki, or just shoot me an email, andrew@acquire.com.
Patrick: Andrew Gazdecki from acquire.com, thank you so much for being here. You’ve just been doing great stuff for the M&A community, and I wish you and acquire.com all the best.
Andrew: Thanks for having me.
