A Detailed M&A Journey Selling My Company

In 2014, I co-founded an EdTech startup called ClassHook. In August 2024, this 10-year journey ended in a successful acquisition by ClickView.

I’ve documented my entire M&A process along the way. In this post, I’ll share my journey and insights to create visibility on what may seem to be an obscure, opaque process.

Since ClassHook’s acquisition, I’ve advised founders who are looking at next steps for their companies and have been featured on news publications. I hope this post becomes a support for founders who are considering an exit or are at the beginning stages of the M&A process.

Important to note: The M&A process will be different for every company. There are many similarities and transferable ideas across acquisitions, but your process may be different, especially depending on company size.

Table of Contents

Background context

ClassHook is a US-based EdTech company that helps K-12 teachers find the perfect hook to start their lessons. Our customers are K-12 teachers, schools, and districts, and our users are K-12 teachers. We started the company in 2014 and bootstrapped it up until our acquisition. We have a freemium business model, and most of our revenue came from B2B sales.

Overall, we ran small and lean. I was the only full-time team member, and we brought in contractors and part-time staff to fill in staffing gaps where needed. This helped us keep our burn rate low while finding product-market fit and beginning to scale revenue.

Types of acquisitions

Acquisitions aren’t all the same, and understanding what kind of acquisition you’re likely to pursue is important in determining the companies to whom you reach out and how you position yourself. Your acquisition can be a mix of one or more of these.

Financial Acquisition

Your company has strong traction and revenue projections, and the acquiring company wants to add your revenue to their bottom line. Your company may not be in this category unless you’ve developed a scalable go-to market strategy ($1MM+ revenue).

Product Acquisition

This was one type of acquisition that ClassHook fit into, and many early-stage companies will also fit in here. A company acquires you to fill in a gap in their product that will make them more competitive or to help them serve a new market.

Market Expansion Acquisition

This is the other type of acquisition that ClassHook fit into. A company acquires you because you have a strong presence in a key region, and your company can support their growth in that region.

Team Acquisition

Your company is acquired for access to your team’s expertise. This is more commonly seen in technology startups who have deep expertise in a specific domain.

How did we decide on an acquisition?

Early on, we knew an acquisition was the most likely exit because of the nature of the EdTech industry. Very few companies in this space actually IPO, so that set our expectations appropriately.

We had been working on ClassHook for a decade and thought about what would be best for us founders personally and for the company. We had limited resources and were starting to scale. We could continue to grow the company, but it would take much longer with our limited resources. We were also ready to move onto something new.

In January 2024, we set a very ambitious growth goal: if we could reach it, then we would continue growing on our own. Otherwise, we would aim to partner with a larger organization. As you could guess, we didn’t hit our goal and decided to move forward with the sale of the company.

So if you’re wondering whether we were approached or we initiated the selling process, it’s the latter. In the past, we’ve been approached by investment bankers and private equity firms, but they are usually looking for much larger companies.

How long did the whole process take?

What considerations did we account for?

Payment options: A mix of equity, fixed cash, higher salaries, and earnouts (payments after hitting milestones post-acquisition). We did not hear many positive stories about earnouts since there is a lot out of your control, but we kept them as an option if it were necessary.

Involvement with the acquiring company. I wanted to join the acquiring company as an employee. You may want to stay only for the transition, or you may not want to be involved at all. If you have employees, think about what you want for your people, keeping in mind their best interests. When it was certain that an acquisition was going to happen, I told all of our part-time staff and contractors, and we wrapped up our existing projects since it was not feasible for them to join the acquirer.

What priorities are important in an acquisition? For me, it was important to find a company who would keep the product running and do good by our customers and partners. Think about the continuity for your product and customers. I had a strong relationship with many of our customers and wanted to make sure the acquisition was positive for them as well.

Negotiables & Non-negotiables. Out of the considerations above, which are you willing to negotiate, and which are requirements? Make sure to have this written out not just for you but also for a potential acquirer. Transparency up front saves time and builds trust.

Which documents did we prepare?

Getting your company acquired is similar to raising money from investors, except your positioning is different and needs to align with company goals. We had the following core documents ready.

Important note: We adjusted these documents as we learned throughout the process. We also customized most of them for every company to whom we sent them.

Executive Summary

This was about two pages long and included an overview of our business, team, product, business model, traction, market size, and competition. I sent this in our initial outreach to prospective companies, whether cold outreach or warm intros. The goal with this document is to provide enough information to pique interest in a conversation.

Pitch Deck

There is plenty of information out there on what makes a strong pitch deck for investors, so I won’t cover that. I reused our investor pitch deck and tailored it more towards M&A. Most notable is to include slides about how you envision the two companies working together and your exit preferences.

Working Together Slide

I titled this as “ClassHook supports {company} with {objective}” This listed 3 concrete ways that an acquisition would support their internal goals. Here’s an example of the bullet points from one of my decks. I wrote 1-2 sentences under each bullet point briefly explaining how our company supports the acquirer in this area.

Exit Preferences Slide

Important note: I sent the pitch deck only after an initial conversion and after an NDA was signed, which allowed me to customize the slides.

Data Room

There is plenty of information out there on creating your data room, so I won’t cover that. The data room is important especially during the due diligence process. I continually added documents here that we didn’t have as they were requested. For example, some companies asked for aggregate data about our freemium users and the subjects they taught, so I added that to the data room.

One document in particular impressed several prospects: our detailed definition of an Ideal Customer Persona (ICP). Our argument was that, with more resources, ClassHook can grow significantly, and the acquiring company can take this understanding of an ICP and continue our go-to market strategy if desired.

Did we enlist any help?

Short answer: Yes and no. Yes – my network for warm introductions, and I had a mentor during the process. No – I ran the process on my own and didn’t involve any M&A advisory firms or investment bankers. Jess Lynch was my mentor and sold her company a year before we did. She was an invaluable source of support whenever I had any questions despite having worked in different industries.

I highly recommend finding a mentor who has gone through the M&A process.

The long answer:

Just like raising money from investors, ask for warm introductions. If you know people working in Corporate Development in your industry, they are great references since they talk to executives at different companies. Similarly, other company founders and CEOs can introduce you to potential acquisition partners. I am well-connected in EdTech, so I asked many EdTech founders, CEOs, and people working in corporate development for help.

You may wonder if it’s worth working with an investment banker or an M&A advisory firm. Investment bankers are really only going to be useful for much larger deals (several millions in revenue), so we did not even consider them. We looked at M&A advisory firms focused on EdTech with a strong track record, but ultimately we decided to run the process on our own.

I did consider working with an independent consultant who used to be an investment banker. Their price was reasonable, but my biggest challenge at the time was sourcing more companies, and their services didn’t support us in that, so I didn’t move forward.

What do M&A advisory firms and investment bankers help with?

They range in their offerings, but typically they help you source companies looking for acquisition opportunities and best position your company for acquisition. That could include creating financial projections, one pagers, pitch decks, and more. They will also support you in the negotiation process to help you get the best deal.

They typically charge a monthly retainer and percentage of the sale. Investment bankers often have high fees so if you’re a small company, you may not have much negotiating leverage that would justify the cost of hiring them. They also typically work with companies at a certain size to be worth their time.

How did we set our target price?

We analyzed all that we’ve built over the past decade and broke up our business into tangible and intangible assets.

Tangible assets included revenue, the technology platform we built, and an estimated value of the content library we’ve built (over 7,400 videos). We thought: how much would it cost another company to build what we’ve built from scratch?

Intangible assets included our team’s expertise and our growth potential, which included the previous year’s revenue growth.

We then assigned an estimated monetary value to each asset with justification for each. It wasn’t purely scientific; we did some estimation using our best judgment.

The reason for doing this is that we wanted the flexibility to sell different parts of our business to different stakeholders if needed. One company may be interested in our content, while another may be interested in our technology platform. This turned out to be true, though we ultimately went with a partner that wanted both.

In reality, other companies didn’t value certain aspects of our business as much as we did, and we had to lower our valuation expectations. However, going through this exercise helped us understand all of the value we could provide to an acquisition partner, beyond what we initially may have thought. It turns out that, in building a company, you build a lot of great technology that you may not have thought was so great at the time.

How did we source companies?

Sources

Below are some examples of the types of companies we sourced. ClassHook focused on lesson planning and video-based content in K-12 education.

Company Size

Early on, I reached out to any company added to my list. After meeting with large companies expecting a minimum of $5MM ARR to even consider acquisition, it was clear that I needed to focus on small- and medium-sized companies with acquisition ability. It’s hard to know if this is the case until the first meeting. I looked for companies with between 15 – 200 employees or at least $1M in ARR. I got a rough sense of this data from LinkedIn and/or Crunchbase.

Who did we target at the companies?

The titles vary quite a bit. Since we saw our acquisition as more of a Product acquisition, I weighed heavily towards reaching out to the Product team. Their mindset was less about financials and more about growth through the product. As such, they were more open to a conversation to learn about the potential of both companies joining forces.

Getting contact information

To find the right person to contact, I used the following resources.

Mindset & follow ups

Going through an acquisition is a lot of work and takes a lot of time. You have to pursue it in addition to your normal responsibilities, and keeping momentum is important. I allocated time each week to source new companies and perform outreach to ensure my funnel doesn’t go dry.

During conversations, it didn’t bother me if I received a “no.” I knew our value and what we built was great. I clearly stated what we were looking for and left it open for negotiation. If it wasn’t a fit, I accepted that. If a company indicated that they weren’t interested, then I would keep them updated if they wanted updates. I know that sometimes a “no” can be hard to deal with, but if you approach it with the idea that you’re saving time from pursuing a deal that won’t work, it feels a lot better. With that in mind, if it’s going to be a “no,” you want to get a “no” as quickly as you can.

I followed up with companies every seven (7) days unless there was a timeline we agreed upon. You’re dealing with executives during the M&A process, so I wasn’t discouraged if I didn’t get a response after one or two outreaches; they are busy. I aimed for six (6) touchpoints before considering them not interested. Remember: the acquiring company is in a similar position in that they’re pursuing an acquisition in addition to their normal responsibilities.

Value yourself and the company you built, and don’t let anyone discount that. If someone doesn’t see your value, they aren’t a fit. At the same time, it’s crucial to assess your perceived value in the market and how you can influence that. For example, if you’ve valued yourself at $100M, but no one is willing to pay that, then you will need to adjust your asking price, or you need to better position your value to justify that price.

Keeping company momentum

The M&A process for us extended over three quarters. I was in touch with several companies for many months, and I would be asked about progress on our goals and projections in follow up meetings.

As such, it’s important to keep company momentum as much as you can to hit your targets. If you fall on your targets, it’s easier for the acquirer to either pass or negotiate a lower price. If you hit or exceed your targets, you become a more appealing acquisition.

For me, it helped to block off specific times for M&A activities during either the beginning or end of the day. This allowed me to focus on the company while still keeping M&A at the forefront.

When do you involve lawyers and accountants?

I didn’t need to involve them until the end of the process, when due diligence was completed and we had a final offer in hand. I asked my lawyer to look through agreements, and both sides made a few changes before we settled on language that we agreed on. In our case, I received the stock purchase agreement and an employment contract at the same time, so we could work more efficiently.

Our law firm had significant experience in M&A, so I used them. However, if your legal counsel doesn’t have M&A experience, I recommend you find counsel that does to ensure your interests are protected.

Since both our books and taxes were in order and available in a data room, I didn’t need to involve our accountants except for asking about some personal considerations.

Personal considerations

General thoughts and reflection

My experience echoes that of other founders to whom I’ve talked that had successful exits: getting acquired is a lot of work but is a huge relief. You can rest easy knowing that you have left your product and customers in good hands, and all of your hard work was worth it.

I was surprised with some of the people I was able to secure a meeting with, including Chairmen and Chief Product Officers at quite large companies. A few times, I received a call directly from a CEO as a follow up to my email. A lot of the companies I spoke with were genuinely interested in our founding story. It goes to show that, if you’re building something interesting that can add value, people will be curious to learn more.

Use your leverage. When I wasn’t getting a response from a company that expressed interest, I mentioned we were in conversations with other companies and wanted to “keep them on the table.” This almost always led to a quick response – people don’t want to miss out.

Don’t accept an offer that doesn’t align with your current goals. One of the offers I received was promising but required us to work with their team for several months on a paid contract. If everything worked out well during the contract, they would acquire us. Despite feeling positive about the company and their mission, I declined the opportunity because I wanted the certainty of an acquisition, not the potential promise of one.

There will be companies who are great acquisition targets, but the timing isn’t right. This is still not a fit, but keep them updated on your progress every quarter. You never know when they might come around and say they’re in a better position to continue the conversation. That’s what happened with us and ClickView!

Speaking with other founders about their M&A experiences before even starting the process was an important step in shaping my understanding and expectations for ClassHook. They all told me that it will take longer than you expect. If you estimate the whole process to take 6 months like I did, it’ll likely take a couple of extra months.

Helpful resources

Thanks for reading! I’ve published a concise and actionable playbook for early stage tech founders, providing clear guidance on running different areas of your company where it can be ambiguous.