SPOILER ALERT: Here it is how the story ends:
i was in the notary waiting for the seller. I had the money in the bank and everything was ready to execute the transaction and yes, you can imagine, the seller changed his mind in the last moment and asker for 400k more.
We had the signing scheduled at 12:00 and at 10:00 the seller told me they will not sell.
Ok, the story about the acquisition itself deserves another post but for now lets focus in the fundraising process.
June 16th: I signed a bidding agreement with a deferred closing (in 90 days).
The acquisitions terms:
Purchase Price: ###-###-#### ,00€
Downpayment: ###-###-#### ,00€
Working capital required: ###-###-#### ,00€
Some operating cash for the hold.co: ###-###-#### ,00€
I had 90 days to raise###-###-#### ,00€. August was in the middle so, lets say 75 days.
Lets start with the easy part: the working capital.
It was through a credit line (commercial short term debt). Easy. Just go to the bank, show them the bidding contract and the company numbers and it was done (with my personal guarantee).
Now, lets dive in the hard part: the equity.
STEP 1: What is the offer?
That was my first acquisition. How to value my hold.co? I decided to do it in the most generous way possible. 49% for the 560k. I will also invest 60k so i needed to raise just 500k.
So, the holdco value was around 1.1M. Yes, i know: it is too much dilution for the first acquisition but my shares had some privileges in future capital increase. Subjet for other post.
STEP 2: Where to raise?
- Make a list of all you contacts ( i mean, ALL your contacts) and start there.
STEP 3: Make a compelling story.
- Do a powerpoint presentation (if you want my presentation ask me) and start presenting.
- Have a concrete ask: ticket size, how much equity you get and what dividens rights (in case).
STEP 4: Repeat and ask for referrals.
- When somebodody say no, ask if he have in his mind somebody who might be intesested in heard the opportunity (this is how i raised 260k).
STEP 5: There is no time to second and thrid meetings.
- I present. I give you acces to the data room and before our first videocall ends we schedule the second one. In the second one you will ask your questions and will tell me in you are in or out.
STEP 6: Money in the bank.
- After the second meeting if you are in we schedule the thrid one to read together the convertible loan contract, sign it and the transfer must be made.
This is brief summary i hope helps somebody. I need to give credit to my broher Or, without him i would probably failed. He came to visit the factory and we end up living together for a couple of months working together like crazy in the fund raising.
In one sentence: do a good presentation and present like crazy. If your shit is good the money won´t be a problem.