Baremetrics: a $4M exit after a $5M deal fell apart

Q: Why did Baremetrics work?

A clean deal mattered more than the top price. Pigford says he could have negotiated a higher price from another buyer, but most wanted him to stay for an earnout, which he calls "soul-crushing" (I sold Baremetrics). Investors did not block a modest exit. General Catalyst and Bessemer agreed to write off their $800,000 so the $4M purchase price could work (I sold Baremetrics). The team was taken care of. Everyone else stayed on with the same pay, and $300,000 was paid out to the team (I sold Baremetrics). The buyer was a long relationship. Pigford had known Xenon's Jonathan Siegel for nearly 15 years (I sold Baremetrics).

Q: What didn't work for Baremetrics, and what are the risks?

The failed deal was expensive. It cost months of work and nearly $20,000 in legal fees (I almost sold Baremetrics for $5m). The final price was lower. The $4M sale was below the $4.95m offer he had accepted a year earlier (I sold Baremetrics, I almost sold Baremetrics for $5m). The founder burned out on managing. Pigford says most of his time was spent as a manager, not a maker, and COVID reminded him how stressful that was (I sold Baremetrics). All figures come from the founder's own posts. The sale was paid in three payments, so the cash did not all arrive at close (I sold Baremetrics).

Key takeaways

Josh Pigford sold Baremetrics to Xenon Partners in November 2020 for $4,000,000 in cash, about 2.65x ARR, with no earnout.
A year earlier he had accepted a $4.95m offer, but the buyer disappeared after nearly $20,000 in legal fees.
Seed investors wrote off their $800,000 so the $4M deal could work, and $300,000 went to the team.

What it is

Baremetrics is a subscription analytics product for SaaS businesses. Pigford says it started as an internal tool he needed for an earlier product and grew to "well over $1m/year in revenue" with nearly a dozen people (Josh Pigford's project page).

Timeline

2013: Baremetrics starts (Josh Pigford's project page).
2014–2015: it receives $800,000 in seed money from General Catalyst and Bessemer (I sold Baremetrics).
2019: Pigford receives four LOIs with offers from $3m to $5m and accepts one for $4.95m, about 3.75x revenue at the time (I almost sold Baremetrics for $5m).
3 December 2019: he writes that the buyer had misrepresented its funding and disappeared after nearly $20,000 in legal fees (I almost sold Baremetrics for $5m).
10 November 2020: he announces the sale to Xenon Partners for $4,000,000 in cash, about 2.65x ARR, with no earnout (I sold Baremetrics).

Why it worked

A clean deal mattered more than the top price. Pigford says he could have negotiated a higher price from another buyer, but most wanted him to stay for an earnout, which he calls "soul-crushing" (I sold Baremetrics).
Investors did not block a modest exit. General Catalyst and Bessemer agreed to write off their $800,000 so the $4M purchase price could work (I sold Baremetrics).
The team was taken care of. Everyone else stayed on with the same pay, and $300,000 was paid out to the team (I sold Baremetrics).
The buyer was a long relationship. Pigford had known Xenon's Jonathan Siegel for nearly 15 years (I sold Baremetrics).

What to learn

Expect a realistic multiple. Pigford notes that a slow-growth company run near breakeven will not get a huge multiple without a strategic buyer (I sold Baremetrics).
Keep due-diligence documents ready all the time, so a failed deal costs less. Pigford describes due diligence as pulling together every legal and financial document the business has touched (I almost sold Baremetrics for $5m).
Check the buyer's funding before you sign an LOI and start paying lawyers (I almost sold Baremetrics for $5m).
Decide what you want from the exit first: price, time or freedom. Compare Xnapper and Pigford's next company, Maybe Finance.

Risks and what didn't work

The failed deal was expensive. It cost months of work and nearly $20,000 in legal fees (I almost sold Baremetrics for $5m).
The final price was lower. The $4M sale was below the $4.95m offer he had accepted a year earlier (I sold Baremetrics, I almost sold Baremetrics for $5m).
The founder burned out on managing. Pigford says most of his time was spent as a manager, not a maker, and COVID reminded him how stressful that was (I sold Baremetrics).
All figures come from the founder's own posts. The sale was paid in three payments, so the cash did not all arrive at close (I sold Baremetrics).

FAQ

Short answers drawn from the sections above.

What is Baremetrics?

Why did Baremetrics work?

A clean deal mattered more than the top price. Pigford says he could have negotiated a higher price from another buyer, but most wanted him to stay for an earnout, which he calls "soul-crushing" (I sold Baremetrics).
Investors did not block a modest exit. General Catalyst and Bessemer agreed to write off their $800,000 so the $4M purchase price could work (I sold Baremetrics).
The team was taken care of. Everyone else stayed on with the same pay, and $300,000 was paid out to the team (I sold Baremetrics).
The buyer was a long relationship. Pigford had known Xenon's Jonathan Siegel for nearly 15 years (I sold Baremetrics).

What can indie builders learn from Baremetrics?

Expect a realistic multiple. Pigford notes that a slow-growth company run near breakeven will not get a huge multiple without a strategic buyer (I sold Baremetrics).
Keep due-diligence documents ready all the time, so a failed deal costs less. Pigford describes due diligence as pulling together every legal and financial document the business has touched (I almost sold Baremetrics for $5m).
Check the buyer's funding before you sign an LOI and start paying lawyers (I almost sold Baremetrics for $5m).
Decide what you want from the exit first: price, time or freedom. Compare Xnapper and Pigford's next company, Maybe Finance.

What didn't work for Baremetrics, and what are the risks?

The failed deal was expensive. It cost months of work and nearly $20,000 in legal fees (I almost sold Baremetrics for $5m).
The final price was lower. The $4M sale was below the $4.95m offer he had accepted a year earlier (I sold Baremetrics, I almost sold Baremetrics for $5m).
The founder burned out on managing. Pigford says most of his time was spent as a manager, not a maker, and COVID reminded him how stressful that was (I sold Baremetrics).
All figures come from the founder's own posts. The sale was paid in three payments, so the cash did not all arrive at close (I sold Baremetrics).

Sources

Every link cited above, in order of first use.

1.Josh Pigford's project page (joshpigford.com)
2.I sold Baremetrics (baremetrics.com)
3.I almost sold Baremetrics for $5m (baremetrics.com)