It all started with an email I wrote last November:
I’m a Spanish Bible salesman. Kind of.
The goal was just to pay our rent, but instead the Spanish Bible app I made turned into a successful 6-figure business.
That was sent to Gimlet Media November 12, 2014 pitching my Bible app story for their podcast, Startup.
12 days later I was being interviewed by Alex Blumberg.
Gimlet Media published that episode on January 5. My interview ended up being half of the episode and I thought it went great. I’m a huge This American Life and Startup fan so just being interviewed by Alex was fun, let alone being on the show.
I got a few “congrats!” on Twitter/Facebook etc. and I thought that was the end of it.
Until Business Insider found it.
About a month later in February, Business Insider published a post that summarized the interview.
This would end up changing my life.
Business Insider’s reach is incredible, and as a result of that post:
And of course the kicker: the following email landed in my inbox:
February 6, 2015
Great to meet you. I work for Salem Media and I read the story about your Bible App. Sounds like you have really created something that is doing very well. I would like to talk with you because we are interested in buying the app from you if you have any interest. You can check out me on LinkedIn if you want and we can set up a quick call just to say hello and see if there is anything there…
I instantly recognized the company and knew this was a very real offer.
Back in 2012 when my apps started really picking up steam I dug into and learned a ton about the Christian media industry.
(For example, I learned that the #1 selling English Bible, the NIV, is owned by Rupert Murdoch and News Corp.)
In my research I found a public company called Salem Media, worth $160 million as I write this. They got started in the 80’s as a radio company.
I pored through their 10-K/10-Q filings, in particular their acquisition sections.
I found things like:
“On May 15, 2012, we purchased Churchangel.com and rchurch.com for $0.2 million. “
“On August 30, 2012, we acquired SermonSpice.com for $3.0 million.”
“On October 1, 2012, we completed the acquisition of Godvine.com for $4.2 million.”
The joy of doing business with public companies; all this info about previous acquisitions, prices, dates… available to anyone.
Even back in 2012 it was apparent very quickly that they buy digital properties all the time.
Websites, apps, Facebook pages, domains… you name it.
Back in 2012 I had no way of getting their interest. But when that first email from them landed in my inbox in 2015, I knew it was real instantly, and that it was game on.
I didn’t respond until 24 hours later. The negotiations had already begun.
The whole process ended up taking 7 months, and basically played out as follow:
1. Agree on price2. Due diligence3. Asset Purchase Agreement term negotiations4. Closing
After we each signed an NDA we got on the phone. My contact for this entire process was a nice guy named David. It’s his job to be nice and get good terms from target companies. He does his job well.
David walked me through basically their entire process, e.g. they make acquisitions of all shapes and sizes, they like what I’m doing, would I be interested in hearing an offer, etc.?
I said that all sounded fine, so he sent over an email with some preliminary questions:
1. What analytics do you use to monitor the app? Is this something you can give me read only access too?2. Can you give me the revenue numbers by month for the last 12 months?3. What are the monthly sessions for the last 12 months4. What are the monthly active user numbers for the last 12 months5. What are the monthly download numbers for the last 12 months6. Do you collect email addresses as part of your business?7. Is there any contracts, litigation or business reasons that would prevent you from being able to sell the app to us?
Pretty reasonable stuff, so I sent over a detailed email with answers, numbers, etc.
And then I didn’t hear anything for a week.
Thankfully I’d also received interest from a different, private investor.
I was nursing both these leads simultaneously and it was around this exact time that I got an official offer from the private investor. It was too low but that didn’t matter. I could still use it to negotiate with Salem Media.
It was a late Tuesday night for him on the east coast, but after a week of silence I got a response to my “I have another offer email” just 15 minutes after I hit send:
I would like to move forward I am at a conference all week. Can we talk Monday? Sorry for the delay.
A few more emails/phone calls laters (this became a theme) they finally made their first offer. I said thank you and that’d I’d get back to him.
I thought about it, and here’s what I knew:
My goal became to convince them that the apps were a strategic purchase (vs. just straight cash flow).
I responded with the following email:
David,I’m still interested in moving forward and appreciate the offer.The offer was enough to begin a serious conversation, but I think it was on the low side. Here’s why:– We’re the #1 downloaded Spanish-language Bible in the App Store. In fact, we get more downloads than the vast majority of English bible apps.– We’re a Top 10 Free app in the Books category. Better than Disney, Google’s Play app, Barnes & Noble, Marvel Comics, DC Comics, and others.– The business is very consistent, and has been for some time (> 2.5 years). This isn’t a trend or a seasonal app.– We rank #1 for “la biblia”, #2 for “biblia”, #2 for “spanish bible” and top 10 for many other phrases.Since the app performs so consistently and takes so little of my time (~1 hour per month) it needs to make financial sense to give it up…
Given the strategic value of the app, Salem Media’s unrivaled ability to monetize media properties, and the other factors mentioned above, I could accept a higher offer.
That would give Salem Media the most popular Spanish-language Bible app at a reasonable price and provide me enough incentive to give it up.Frankly it also helps that you guys have experience with app properties and that I can trust you as a buyer.Let me know what you think. I can move quickly if the deal makes sense.Trevor
They came back with an updated offer.
But they were big and I thought they could do more, so I countered again.
Finally, he emails me:
Trevor,Let me know if you have a few minutes this afternoon. I think I have a way to get to your number but I want to be sure you are good with it before I send along the offer.
Hope you all are having a great trip. David
The timing for this entire process was less than ideal as my wife and I were in Europe for all of March and April.
But I still remember where I was when I “accepted” their offer: having dinner with my wife in Germany.
I’m not gonna lie, saying yes on the phone from a restaurant in Germany to a big company offering to buy my company felt pretty cool.
Once we’d agreed on the price it was time to begin due diligence.
After we’d agreed on price the joy of due diligence began.
I already had all my ducks in a row so it was pretty easy to get them everything they asked for:
What wasn’t fun was how long it took. We agreed on the price and started due diligence around March 10th, and I didn’t get the first draft of the initial asset purchase agreement until April 21st. Just awful.
In the first half of April they’d asked (and I’d complied with) multiple due diligence asks, phone calls, etc. Eventually I had to put my foot down and say no more. I wasn’t giving them a single more minute or document until I got the draft agreement.
I worked up more and more moxy as the process continued.
I finally got the draft APA on April 21st. It was a 63-page document, so I finally hired an M&A firm to help.
I ended up only having to spend ~$5k on lawyers for the whole deal, which sounds like a lot until you work with lawyers. I was happy to pay it for the advice I got. I actually wish I’d hired them a little bit sooner.
There were quite a few things we negotiated to change in the APA, but the two that took the longest were:
Basically I spent 2 weeks convincing them to let me write this blog post!
No joke. The original terms were something along the lines of that I couldn’t tell anyone about the sale, ever, which is crazy since it’s going to be publicly available in their Q3 10-Q in about a month anyway.
Thankfully they finally agreed to let me talk openly about most things in the transaction, which is why I’m able to write this post.
For people who aren’t familiar: indemnification means “if I get sued for something you did, will you protect me?”
This is generally a reasonable term and is included in basically every M&A deal under the sun.
Generally the pieces that get negotiated are 1. how long does it last and 2. whether there’s a liability cap.
E.g. How long after the sale do I have to indemnify them, and in some disaster scenario if they got sued and lost, what’s the max I’d ever owe them?
In the end we agreed on a length of time and cap that was comfortable for both of us.
I will say this: I had to push back hard to get my terms on this point. Initially they wanted uncapped liability forever, which was unacceptable.
The most tense moments in the entire 7-month process was on a phone call about this very subject.
I told them I was going to walk away from the deal (after ~6 months of work) if I didn’t get some sort of compromise. That was followed by roughly 45 seconds of silence on the other side of the line, but eventually the guy spoke up and said he’d see what he could do.
And I wasn’t bluffing.
From this phone call we were able to finally agree on indemnification terms that were acceptable to both parties.
The best day of all.
Once we’d agreed on every detail in the APA it was time to schedule a day to close the deal. In my case that meant signing and transferring the assets all in the same day (in high profile acquisitions you see online the announcements happen after the deal is signed but usually before it’s closed.)
So sure enough: I transferred the apps from my iTunes Connect account to theirs. I gave them my login details for my email list, my hosting account, and a few other things.
Then they wired over the money.
And just like that the deal was over and I’d sold my first company.
My wife was out of town so to “celebrate” I treated myself to In-n-Out for lunch!
The deal made a ton of sense and I’m glad it got done.
But it did take over 7 months, hundreds of emails, and dozens of phone calls. It was psychologically exhausting and definitely the hardest part of the 3.5 years I ran the business.
I’d heard so many horror stories about failed acquisitions that I always assumed it was dead until the cash was finally in the bank.
Even literally the Monday before the sale closed I spent all day in bed worried about whether it would actually go through. That was not fun, and various levels of depression occurred throughout the sales process.
That would explain the relieved smile in the picture above.
Thank you Salem Media. It was a pleasure doing business with you.
Here’s to the next side project.
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