Recently I completed the sale of one of my underperforming Shopify apps on Acquire .com
I thought it is an interesting experience and love to document some behind-the-scene process here.
Timeline
- 30 Jun 2021 – I have the idea for the app
- 22 July 2021 – Reached out to an ex-colleague to help build the core app
- 30 Dec 2021 – App goes live on Shopify App Store
- 8 Aug 2022 – Listed app on acquire.com for sale, as it is not performing to my expectation
- I can’t remember the date, but I took it down later from acquire.com as there are a lot of enquiries but none turned into anything meaningful, not even a proper due dilligence conversation
- 16 Nov 2022 – I got an email from Acquire.com CEO Andrew Gazdecki and asked me if I have sold off the app, as he realized I took down the app. Andrew is super nice and he also offered me to work with one of the acquisition specialists if needed. I turned down the offer as I wasn’t ready to sell it again (more below).
- I can’t recall but I later relisted it again on acquire.com
- 10 July 2023 – Received an offer
- 1 Aug 2023 – Sale completed
Why I decided to sell?
This is my second Shopify app that goes live on the app store. While it has some enquiries and recurring revenue, I am simply not feeling the pull of the market.
Unlike my other app, even with little marketing there is a constant flow of movement (install and churn etc), this app simply has no movement – and I have exhausted all my channels of marketing.
While we can add more features and reposition it, we simply lack the justification to invest more engineering power into this app. After all we are all working on part time basis and time is a scarce resource.
What happens after I listed on Acquire.com
There is a constant flow of requests from interested buyers to look into the stats; but none materials into even a conversation.
This gets so frustrating to me that I eventually took it down from Acquire.com
All in all, I got 36 enquiries.
Taking it down from Acquire.com
Here are a few reasons I took it down initially from Acquire.com
- The constant enquiries that didn’t material into anything meaningful is tiring
- I was also hoping to sell it for a price higher than most other apps in the market ie. not based on ARR multiples – I later realised this is not realistic and the selling price will most likely not yield anything.
I relist it later with updated stats.
This was probably based on my belief that a piece of software is an asset (that preserves value), and the acquisition confirms my belief.
Getting the offer and selling it
On 10 July 2023, I received an email for an offer with LOI (Letter of Intent).
I jumped on acquire.com and chatted with the buyer. There was no due diligence carried out but we deal in good faith – as I reviewed my current revenue (which has decreased further) and offered him to renegotiate the price.
We agreed on a revised pricing the same day and the buyer promptly sent me APA (Asset Purchase Agreement) on the same day.
The process is surprisingly simple: both LOI and APA were automatically generated and sent via acquire.com – I received and signed the documents digitally on acquire.com as well.
From here, we proceed to escrow.com to facilitate a secured asset and payment exchange process. I created an account on escrow.com and added my bank account as the payment receiving account.
Here is where we got stuck due to a mistake I made in the APA step:
I signed my APA with the name of my app (which is neither a reflection of my name, nor a legal entity that exists).
However, the escrow.com team needs to verify and make sure the APA signing party’s name is aligned with the bank account owner’s name. With the mismatch of the APA signing party name vs my escrow bank account name, we are stuck and I was initially not aware of what happened.
Being the nervous newbie I was, I promptly reached out to Andrew (CEO of acquire.com) again via email for assistance. He quickly replied me and cc his team member as well as someone from escrow.com to help.
After realising what happened, we (the buyer and I) decided to cancel the APA for him to re-send a new one so I can sign with a proper name.
Luckily this went smoothly, and the buyer also deposited their fund into escrow.com afterwards.
The Asset Transfer process
With the fund deposit verified by escrow.com, I compiled an Asset checklist in Google Sheet and share with the buyer for an alignment on things I need to transfer to him. Here is the full checklist:
- Domain name
- Codebase access
- Database access
- Hosting infra access (GCP in this case)
- The actual Shopify App Store listing
- App icon design file
- WordPress site + database file
- Google analytics access for Shopify App listing
- Google analytics access for WordPress site
- Google search console for WordPress site
The app has no social media presence.
Additionally, I also include some documents below to help the buyer for a smoother transition as he has no prior experience running a Shopify app. A technical walk thru doc is also created based on the buyer’s request.
- Feature ideas doc
- Customer support process setup (zapier + google sheet)
- Guide to setup demo store
- Technical walk thru doc
As the buyer begins inspecting the asset based on my checklist (and attempts to migrate the app to his own infra), he bumped into an issue to keep the app running. We can only help so much with the acquire.com chat – so we eventually jump on a call with Rao (my dev partner).
The issue was then promptly solved within 24 hours from the call.
As the buyer marks the asset transfer completed, escrow.com then starts sending me my closing payment. (we are only doing 1 milestone as it is a simple app – from what I see you can set multiple payment milestone in escrow.com if the deal is structured to have multiple milestones)
Did I make much $$$
The combination of the app revenue since its launch + the app sales let me breakeven on my initial investment.
It is simply a 4 digits (thousands) exit – I didn’t make any extra $ from my initial investment.
Last word
As someone who learns through practice, the whole process is a refreshing journey for me.
Having done it once makes me feel empowered to do it again. While I have no plan to sell my other app in short term, I definitely would start keeping things organised in preparation for an cleaner sale process in future. A good place to start would be a wiki to document the various process and an asset checklist.