I had a chance last week to talk with OurExplorer founder and CEO Dave Cunningham about the sale process and what he learned as the boss of an online travel start-up. [for more background on the company see my 2008 interview with Dave]
BOOT: How was the sales process?
Cunningham: It took about fourteen weeks to complete. Six weeks of work in the background then eight weeks of due diligence to confirm the value and the legals.
BOOT: 14 weeks to do a deal – that’s quite quick?
Cunningham: It felt very long. For a small team due diligence is a lot of work. It is a massive risk as a start-up to engage in a sale process. The company we lost 10-15 weeks of growth in the process.
BOOT: What did you learn from the sale process that would benefit other start-ups?
Cunningham: Three steps to us building out OurExplorer
- Build the platform an website
- Establish the supplier base (guides); and
- Build demand
I wish I’d had more paper evidence of supplier’s commitment. Both in terms of contracts and exclusivity. OurExplorer would have been worth a lot more with paperwork on supplier.
BOOT : Did you user a broker or advisor? If so, do you have any advice in using an advisor?
Dave: Yes. If getting biz broker to help – insist that they take less up front and more on the back end. This made it easier for us to see who had the contacts in the industry. We negotiated to double exit fees and reduce upfront. Any company that said yes to the deal provided us with confidence of the value of their network.
Too many start ups have the same number of companies on their power point deck as the exit. In Australia everyone has Fairfax [large AU media company] or News [News Ltd, the AU arm of News Corp] on their slides as a buyer. Need to have a profitability strategy in your plan. Cannot be reliant on a sale exit – especially in Australia where there are limited buyers.
BOOT: What are the integration plans with Viator?
Dave: Viator have confirmed that they will keep the brand. Viator had two options
- integrate product – select the top 1000 or so guides (out of 2,400) and add them into the Viator product set; or
- keep the OurExplorer brand and dedicate effort to grow the business and brand
BOOT: What’s next for you?
Cunningham: One job left. I am going to the World Tour Guide Association conference in January for a good quality hand over. Then done. Then looking to buy into another start up. To help them drive sales and marketing.
OurExplorer are the definition of the long tail in travel (I mean that in a good way). They are the first (that I know of) to provide searching, rating and booking of individual guides. I think it makes a good addition to Viator.
For my 2008 interview with Dave see this post