Baremetrics: The First Buyer Vanished After 6 Months of Due Diligence — the Road to a $4M All-Cash Sale One Year Later

Stories of failed M&A almost never surface. Broken deals are buried by both confidentiality and the urge to save face. Josh Pigford, founder of the SaaS analytics tool Baremetrics, wrote about both: the collapse, a buyer who vanished after six months of due diligence, and, a year later, the $4M (about 600 million yen) all-cash sale. Take-home pay, team payouts, the treatment of investors, even his regrets, all disclosed on his own blog. For the “Open Startup” that had kept its revenue dashboard public for years, this is the final chapter.

Seven Years in Overview

At the time of sale, the company had over 1,000 customers and a team of 10. Seven years of “slow and steady” growth with no dramatic inflection points, by his own summary.

Anatomy of the Broken Deal — 6 Months and $20,000, Gone

The failure of the first negotiation was not mere bad luck, it had structure. The buyer had misrepresented its own financial position, and after consuming six months of due diligence, roughly $20,000 in legal fees, and enormous document-gathering time, simply disappeared. “Nearly twenty grand in legal fees and months of compiling due-diligence documents (and they just vanished.” Throughout, Pigford was torn away from growth work, an experience he describes as “brutally draining.” An exclusive negotiation with a single party is a structure where you bet everything on the buyer’s good faith) and when you lose that bet, the cost lands three ways: time, cash, and opportunity.

One Year Later: What He Changed in Deal Two

The terms with Xenon Partners are designed as the mirror image of the previous failure.

Most acquisitions demand the founder stay 2–4 years (an earnout). Pigford refused and took complete freedom. He admits that “the no-earnout condition was the biggest constraint on the purchase price.” Other buyers offered more money, bundled with lock-ins. Price, freedom, and speed cannot all be maximized at once, and he resolved the trade-off on the side of taking less money. Against the “usual haircuts”, working-capital adjustments after LOI eroding the take-home, he pre-empted with the $3.7M guarantee clause. Every lesson from the previous year’s collapse is inscribed, term by term, in this deal.

Where the $4M Went — the Full Breakdown, Published

The $4M price was 2.65x the ARR at the time (publicly around $1.5M), squarely within the standard SaaS multiple. He himself writes that “most acquisitions happen at this level, or below it.” What is distinctive is that Pigford published everything (the breakdown, the emotions, the regrets) on his blog.

Take-home: $3.7M (about 550 million yen). The 10-person team shared a $300K bonus pool. Option holders were paid out the full value of their vested rights, and employees without options received bonuses too. Everyone kept their jobs on identical terms, with no forced retention. Meanwhile, General Catalyst and Bessemer, who had invested $800K, agreed to write off the investment (effectively zero recovery). Even General Catalyst’s reply is published: “Respect for the last seven years of work. Grateful we could be part of it.” The sale proceeds also qualified for the US QSBS (Qualified Small Business Stock) federal capital-gains exemption.

The VCs’ waiver of $800K is the crux of this case. A $4M sale is a failure by VC fund math, yet a substantial outcome in a founder’s individual life. In every “small exit” of a seed-funded startup, this asymmetry of interests necessarily appears. In Baremetrics’s case the investors stepped aside amicably, but that, too, was the product of a relationship built on seven years of transparent operations.

Why Let Go After Seven Years

The account of motive is equally candid. Pigford defines himself as a “maker” and a “starter.” When he sold TheAppleBlog to Gigaom in 2008, Om Malik called him a “starter,” and the word stuck with him ever since. “The person who is good at starting things and the person who is good at growing and managing them are not necessarily the same.” Baremetrics was his “most successful project,” yet for seven years he thought about it every day and piled up sleepless nights. Even the record growth months after COVID were merely a reconfirmation of the stress of managing 10 people and 1,000 customers, “the early-phase creativity had been gone for years.” After the sale he wrote that he would “stay away from software for a while, do something tangible, art or music”, and then went on to launch Maybe, a financial-planning startup. Starters, it turns out, start.

Reading Behind the Numbers

“Vanishing buyers” are a real M&A risk, and the only countermeasure is running the process in parallel. The first negotiation that consumed six months plus $20K was an exclusive process dependent on one party. Together with Fin vs Fin collecting 10 LOIs in three weeks and DashThis surviving two broken deals, the principle is confirmed again here: always hold multiple buyers. Treat broken deals as part of the process.

The brand of transparency converted into trust during due diligence. A company that has published its revenue for years cannot plausibly be suspected of cooking the numbers. The extraordinary six-week close and the $3.7M guarantee were both terms made possible by the low cost of verification. In exact opposition to Zen Arbitrage taking a price cut over a churn-calculation error, daily disclosure is the strongest due-diligence preparation there is.

The sale to PE functioned as the founder’s graduation. Handing a product you have run for seven years, passion depleted, to operations professionals, and moving on. The same pattern as the Usersnap founders: exit, then next challenge.

Points to Discount

The “$3.7M guarantee, no earnout, six-week close” package rested heavily on the unusual collateral of seven years of public data. There is no guarantee a privately-run company could extract the same terms. The 2.65x multiple, too, is a valuation of a company deliberately run at break-even (profits unoptimized). A high-margin SaaS would compute differently. The QSBS exemption is specific to US tax law, a different premise from Japan’s capital-gains taxation on share transfers. And the decision to “sell during the best growth period ever” was a life-design choice, not a financial maximization, imitating it on price alone would be a misreading.

Conditions for Reproduction

For a Japanese reader, the structure is the part worth taking. Hold multiple buyers and budget broken deals into the process. Let routine disclosure of your numbers double as due-diligence preparation. Decide before negotiating which of price, freedom, and speed you will prioritize. These three apply at any scale of business. What does not exist as-is in Japan’s market: the deep bench of PE firms buying small SaaS one after another, a tax regime like QSBS, and a VC culture able to quietly write off $800K as “tuition.”

Further Reading

• Fin vs Fin — defending price with a bundle of buyers
• Zen Arbitrage — the counterexample where sloppy numbers invited a price cut
• Gumroad — another landing for an Open Startup of the same era