Our Mission To Founders

In March 2019 I was standing next to my wife in the middle of a baseball stadium in Taoyuan City, Taiwan, watching Ed Sheeran coming to the end of a 90 minute performance.

I’m not the world’s biggest Sheeran fan, I have too many Y chromosomes for that, but it had been an enjoyable experience. Ed performed the entire show by himself, just with a guitar and a loop machine.

It was the kind of concert that makes a welcome distraction from the trials and tribulations of every day life.

It was also a slow enough pace to allow my mind to wander and reflect.

Here I was in Taiwan, a country I had come to as a 23-year old to teach English for a couple of years in 2008.

It had now been 11 years.

My wife was around 7 weeks pregnant and we had just found out we were going to becoming parents.

I was three weeks away from closing the sale of my first big business, HumanProofDesigns, for the sum of around $700,000 USD.

Enough money to not have to worry about money for a little while, and give me some seed capital for this new idea I had been working on, a business called Onfolio.

Life was looking pretty good.

As Ed left the stage to begin the inevitable “Will he, won’t he” pantomime where the audience ask for an encore, I took a second to glance at my phone to see what time it was.

A message had popped up from the broker working on the sale of HPD.

"Hi Dom.

Bryon has looked inside the Paypal account and can’t get the reports and numbers to add up to the numbers you reported on your PnL. As such he is leery of closing the deal and wants to pull out.

I’ve got him to agree to have a call with you at tomorrow morning 8am your time to sort this out, but he’s pretty adamant.”

Shit.

My heart didn’t quite sink, it did that thing it does that nobody knows the word for.

The feeling you get when the world slows down, your mind races, your heart beats fast enough to generate its own gravitational pull, and sucks you down inside your body.

Your skin itches as the first prickles of a sweat start to overwhelm it and you wonder if you’re going to vomit.

Yeah that thing.

The due diligence period had been tricky because like a typical first-time Internet entrepreneur I co-mingled funds between HPD and a couple of other businesses, I used my paypal account more like a business checking account, and I used cash accounting (didn’t understand or see the point of accrual).

As such, it had been a painstaking process for me to create an accurate PnL based on what charges belonged to HPD, what charges were irrelevant, and what the true PnL was.

The buyer was a finance guy who was used to connecting things to Xero and consolidating the numbers, and this was the issue.

My numbers were real, but he couldn’t get his fancy pivot tables to reflect that, and assumed I was lying.

Anyone who has run (or performed due diligence on) an online business can relate to the issue.

It can be both true that a business owner is telling the truth about his or her numbers, those numbers can be correct, and yet it is impossible to verify using the traditional methods.

And that was our problem.

Now back to the concert.

Ed was back on stage performing the encore and struck up the first few bars of Perfect.

I was rapidly trying to calm myself down as my mind raced through possibilities.

Ok Dom, you know you aren’t lying about your numbers and they’re real. Bryon just needs to be walked through them (again) and get comfortable with them (again). The money coming into HPD is real, the sales are real, the expenses are real, the customers are real. We’ll do the call tomorrow and it’ll be sorted out.

Now get back to the show and enjoy Ed’s best song.

Didn’t work.

For 3 years I couldn’t listen to Perfect without feeling sick.

Which probably puts me about on par with how most people feel listening to Ed Sheeran.

Over the next few weeks we had multiple calls, discussed prospects ranging from using an earnout, putting the business back on the market, suing him (he had signed the asset purchase agreement and had taken over the business, but was refusing to release funds and insisted on giving the assets back), or just working harder to help him get comfortable.

Eventually he WAS able to see the numbers were real and coming into the bank account as reported, and the deal closed about 4 gruelling weeks later.

This was a period where I lost 5kg in a couple of weeks. I was waking up at 6am with butterflies every day, and I was incredibly anxious.

Deep down I knew it wasn’t necessarily a long term problem because:

a.) The fundamentals of HPD were sound and Bryon would eventually see that and b.) If he didn’t, I could just take the business back and keep on running it.

But it’s not that easy.

Selling a business, particularly the business you’ve poured your soul into for the last few years, is a rollercoaster even when it goes smoothly.

I just didn’t want to face the possibility of the sale collapsing.

I took a hit of about $100k on the sale because Bryon couldn’t get comfortable with everything, and I just couldn’t face going back to market and selling to someone else, who probably also wouldn’t have been comfortable with my ad hoc bookkeeping.

To Bryon’s credit, he got comfortable and closed the deal eventually, despite it being uneasy for him.

I had my money (it actually hit my HSBC account on my birthday), Bryon had his business, and I was ready to hit the ground running with some money to start Onfolio.

Which was useful, because I had hired Esbe van Heerden, Onfolio’s President, about two weeks before and didn’t really have much money to pay her without the HPD sale.

As it happened, Bryon emailed me 9 months later at the end of 2019 saying something along the lines of “Hey, HPD had a really good year, it earned a bit more than I expected which was a nice surprise”.

Yeah, who’d have thought it?

This experience shaped me in many ways.

It meant that when Onfolio hit rocky waters in 2022 trying to get our IPO over the line, I was already a veteran of shit hitting the fan and knew how to keep things moving forward while faced with extreme anxiety and financial fears.

It meant that as a buyer, I can fully relate to sellers and the experiences they go through and do my best to insure we never put a seller through a similar experience.

In reality due to the complexities of M&A it is inevitable that a seller is going to have a rough ride when doing business with us, and will experience similar anxieties. I can only do my best to empathise with them when this occurs.

Most sellers are doing it for the first time, and are naturally nervous.

They’re nervous that you’re going to hate their business.

They’re nervous that you’re going to lowball them.

They’re nervous that you’re much more sophisticated at M&A than they are (which is true).

They’re worried that their broker isn’t really in their corner and will just get them to accept any offer.

They’re worried their team will hate them for selling. They’re worried you’ll fire their team when you take over.

They’re worried people will tell them they sold for too little.

They’re worried they’ll sell for too little.

They’re worried that you won’t actually close and you’ll just waste their time, or worse, steal their business secrets.

Sometimes, they focus on the taxes they’ll pay. Sometimes they focus on the structure of the deal.

Most of the time, they just want to not be taken advantage of.

They’re exhausted but they’re relieved.

They’ve built a business that someone wants to buy.

They’re ready to move on to the next phase of their life, and buy a house, or start a family or just sleep on weekends for the first time in years.

I know this because I started out as one of them, and my first major sale was worse than theirs will be.

I never go into a negotiation looking to win it.

I just want to find someone with a wonderfully built business and a strong team, and give them the money they deserve for it..assuming we are agreed on the amount.

Onfolio might not look like a mission-focused business, because we are a collection of businesses where financials and compounding are the core of what we set out to do.

But we have a mission.

Our mission is to disrupt the micro private equity space in order to find a way for these small, passion-built businesses with deep embedded knowledge and founder-driven teams to find a new home without collapsing post-exit.

Our mission is to give small online business owners a way to take chips off the table without traditional PE firms or VC money ruining them.

Our mission is to help founders be able to go to concerts and smile that their business is in a new home and to help them relax.

We won’t always achieve our mission.

We’ll inevitably disappoint some founders or need to pull out of a deal. That’s just the way it goes.

But every time I hit send on some unsavoury news I’ll be aware what it’s going to do to the mindset of a fellow founder, and that’s what will keep us on course.

8 months after that Ed Sheeran concert our daughter was born and we named her Lyra. We chose a name we liked, but one we thought was unique and wouldn’t become too popular.

Half a year later, Ed had a daughter and named her Lyra, and it’s now a top 30 girl’s name in the UK.

Can’t make this stuff up.