Getting the Deal Done: Inside Dating M&A
Max Schapiro of Wolfson Partners joined the GDI Conference virtually to talk about getting dating deals done. Wolfson Partners has worked on transactions involving Sniffies, Juliet AI Labs, Spark Networks, Christian Mingle, Jdate, HER, EliteSingles, The League, Grindr and Lex, among others.
Max said buyers are more sophisticated today and founders need to know their numbers. Key metrics include engagement, user and revenue growth, conversion, monetisation and retention. Market density, organic growth, gender balance and opportunities to improve margins can also affect valuation.
Preparation is important. False starts can kill deals, and where several buyers are interested, Max said they should be kept “in lock-step”. He also said the first serious buyer to show interest often ends up being the buyer.
Max stressed that founders should be upfront. They know their company better than anyone, and anything negative is likely to come out during due diligence anyway. Trying to hide something rarely works.
The same topic came up during GDI’s panel on acquisitions and exits. Colin Hodge, founder of DOWN Dating, said buyers value high retention and active, monetised users, as well as understanding the mindset of those users. Karima Ben Abdelmalek, CEO of happn, said buyers may be looking for something specific, such as technology, a strong geographic position, a niche audience or the skills within the team.
Alistair Shrimpton, a longtime Match Group executive, said geography can also be attractive. He described Match Group as a numbers-driven business, but said the CEO becomes important too, noting that Match has often kept CEOs in place following acquisitions.
Asked what they would do differently, Colin said he would make sure other alternatives were lined up rather than becoming too focused on the acquisition. Karima said founders need to remember that they still have a company to run during what can be a long process. Her advice was to split responsibilities across the team and communicate directly with the buyer rather than leaving everything to lawyers.
Alistair also stressed the personal side of a deal: build a relationship with the buyer’s CEO and don’t let the bank run the relationship.
