[airstrike]

Sorry, but the more I read this, the more I feel like KPMG is the main reason for the failed process...

> And so in September, we granted exclusivity to a bidder. (...) And so began the extensive due diligence. KPMG had warned me about this phase right at the beginning of the process and from memory, the word they used was something akin to "onerous".

You're supposed to have your ducks in a row before you launch the process, not after. As you're drafting your IM, you should also be preparing a virtual data room with as much data as you reasonably expect to be asked, and board minutes are the absolute minimum that any advisor should know...

> Among literally thousands of other requests (seriously - the total number was four figures)

And you don't have to respond to all of them! You can answer any request with "The company believes this can be answered as a matter of confirmatory diligence"

From literally dummies.com[0]

"Sellers can’t be afraid to remind Buyers that due diligence is confirmatory in nature, meaning Buyer should spend the time confirming Seller’s information and not planning, creating, and combining the two entities. The Buyer should take care of post-closing activities after closing! Otherwise, due diligence will drag on longer than necessary."

[0] https://www.dummies.com/business/corporate-finance/mergers-a...

[alexpetralia]

I also distinct got the sense that KPMG bungled this process. They seemed to bafflingly parlay Troy's position of strength into a position of weakness. Of course, all they really cared about was the bill at the end!

[mrkurt]

If your company is getting shopped to 43+ other companies, it's not a very strong position. This seems like KPMG responding to their incentives: sell the company and make like $250k, or don't sell the company and make "the biggest bill I've ever paid in my life".

[web007]

I'm curious if Mr. Hunt has ever been through either side of a diligence process.

Everything in his list sounds like what you need to check the audit and compliance boxes at any "real" company. I've been through a dozen audits from prospective _customers_ that are worse than his description, even apart from our internal audits, so if someone was going to buy a company I'd expect essentially a superset of BS from all of those different inquiries. You sometimes answer the audit optimistically, then use that as your framework to write the policies and figure out how you're going to implement them before you submit your response. "How do you sanitize media for disposal?" "Oh shit, I guess we need a document that says how we dispose of media." - problem solved!

Yeah, it's rough. KPMG should have done their own diligence to see that he wasn't serious - if you're not willing to jump through some of those hoops then you're not ready for a big-boy company.

[txcwpalpha]

Agreed. I really feel for Hunt because the process surely is exhausting for anyone, let alone a sole business owner. But I have to wonder what he expected when he started to go down this path. It sounds like KPMG may not have adequately prepared him for this, or (based on my experience with consultants similar to KPMG) they probably assumed that he knew what he was getting himself into (he apparently did not).

That said, I don't put all of the blame on KPMG. It takes only a few minutes searching on the internet or speaking with advisors to learn that shopping for a buyout is a long, extremely hard process. In particular, I couldn't help but audibly laugh at Hunt's seeming incredulity at the request for "Documentation of the Company's technical operations". Hunt is trying to sell a tech company whose primary business value comes from the technical infrastructure, operations, and data. I don't want to sound too blunt, but...no fucking shit the buyers are going to want to know about his technical processes and infrastructure. Did he seriously think someone would even think about buying HIBP without investigating exactly what technical stack and data they are buying? Even for companies where the value isn't as based in the tech processes, nobody wants to buy a pile of steaming spaghetti code.

It should be common sense that this is the type of information that buyers would ask for. This list of tech processes and documentation of infrastructure is something that should have been put together first thing before Hunt even started shopping around.

[texasbigdata]

Also true. When in banking we generally ran 2 parties in parallel through final documentation.

By the way the game theory and signaling is intense!