Acquire.com x Sunset Partnership

Foreign.

I'm here with Brendan, the former founder of Toy Box. That was quite a common. Now the founder of Sunset. Brendan, how you doing today?

I'm good, man. How are you doing?

Good. I know this is a complete off the cuff podcast and I'm super excited to dive in, but for those that don't know you, do you want to give just a brief introduction of yourself?

Yeah, of course, of course. Well, I went through, you know, know y commoner back in 2018, started my first company which was Toy Box. Ended up being like a very early user of acquire.com. i think it was, it was called like acquisition. It was called something different then Microcore.

I remember when Micro Acquire and it was, it was just me running the company when Toy Box came in and I remember helping you personally and it's yeah, good to catch up.

Four years later, I know Andrew was, I knew they would crush it because Andrew would email me so quickly and I was like, what is this guy up to? And we did like a chat after. But it was incredible experience. Like we, we post on, yeah, Micro Acquirer at the time. We got like so many inbound interest so fast. I think we sold in like maybe, maybe like five days. So anyways, did that start another company kind of right after? Unfortunately had to wind that one down, didn't sell that one. And yeah, went through, you know, very long, brutal of, you know, shutting a company down with all the legal and accounting and the, you know, massive headaches there. And so about a year ago, a bunch of my other friends, you know, they were having companies starting to wind down and coming to me asking for advice and that's kind of how this idea of Sunset came to be where, yeah, we're, we're the one stop shop for, for dissolutions. We help tech companies wind down, do legal, accounting and all the operational aspects involved.

I like that because, yeah, I mean startups have a high failure rate. They say 90%. You know, I would argue it's, it's even higher than that. And then most founders don't know what to do when, you know, they have to go and shut down their company sometimes to their detriment when they're out of capital and you know, they, they aren't able to shut down the company properly. Can you walk me through just exactly how Sunset works, how it makes the process easier? Maybe the old way and then the new way. With Sunset.

Of course, of course, yeah. So the old way of shutting down your. I mean we've seen a, we've seen a bunch of different things, but at least the way I did it, you know, first you're going to try and probably go find legal counsel but like no one's going to want to work with you, especially if you don't have someone yet. Legal, legal counsel hates doing dissolutions. It's like not super lucrative. Obviously they can't build long term relationships and it's just like really awful grunt work. Then you're also going to need to find an accountant. If you don't already have an account, it'll probably be pretty hard to find one too. They also hate doing dissolutions because yeah, no one likes dealing with this stuff. But yeah, I mean there's just a lot, a lot of steps involved. I won't kind of bore everyone and go through everything but you know, you have to figure out what to do with your ip. You have to figure out what to do with any other non cash assets to liquidate. You know, if you have certain debt obligations or creditors, you have to deal with those. You have to sign all these different consent board and stockholder and liquidation manager agreements to kick things off. You have to build out a waterfall. If you're redistributing any capital potentially do save cancellations or no cancellations, you know, in there you have to cancel all your subscription. I mean I can go on forever but like there's massive amounts of steps and a lot of like small gotchas and so like when I went through my dissolution, you know, I thought I did everything. It took me like nine months and then I forgot about like workers comp in New York and a year later I had like a 2k bill that I had to pay out of pocket. So it's just like a pretty awful, awful thing to go through and so sorry, what we do is we just handle all of that. We've done like dozens and dozens of dissolutions of tech companies and we do all the legal work, all the accounting work and again all that kind of operational like how do you communicate with customers and investors and all that other stuff. So that's, that's really what we do.

Nice. I think that's, it's such a needed service and I know it's not, you know, probably a product that most startup founders want to use but you know, if it gets you to a point where you can, you know, get on your feet faster and you know, take another swing at the, at the ball if you will and get, get back onto another startup, I think, I think it's fantastic. The next question is we were talking about this before we started recording and you know, we facilitate a lot of asset purchase agreements. So when that happens, you know, the buyer will purchase assets and then they leave behind a entity. How could Sunset potentially help people that business is going great. You know, they sell the ass to a buyer but they're still left with this entity behind. How could Sunset potentially help in those scenarios too?

Yeah, it's a really good question. A lot of our customers actually, you know, in a very similar position as this. So it's post asset purchase sale and you know, when you sell your company, you know, you might think you're done and you're like great, we sold it, we're good to go. But yeah, unfortunately, unfortunately like I mentioned, that's really like one aspect of dissolving an entity. It's a rather small aspect. There's all those other steps involved. And so yeah, we work with a ton of startups where you'll sell your assets, come to us and again we'll kind of take care of everything else involved with that, that wind down process. Post asset purchase sale. And yeah, sorry, just going way back to your point, like you're saying about moving on with founders. You know, about like 65% of the companies we work with, the founders have already started something new or planning on starting something new. So it's super. We think it's great for the ecosystem to like get people onto what's next and get investors onto what's next versus you know, dealing with this for, for months at a time.

Nice. Yeah, we see that a lot with acquisitions too is, you know, when people go to sell their businesses, they already have another business that they're working on and then you know, that's usually a top reason for, for selling a business. So if, if someone sells a business on acquired.com, it's an asset sale, the buyer buys all the assets, it goes over to Sunset. Can you walk through just maybe the differences between like a full dissolution of everything because it's kind of like an empty entity at that point, if you will. Is there any sort of difference between post acquisition, post asset, asset acquisition compared to just a complete company wind down?

Yeah. So you know, you're still like I mentioned, even post asset purchase sale, you're going to still have the majority of the steps. The one nice thing is that you know, IP can be pretty tricky in a wind down. So you know, getting into the nitty gritty a little bit. So if you've raised capital, let's say you know, you have to distribute all the assets pro Rata and so let's talk about a code base. You know, if you've got a code base, you haven't sold it yet. It's like, okay, well what does that mean? How do you distribute code pro rata to like 12 different investors? So the really nice thing about dissolving an entity post asset purchase sale is you've kind of covered your bases on the IP front. So you know, there's been a fair market value, there's been a proper sale and now you know, you can do the rest of the steps without having to worry about that. When you don't go through that obviously then we have to help you figure out what to do with your ip, whether it be auction it, open source it, you know, if there's self assignment involved, things along those lines.

Gotcha. So in terms of, you know, if users of acquire.com you know, wanted to use your service, what are, what are some of the best use cases? I know we've, we've kind of covered them but just to kind of double down on maybe like the top two or three would they be.

Yeah, I mean to user service definitely if you, if you sell your assets but you're, you're, you have again this like entity that is still around, we can just help take care of that so you can kind of move on to what's next, start that next company, get that next job and do whatever you need to do and don't need to worry about this because again if, even if you raise money and you sell your assets, you need to figure out, you know, how to redistribute this capital, what's the waterfall and kind of liquidation preference stack that I need to be dealing with. And again, all the foreign qualified states, all your state and federal tax returns, I mean the list is endless of things that you'll need to, you know, kind of be saddled with and we can just kind of help take all that burden off of you and you can again like do what you do best, which is like create new startups and sell them and not have to deal with like 50 government agencies you need to call basically nice.