The archive · Small Business & Money · Financial decision · 2016
Codetree closes at $128k after a Friday-night full-price offer with a Sunday deadline
Three partners who had just picked issue tracking as their next business bought Codetree, closing at full asking before the broker's wider market opened.
Codetree
What it had to solve
Arif Bandali, Kareem Mayan and Ryan Stocker had just sold one SaaS and, three days earlier, chosen issue tracking as the niche for their next venture. Then broker FE International emailed them about Codetree — Derrick Reimer's 18-month-old GitHub-issue tracker, on autopilot and for sale at $128,000 (3.5x SDE) — through an early-access list that would hit the wider market a week later if no offer stuck.
How it works
In May 2016 Arif Bandali, Kareem Mayan and Ryan Stocker were two steps into a plan to build an issue tracker as their next business — they had sold a SaaS before, defined success for the venture they called Next Biz, and picked the niche three days earlier. Then FE International, a broker they had dealt with when selling, emailed about Codetree: Derrick Reimer's 18-month-old issue tracker for GitHub, on autopilot and offered at $128,000, or 3.5 times seller discretionary earnings.
Codetree matched the niche almost too well — existing customers to call, a steady stream of trials, a familiar stack, and a seller with credibility from Drip and the Micropreneur community — but it carried the risks any buyer would fear: GitHub could absorb the category, and growth had been flat since October 2015, meaning churn was eating new revenue. The partners made a first offer of $103,500 all cash (2.8x SDE) with a non-compete, an NDA and five hours of training a week for 30 days. The broker declined and held firm at the asking price.
FE's early-access list worked for the seller: deals that attracted no acceptable offer went to the wider market at the end of the week. With a poor BATNA — the alternative was building from scratch — the partners decided the roughly $8,000 each it cost to move from their offer to the asking price was cheaper than walking away. They sent the full $128,000 offer on a Friday around 6pm with a deadline of Sunday 9am, deliberately denying the seller a full-price number to shop around on Monday; Derrick accepted the next morning.
Two weeks of due diligence followed, including posing as Codetree's own customer-satisfaction agents on calls with users. The buyers found the prospectus had overstated SDE by $652 and identified $4,223 of collected-but-unserviced revenue at closing; when the broker pushed back, they conceded both rather than risk the deal. The account is candid about the cost: without a position they were willing to walk away over, scarcity bias and a weak BATNA turned what should have been negotiation into paying full price and accepting terms they disliked.
Why it lands
- Paying the full ask on a Friday with a Sunday deadline removed the seller's reason to wait: the deal was accepted before the broker could take a full-price number to the wider market on Monday.
- The early-access list was a clock both sides could read — the seller used it to test demand, and the buyers used the same deadline to force an answer before the market opened.
- A weak BATNA decided the negotiation: with build-from-scratch as the only alternative, about $8,000 per partner to close the gap looked cheaper than walking away, so later disputes were conceded too.
- Buying instead of building compressed the risky part of the plan: Codetree came with customers, trials, code and revenue data, replacing months of guessing whether an issue tracker could find users.
What it did
Codetree changed hands at the $128,000 asking price, the deal closed on 7 June 2016, and the three partners had run the business for almost four months when the account was published. The post drew 313 points and 77 comments on Hacker News on 6 October 2016, and the same blog later announced Codetree as a launch partner in GitHub Marketplace.
What you can take
A Friday-evening full-price offer with a Sunday deadline closes before the deal reaches a wider market — and a weak BATNA is why you end up paying the full ask.
Since then
The three partners owned and ran Codetree after the June 2016 close; later posts on the same blog announced it as a launch partner in GitHub Marketplace, showing the acquisition being actively developed rather than shelved. The article itself ends as a negotiation post-mortem — its authors noting that failing to play out scenarios in advance let scarcity bias and a poor BATNA push them to full price, a mistake they said they would not repeat.
Sources
- What it's like buying a $128k side project
- What it's like buying a $128k side project (Hacker News discussion)
spotted an error? The archive wants to know.
Your turn
You just read one. Describe the brief you are staring at, and see who has been given the same problem.
Free account · 3 free questions · no card