Simon Lorenz Story | The 15X Multiple That Let Him Walk Away In 12 Months
- 21 hours ago
- 3 min read
About This Episode
At some point every founder needs to ask a simple question: is it better to own a big slice of a small pie, or a smaller slice of a bigger pie?
In this week’s episode, we hear from someone who chose a smaller slice of a bigger pie. Simon Lorenz co-founded Klara, a patient communication platform for medical practices, and raised roughly $32 million across six rounds of outside capital before selling to ModMed at 15 times forward revenue.
The path there was not a clean one. Every funding round was painful. Most of them came down to a single term sheet, take it or leave it, because an early valuation had set an equity story Simon spent years chasing.
He hired salespeople he later had to fire. He took on an apparatus he could not easily shut off. And when ModMed’s CEO first reached out, Simon almost ignored the email because the company had finally started humming and he was preparing another round.
What turned a distraction into a deal was Simon’s willingness to act genuinely uninterested, which pulled ModMed up to a price that made his eyeballs pop out. What let him walk away twelve months after closing was a single clause his lawyer negotiated into the contract.
In this episode, you discover how to:
Structure your equity story so a high early valuation does not box you into an impossible next round.
Negotiate a “good reason” clause so a change in your role triggers full acceleration of your earn-out.
Pair a leading indicator for customer success with a sales efficiency metric to decide when to hire and when to pause.
Price per provider in a way that holds the line on bigger accounts instead of discounting your way into a smaller deal.
Get an unsolicited offer taken seriously by acting genuinely uninterested, which is exactly what Simon did with ModMed.
Walk away from an acquirer in twelve months with your full proceeds, instead of grinding through a three-year earn-out.
About our Guest
Simon Lorenz
Simon Lorenz is an entrepreneur and investor best known as the co-founder of Klara, a healthcare technology company that improves communication between medical providers and patients.
He helped scale the business into a widely adopted platform, leading to its successful acquisition in 2021.
Today, Simon focuses on investing, advising, and building businesses, with a focus on deal-making, acquisitions, and value creation.
Definition of Terms
Due-Diligence: This is a comprehensive appraisal of a business or investment undertaken before a merger, acquisition, or investment. It seeks to validate the information provided and uncover any potential risks or liabilities.
Earn-out: This is a financing arrangement for the purchase of a business, where the seller must meet certain performance goals before receiving the full purchase price. It reduces the buyer’s risk and aligns the interests of both parties post-acquisition.
Roll Over Investor: A rollover investor, in the context of selling a business, refers to an individual or entity that rolls some of their proceeds from the sale with the buyer. This strategy allows the seller to defer capital gains taxes and potentially leverage their expertise or resources in a new venture.
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