For app developers Sam Henning, Steve Jones and Alex Dover, listing one of their products on a marketplace led to an unexpected outcome: the acquisition of a set of apps they hadn’t intended to sell.
The UK developers had been building Shopify apps through their bootstrapped company Union Works since 2017. In 2021, they turned to Acquire.com, to find a buyer for two of their apps — an HTML sitemap app and birthday email app, Henning said.
Happy Birthday, their app which allows Shopify merchants to send personalized emails to customers offering discounts on their birthdays, caught the attention of Shop Circle, a London-based e-commerce software company.
“We got chatting, and after an initial get-to-know-you call, they started to express an interest in [Order Tagger and Customer Tagger],” Henning told us, referring to two other apps Union Works had developed but had not listed for sale.
Order Tagger helps Shopify store owners with order management, while Customer Tagger allows merchants to categorize and segment customers based on past purchases. Order Tagger grew to be Union Works’ biggest app during the pandemic as online ordering surged, Henning said. At its height, Order Tagger processed 300,000 daily orders for more than 2,000 different Shopify brands.
Order Tagger and Customer Tagger were growing quickly and much larger than the birthday email app, Henning said.
While the founders weren’t planning to sell Order Tagger and Customer Tagger, the demands of growing the apps were becoming too much for the Union Works team, which consisted of the three founders and one additional employee.
“All our apps were growing and getting to a point where we would need to hire to keep up with the pace of development and support,” Henning said. “We’ve always preferred to stay lean, which is why when a good offer came in … we felt it was the right time to let go.”
In December 2021, Shop Circle acquired Order Tagger and Customer Tagger in a 7-figure deal, a multiple of 3-4x the apps’ annual recurring revenue (ARR). The acquisition did not include Union Works itself, only the apps.
While Union Works did not find a buyer for the birthday email app, the HTML sitemap app they had listed on Acquire.com also sold in November 2021. That was a smaller deal to a different buyer, Henning said.
What due diligence looked like for the Union Works team
The acquisition process took two months from the letter of intent (LOI) to closing the deal, Henning said.
“[Due diligence] was broken down into three phases: technical, financial and performance,” he told us.
The technical phase involved sharing the apps’ code with Shop Circle’s development teams. The financial phase consisted of reviewing the app’s revenue and costs. The performance phase covered various topics, including churn rates, growth rates, marketing activities, support issues and features to be built.
Henning said being well organized helped his company complete the acquisition efficiently. He advises other founders looking to sell to “make sure you’ve put plans in place for a smooth transaction to happen.”
Life after the Shop Circle acquisition
The Shop Circle acquisition included a three-month handoff period where the Union Works team could answer technical questions and provide support.
“[Shop Circle has] since grown the apps further and added a lot more apps to their portfolio,” Henning said.
After the acquisition, the new owners changed the names of the apps to SC Order Tags & Flows and SC Customer Tagging, according to a Shop Circle blog post.
As for the Union Works team, they’ve continued developing more Shopify apps, including one called Grapevine, a post-purchase survey app.
“We’re particularly excited about Grapevine,” Henning said. “It was recently awarded a Built for Shopify badge, which is recognition from Shopify of the quality of the app.”
While he said he was sentimental in handing their former apps to a new owner, it was the right move.
“We’re always open to selling our apps at the right price,” he said, especially to a team that can take them to the next level.
