OffDeal Aims to Boost Small Businesses' Exit Strategies Using AI Agents

Revamping Small Business M&A: OffDeal's Innovative Approach

Small businesses are the backbone of the American economy, employing almost half of the nation's workforce and accounting for 44% of the GDP. Yet, when the time comes for these owners to sell their enterprises, their choices can be dishearteningly limited. Many turn to small business brokers, pass the reins to their children, or simply close their doors for good. Meanwhile, large corporations often rely on investment banks like Goldman Sachs to secure optimal acquisition prices, a luxury rarely extended to businesses valued under $25 million.

Enter OffDeal, founded by former investment banker Ori Eldarov and ex-Meta engineer Alston Lin. This startup aims to democratize merger and acquisition (M&A) services by automating processes typically reserved for larger firms, effectively serving millions of small businesses. As a participant in Y Combinator's Winter 2024 cohort, OffDeal utilizes AI agents to identify promising acquisition targets, connect them with institutional buyers, and create compelling pitch decks—all while ensuring that users interact primarily with human advisers who leverage the technology for enhanced efficiency.

“The most significant transactions in life always involve a human touch,” Eldarov noted in an interview. “Previous efforts have often relied too much on automation and code, missing the personal element.”

OffDeal’s technology caters to both small businesses seeking buyers and buyers looking for acquisitions. In a demonstration, Eldarov illustrated how the platform works: by inputting a company’s website, revenue, and employee count, OffDeal’s AI agent scraped the site for essential information and generated a list of 150 suitable buyers, alongside relevant data on their acquisition history and alignment.

For buyers interested in small business acquisitions, OffDeal boasts a database of 2 million American small businesses that could be exploring exit options in the near future. The AI agents facilitate connections by intelligently matching buyers with potential targets.

Currently, OffDeal is engaged in contracts with nine institutional buyers, with an additional 250 on a waitlist, highlighting the demand for its innovative services.

While OffDeal's software could function as a stand-alone platform, Eldarov maintains that it's not designed that way. Although there was initial consideration for creating software for small business brokers, he chose instead to establish an advisory firm that employs the technology and competes with traditional brokers.

Concerns around AI reliability persist. OffDeal’s CTO, Lin, acknowledges that while AI challenges remain, advancements in models—such as those built on OpenAI’s GPT-4—have significantly improved the technology's dependability. This is why OffDeal, like many AI-driven companies, adopts a copilot approach, allowing AI to enhance human capabilities rather than replace them.

OffDeal charges a fee ranging from 5% to 10% of the transaction value, aligning its pricing structure with traditional investment banks. Eldarov is confident that his AI-enhanced advisers can facilitate a higher volume of successful deals compared to conventional small business brokers.

This concept of using AI to streamline repetitive tasks is not entirely novel—similar innovations have emerged in sectors such as legal and compliance. Nevertheless, new startups continue to attract funding across various industries.

Recently, OffDeal announced a successful $4.7 million seed round, led by AI-focused venture firm Radical Ventures. The startup plans to utilize this investment to expand its team of advisers and enhance marketing efforts, positioning itself as a transformative player in the small business M&A landscape.