Built to Sell Radio

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Ep. 65 The downside of accepting shares as payment from your acquirer Oct 19, 2016

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Doug Chapiewsky built CenterPoint Solutions Inc. into an Inc. 500 company with $5 million in revenue and more than $3 million in EBITDA before he sold it to Israeli-based Nice Systems. In this episode of Built to Sell Radio, Chapiewsky describes how to:

scrutinize the various currencies used by acquirers (cash vs. stock vs. options).
dress up your company to sell it.
use an office manager to increase the perception—and ultimately the value—of your company.
stimulate an unsolicited offer for your business.
structure your employment agreement to keep control of your employees after you sell.

Ep. 64 Two to Tango Oct 12, 2016

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Manny Fernandez started HomeBuyingCenter.com in 2007, just as the real estate market started to wobble in the United States. As it turned out, his timing was perfect as his site helped underwater homeowners unload their real estate.

In fact, Fernandez was generating so many opportunities for one real estate brokerage, that he received an unsolicited offer from them to purchase his business. He took their offer and parlayed it into a competing offer that helped provide the competitive tension to get a deal done – proving once again, it often takes two offers to maximize the value of your business.

Ep. 63 What Do You Need From The Sale Of Your Business? Oct 05, 2016

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Of course you want an all-cash offer at a beefy multiple with no strings attached, but what do you really need from the sale of your company?

That's a question Dr. Frank Gibson thought a lot about. He had a successful healthcare business but had stumbled on a new opportunity in a related field. He wanted to sell his company to fund the new idea and, at the same time, needed to retain the rights to some intellectual capital in his old business.

Ep. 62 How One Pivot Doubled The Value of This Business Sep 28, 2016

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James Garvey and his partner grew Objective Loyalty from a standing start in 2005 to $2.5 million in EBITDA before they decided to sell their email marketing platform.

Garvey's investment banker spent six months shopping the deal without a single offer. Then Garvey decided to switch tactics and approach the strategic partners who already knew the company well.

Garvey got an offer and was able to double it quickly through some shrewd negotiation. Find out how Garvey 2X'd his original offer by listening now.

Ep. 61 How To Structure Your Earn-Out Sep 21, 2016

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An earn out is a way to bridge the gap between what you want for your business and what a buyer is willing to pay. In an earn out, a portion of the sale price of your business is set aside for payment in the future if you reach certain goals the acquirer sets for your business. You'll need to stay on for a few years as an employee of the acquiring company to lead your team to hit the earn out goals.

Most owners would prefer all of their cash the day they sell their business and most buyers would prefer to pay the entire amount contingent on future performance. Deals get done in the middle where some portion of your money is paid up front with another slice available if you meet your goals as a division of the acquiring company.

Traditional earn outs are typically tied to the profitability of your company as a division of your new owner and they are fraught with problems. Buyers may thwart you ability to hit your number in any number of ways. In this episode of Built to Sell Radio, you'll hear from Mac Lackey, a veteran entrepreneur who took an alternative approach to structuring his earn out which put up to 80% of the sale of his company, Kyck.com, at risk.

You'll learn the surprising approach Lackey took to structuring his earn out to maximize his shot at hitting his number.

Ep. 60 When To Sell Your Business Sep 14, 2016

Show notes

Peach New Media was launched in 2001 by Dave Will, who carried the title "Chief Peach" until he sold the business in 2015. Will had built his learning-management software company up to 40 employees when he received an offer from the private equity group Accel-KKR that he simply could not refuse. In this interview, Will shares his wisdom on:

- How to create a company acquirers will want to buy.

- How to figure out when to sell.

- How to look at your business as an investor would.

- Cup-holder ideas and how they impact your company's value.

Ep. 59 Think Twice Before Starting That New Division Sep 07, 2016

Show notes

Jim Beach sold American Computer Experience for $200 million, which sounds like a fantastic exit, but when I asked Beach if he had any regrets I was surprised by how long a list of lessons he had to share including:

How creating new divisions can help grow revenue but reduce the overall value of your company.

- The dangers of raising venture capital.

- Why growing faster than your cash flow may end up costing you more equity in your business than you want to give up.

- The perils of partnering with a celebrity entrepreneur.

- Why you should never take an angel investment from a friend or family member.

- How to avoid a $250,000 legal bill when selling your company.

Ep. 58 The Surprising Truth About Who Will Buy Your Company Aug 24, 2016

Show notes

In 1999, Andrew Weinreich sold Six Degrees, a social networking site based on the same idea that sparked the likes of LinkedIn and Facebook, for $125 million. In the following years, he went on to sell three other companies including one to IBM and another to Match.com.

Most founders are lucky to have one successful exit, but Weinreich has already had four. In this interview, you'll learn:

The common denominator among all four of Weinreich's exits.
Where to find the company with the highest probability of acquiring you.
How to hire an M&A professional for a "Dual Track" mandate.
The mistake most entrepreneurs make when they assemble a board.
The simple technique Weinreich used to let buyers know he was interested in being acquired (without sounding desperate).

Ep. 57 How To Quadruple The Value Of Your Business Aug 17, 2016

Show notes

Intellectually, you know you need recurring revenue, but how do you build an annuity stream in an industry where subscription billing is not the standard?

Take a look at the example of Laura Steward, the founder of Guardian Angel Computer Services. She was in the business of fixing her clients' computer problems when a valuation specialist told her that Guardian Angel was worth less than 50% of one year's revenue. Determined to get more for her business, she underwent a makeover focusing on her Angel Watch subscription program.

Steward went on to sell her business two years later for four times what the valuation consultant thought it was worth. In this interview you'll learn how to:

Switch customers from hourly to subscription billing.
Overcome the objections hourly customers have for making the switch.
Ensure customers stop asking for your personal attention on their job through one simple idea.
Maximize the value of your contracts in the eyes of an acquirer.

Ep. 56 The $20 Million Mistake Aug 10, 2016

Show notes

Rod Drury is the founder and CEO of Xero, a cloud-based accounting platform that competes head on with Intuit's QuickBooks.

Started in 2006, Xero now boasts 700,000 subscribers and a market capitalization of almost $3 billion. Xero was picked by Forbes as the World's Most Innovative Growth Company in 2014 and 2015.

Drury got the capital to start Xero from selling another software company, AfterMail, for $15 million plus another $30 million in a potential earn-out—not bad for a company with a little more than $2 million in revenue.

Drury offers all kinds of insight in this interview including:

How to avoid the mistake he made in structuring his earn-out, which ended up costing him $30 million.
The definition of R&D by acquisition.
How to use public company arbitrage to increase the value of your company.
How to transition from offering a service to a product.
How to get an acquirer to come to you.
How to exhibit at a trade show if your goal is to get acquired by someone in your industry.

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