Built to Sell Radio

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Ep. 55 Lessons From A £20 Million Exit Aug 03, 2016

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Have you ever stayed in a fancy hotel and wondered how much they pay Aveda for those little bottles of shampoo? Turns out, there is a company called Pacific Direct that acts as a middleman between the hotel chain and the company supplying the shampoo.

U.K.-based Pacific Direct was earning £3.3 million when founder Lara Morgan decided to sell. She got multiple offers for her company and ultimately sold it to a private equity group for £20 million. During our interview, Morgan shared her wisdom on how to sell your company, including:

What to do if your acquisition falls apart at the last minute.
How to reward your employees when you sell.
How a "drag and tag" clause in a sale to a private equity acquisition works.
How to evaluate multiple offers to buy your business.

Ep. 54 The Competitive Threat Jul 27, 2016

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A direct competitor can often be the most likely buyer for your business. A competitor already knows your industry and may see your company as a way to consolidate market share and gain more pricing control. They may also be able to buy your business and eliminate redundancies in your back office, meaning your business is worth more in their hands than in those of many other potential buyers.

The challenge with negotiating the sale of your business to a competitor is, if the deal falls through, you can end up regretting all the secrets you shared with them in the process.

John Bodrozic is the co-founder of Meridian Systems, which offered project management software to the construction industry. In 2005, Bodrozic began negotiations with a direct competitor and ended up living to regret it.

Ep. 53 Who Would Buy Your Business? Jul 20, 2016

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Part of building to sell is knowing who you are going to sell to.

If you don't start thinking about your potential buyers list early, you may end up growing an entire appendage of your business that an acquirer will neither want nor value.

Take Northern Lights as an example: Michael Glauser started Northern Lights to offer low-fat frozen yogurt through a growing wholesale distribution network of stores selling his desserts. At the same time, he built up a network of 60 company-owned stores under the Golden Spoon brand. The company-owned stores were expensive to start and complicated to manage.

Glauser went on to sell Northern Lights to Cool Brands International for five times net income. Cool Brands turned around and immediately sold or shut down the 60 company-owned stores because they wanted Northern Lights' wholesale distribution channel – not a bunch of expensive retail stores.

During our interview, I couldn't help but wonder how much more Glauser and his shareholders would have gotten for their company had Glauser figured out what a buyer would value and then invested all of his limited resources into building his brand and its wholesale distribution channel from the start.

Ep. 52 Selling The Baby In The Bathwater Jul 13, 2016

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If you run a service, my guess is you've dreamt of owning a product business instead.

Service businesses are such a mess – demanding clients, scope creep, and more often than not, slow growth.

Which leads many service company founders yearning for a product. They tinker with a product on the side, often sucking cash and other resources out of the service business to fund the development of a product, which can compromise the health of the service business.

But there is an alternative: why not sell the service side of your business to have the cash and the freedom to properly invest in your product idea?

That's exactly what Talia Mashiach, the founder of Eved, did.

Ep. 51 Your Training Wheels Business Jul 06, 2016

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Have you thought about when you want to sell your company?

A lot of owners think selling equates to retirement, but selling your business and retiring are not the same thing.

Sure, some people sell because they want to play more golf but many others sell because they want to go do something else.

Take Josh Latimer as an example, he started Birds Beware, a Michigan-based window cleaning business. He built his company up to $800,000 in sales and decided to sell it so he could move his family of three young kids (with a fourth on the way) to Costa Rica.

Ep. 50 The 50% Bump Jun 29, 2016

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When Mark Carlson put Minnesota Mailing Solutions on the block, he got two offers for around $3 million, which represented about four times his pre tax profit – a respectable price for a postage meter reseller turning over $4.5 million in revenue.

But Carlson wasn't satisfied, and in this week's episode you'll hear the one simple tactic he used to get the acquirer to boost their offer by 50%.

Ep. 49 The External vs. Internal Sale Jun 22, 2016

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When the time comes, do you want to sell your business externally, or internally to your employees or family members?

Once you decide, a little piece of you may always wonder how the other option would have played out. That's why the story of Barry Wood is such an interesting case study. Wood is a door guy, who started M&I Door Systems in 1995, sold M&I in 1998, and then started another – virtually identical – door business in 2003, only to sell it in 2013.

Wood sold his first door business externally and his second internally, so his two exits allow us to see clearly the differences between these two types of sale with an as close to apples-to-apples comparison as possible. The pros and cons of selling externally rather than internally may surprise you.

Ep. 48 The Biggest Mistake Most Owners Make When Selling Their Company Jun 15, 2016

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Mike McCarron sold MSM Transportation to the Wheels Group for $18.6 million. After receiving the letter of intent (LOI) he signed it immediately. If McCarron had the opportunity to do it all again he'd handle this request differently. Listen now and find out why.

Ep. 47 Why Was This Money-Losing Business Worth $10 Million? Jun 08, 2016

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For most of its 17 years, Imaging Path was a successful IT services contractor that peaked at more than $16 million in sales.

Imaging Path founder and CEO Corey Tansom kept a close eye on his business until, a few years prior to its sale, Tansom went through a divorce that caused him to spend a lot of time away from the office. Tansom was distracted, costs ballooned and margins shrank. Imaging Path started losing about $500,000 a year.

The situation at Imaging Path got worse when Tansom's bank decided to pull its financing. Tansom decided his best option was to sell his business – but who would buy a money-losing company?

Ep. 46 The Apple Acquisition Jun 01, 2016

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Carl Silbersky sold his facial recognition software company Polar Rose to Apple in 2010 for a reported $29 million. The negotiation was relatively smooth but Steve Jobs would not budge on one deal point. Learn how one of the savviest deal-makers of our time approached his strategic acquisition.

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