Things I wish I knew before selling my company
Figure out if your company plays well with others, and get out as fast as you can
In no other situation does “hindsight is 2020” become even more palpable than after you’ve sold a company.
Only after you’ve had time to reflect, swallow your pride, bemoan and begrudge or look back longingly, will you think, shoulda, coulda, woulda…but ultimately didn’t-a.
Turns out, there are many people in this boat, who are more than eager to share their experiences of selling their companies.
At a Mastermind conference in Miami last month, I was part of group of founders, serial entrepreneurs, and investors, from all over the world and from a huge cross section of industries.
During a break-out session, we spoke on a topic that I actually put forward, which was “things I wish I knew before selling my company.”
A little cohort assembled and we found ourselves in what felt like a warm embrace of like-minded company.
After introductions and chatting about what everyone was going through or went through, two major themes emerged:
Get out as fast as you can, or “I shouldn’t have worked as long at the company as I did after it sold,” and,
Make sure you work well with others, or “I should have made sure my company was a better fit with the other company”
Get out as fast as you can
It’s really exciting when someone wants to buy your company.
You think, “Wow, another company wants to buy lil’ ol’ me!”
But really, this could be because of two likely scenarios:
The buyer sees your potential and is investing in you, your reputation, your work product, book of business, and network to help them expand, or,
The buyer sees your business is in a stalemate or distress situation. They can put in minimal time, marketing, and administrative resources to absorb your existing business, clients, and profit.
After you’ve decided to sell your company (which could be a separate newsletter on its own, but mentors, advisors, business brokers, and people who’ve been there and done that can help you make this decision), that’s when the negotiation begins.
You’ll go through the following discussions, first on your own and then with your advisors, partners, co-founders, attorneys, accountants, and so on:
Price and procedures: What will the sale look like? How much is my company worth? How much will I get paid? To fundraise, sell equity, and grow, or hand over the reins completely? Is my company being purchased in tranches, like a phased buyout, or all in one go? How long is my earnout period? What targets must I meet in order to get my full payout?
(Find good attorneys and financial advisors. Even if they’re costly, they’ll save you more time, money, and hassle in the long term. If you don’t know any, ask your circle and research for them.)Roles and roster: What will your role or title look like, and for how long? How long will you have to work at yours or the newly formed company, and if so, how long? How will your co-founder or employees be impacted? Will your team get along with others?
The consensus among the group was that if they could do it all over again, they would have shortened the amount of time they were tied to their company post-sale.
In other words, get your distribution or payout for as much as you can, as soon as you can, and move on.
Only after you cut the cord and free your mind from your primary thing, can you then make space for new beginnings and your next thing much faster.
Make sure you work well with others
Another theme that emerged was how well your company will integrate with the buying company.
This includes how well your company culture and people can fit in with the others.
Are your systems and procedures aligned? Do you use the same software? Will your sales cycles and operations complement and mesh well, or run into procedural differences? There were several comments among the group that some acquisitions ended “terribly,” or “we blew that up,” which in hindsight were funny but during the moment were truly awful.
Are your sales price points and conversion points similar or vastly different? If there is a huge disparity between price points, how will the two companies handle these conversations in sales conversations?
Finally, if I learned anything from this amazing group and conversation, it was how “same but different” the terms can be when selling and buying companies.
Things can get complicated, quickly, especially when private equity and venture capital are involved.
At a macro level, the structures, percentages, and processes may appear the same, but the micro level is the “personal” level that’s going to determine the entire experience.
And whether you’re the one at the table bemoaning “hindsight is 2020” months and years later.
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Until next time,
Shindy
On Instagram + TikTok
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