In 2011 Josh Holtzman, the founder and CEO of American Data Company, gathered his employees into a conference room to announce “Fifteen Cubed”, a company-wide initiative to grow to $15 million in revenue by the year 2015.
Entrepreneurs can be categorized into two groups. On one hand, you have the doers. These are the people who organically grow a business over time. They plod along for years, or even decades in the same business. They look for small, incremental improvements every day. Their natural tendency is to say no to new ideas and they have to be thoroughly convinced before they change strategy.
A few weeks ago, Shaun Oshamn sold iSupportU, a Colorado-based IT support business. Oshamn started the business at the age of 32 and knew he wanted to sell before his 40th birthday. As that milestone approached, Oshamn started getting his business ready to sell.
Jill Nelson built Ruby Receptionists, a call answering service, into an $11MM business when she met with an investment banker who told her the technology she had built to answer calls could be worth a mint.
Joey Redner started Cigar City Brewing in Tampa Bay in 2009 with a vision of being the first quality craft beer in Tampa at a time when craft beer was gaining popularity across the country.
Ari Ackerman started Bunk1 in 1999 to give parents a way to keep in touch with their kids while they were at summer camp. Over 17 years, Ackerman grew his technology business into one of the biggest brands in the summer camp industry, which is about the time they were approached by TogetherWork, a company backed by a billion-dollar private equity giant.
Dan Faggella started Science of Skill, an e-commerce website selling self-defense videos and paraphernalia, in 2013. His goal was to sell the business as soon as possible, and he started soliciting offers just 14 months later.
Shelley Rogers started Admincomm Warehousing to help companies recycle their old technology. Rogers purchased old phone systems and computer monitors for pennies on the dollar and sold the gear to recyclers who dismantled the technology down to its raw materials and sold off the base metals.
SnapSaves was created by Toronto-based company Buytopia, which has a deal-of-the-day business model similar to that of Groupon.
In the early 2000s, Carl Gould gained notoriety in New Jersey for building upscale modular and log homes under the banner Outdoor Imaging. Gould invested heavily in growing his reputation in the New Jersey market. When Gould went to sell his business, the buyer wanted his hard assets and for Gould to sign over the development contracts he had commitments on, but the buyer did not want to take Gould’s company name.
Adam Glickman started hawking “Jumbo Brand Condoms” from his Tuft’s dorm room in 1989 under the moniker “a safe jumbo is a happy jumbo.” His brand grew across campus and, upon graduation, Glickman started America’s first retail condom shop in New York City. Based on the success of the Manhattan store, Glickman expanded to Los Angeles and in 1996 became an e-commerce pioneer.
Melbourne-based David Trewern grew DT, a digital advertising agency, to $10 million in annual revenue before he sold it to STW Group in 2007 for almost 10 times profit after tax. Trewern was able to get maximum value for his business and preferred terms because he started to look at the world through the eyes of his would-be acquirer.
Lois Melbourne and her husband started Acquire Solutions, a software business that helped large companies manage their employees. After 18 years, the self-funded business had grown to 85 people and the Melbournes received an offer from a private equity firm rolling up software companies in the human resources field.
Acquirers are a secretive bunch. They typically operate behind confidentiality agreements with their motives and tactics disguised from the public. That’s one reason I enjoyed my interview with Rocky Romanella so much.
Anthony Amos and his brother started HydroDog, an Australian company offering a mobile dog washing and grooming service. For $10, the Amos brothers would show up at your door with a giant dog bath on the back of their trailer and wash your dog.
How many people will you have to approach about buying your business before you end up getting an offer?
In this week’s episode, you’ll hear from John Arnott who gives you a breakdown of the statistics on how many people he approached, the conversion rate of those approached to those who signed a Non-Disclosure Agreement (NDA), what proportion of people under NDA requested a face-to-face meeting and, of the people he met with, how many offers he received.
It’s the first time that we at Built to Sell Radio have received such specific conversion rate statistics on a single deal. Arnott’s story is treasure trove of hard-fought wisdom, including:
Dan Lok packaged a set of table tennis video tutorials into a membership website and charged a subscription fee to join. Over eight years, Lok managed to build a five-figure recurring revenue stream from subscribers to Table Tennis Master.
Table Tennis Master was one of 20 businesses Lok was developing simultaneously when tragedy struck his family. That’s when he decided to simplify his life and sell off some of his business interests.
In Lok’s case, speed and ease of transaction were more important than maximizing his financial take, so in this episode you’ll hear the story behind the sale of Table Tennis Master and learn some unconventional tactics, such as:
The Mortgage Reports publishes information about mortgages for home owners. Site founder Dan Green, capitalized on the internet traffic they generated by selling leads to mortgage lenders.
Within three years, Green crested a million dollars a year in annual revenue. That’s when he began to worry about new regulations and compliance as his business went from being a hobby to a major player in the mortgage leads industry. Green decided to sell and quickly got three offers from the companies he was selling leads to.
The first offer was mostly cash. The second was for half cash and the other half “at risk” in an earn-out tied to meeting lead volume goals in the future. The third offer included a small payment up front with a rich potential earn-out if Green was able to send the acquirer enough quality leads. You may be surprised to learn which of the three offers Green picked.
In this episode, you’ll learn:
Laura Gisborne has started nine companies and sold six of them, including The Art of Wine, the subject of this week’s episode. The Art of Wine is a tasting room with a subscription-based wine club division. With a little more than $1MM in annual revenue, The Art of Wine was still a relatively small business, but when the lease came up for renewal Gisborne reasoned it was the perfect time to look for a new owner.
Gisborne channeled her experience from six exits into the sale of The Art of Wine, and in this episode you’ll learn how to:
Most sellers want to be paid all of their money up front, and most buyers want to avoid paying anything up front. Deals usually get done somewhere in the middle, where the seller agrees to accept some cash and to be paid some of their proceeds over time.
Eric Weiner, for example, started All Occasion Transportation in college and by the time he turned 35, his company was grossing more than $3MM a year. That’s when Weiner decided he wanted out.
Weiner found a buyer and agreed to accept half of his money in a five-year consulting contract, which sounded great in theory but ended up becoming hard to enforce. In this cautionary episode, you’ll learn:
Have you ever noticed the ads that run before you watch an official online video clip from shows like Saturday Night Live or Jimmy Kimmel? You can thank Nicholas Seet for that. Seet developed the video player that hosts both the content and the ads for some of the world’s biggest media companies. His business, Auditude, was recently acquired by Adobe for more than $100 million according to UCLA's Anderson School of Management.
Although a spectacular exit, Seet had to give up a large chunk of the company—and the CEO title—to scale up, so in this episode of Built to Sell Radio we ask the age-old question: 'Is it better to own a big chunk of a small company or a small slice of a big company?' You may be surprised by Seet’s response.
You’ll also learn:
Ian Ippolito started Rent a Coder as an online marketplace for hiring technical talent. He quickly expanded to go beyond technical professionals and re-branded as vWorker. Ippolito built vWorker up to $11.5MM in annual revenue before he received an acquisition offer from Australia’s Freelancer.com
Freelancer.com had been courting Ippolito for months but their original offer was too low in Ippolito’s view. That’s when Ippolito decided the only way for him to get any real negotiating leverage was to seek out a second bidder. In this episode, you’ll learn:
Peter Shankman started Help A Reporter Out (HARO) to connect experts with journalists who needed people to quote for stories. HARO sent a simple email three times a day to subscribers and because every email had the potential to be a reporter from a media outlet like The New York Times, the email open rates were close to 80%. Most days Shankman worked from his sofa with two employees helping him remotely.
Within three years, Shankman was generating $1.5MM from selling simple text ads on his email blasts. That’s when Shankman’s largest advertiser approached him to buy HARO. In the episode you’ll learn:
Bobby Albert took over the family moving business when his father died unexpectedly. Determined to succeed, he transformed his father’s five-person business into a fast growth company, eventually employing 150 people before The Albert Group of Companies was approached by a strategic acquirer.
Rather than simply accept their first acquisition offer, Albert patiently negotiated the offer up by more than 100% before he agreed to be taken over.
In this episode, you’ll learn:
- The difference between an abundance and a scarcity mindset.
- What distinguishes your company’s core values from the founder’s core values.
- How to 5X your revenue.
- The secret to getting discretionary effort from your employees.
- The difference between a values-driven company that gets results and a results-driven company that has values.
- Why aspirational values kill a company’s culture.
- How to more than double your next acquisition offer.
Julie Pickens and her partner Mindee Hardin created Boogie Wipes, a moistened tissue Moms use so their sick kids can avoid a raw nose in cold season. They patented their formula and won orders from Rite Aid, Walmart and Target leading to annual revenue of $15 million.
But all was not well in Boogie land—in fact, the partners’ relationship became strained when Hardin announced she wanted out, forcing Pickens to find a buyer for their company. The result would leave Pickens disappointed with her exit while partner Hardin had to file for bankruptcy.
What follows is a cautionary tale of what happens when partners decide to go their separate ways.