Trevor McKendrick had created the best-selling Spanish-language Bible app when he was approached about an acquisition offer. Salem’s original offer was 3.5x revenue but Trevor got them up to 5x with a combination of chutzpah and a knack for reading the fine print.
Stephan Spencer went to sell his consulting business in the late 1990s but buyers all wanted him to sign up for a long, painful, and risky earnout. Keen for a clean exit, Spencer took the business off the market and set out to make it less dependent on him personally. In the episode, he details the three unique strategies he pursued for withdrawing from the day-to-day operations of his business. By 2010, Spencer had the business running so independently that at one point he was able to take a six-month sabbatical. That’s when he knew he could sell without such a lengthy earnout. Ultimately, Spencer sold his business to Covario in 2010 for a combination of cash, stock and a six-month earnout—an earnout so short it's almost unheard of for a marketing services business sale.
Ian Schoen built Two Tree International, up to $4 million in revenue before he sold it in a multimillion dollar exit in 2015. Despite only working in the company for a handful of hours each week, Schoen was able to attract a number of buyers because he had created an operating manual employees could follow.
I loved watching David Price pitch for the Toronto Blue Jays in last year’s pennant race, so I was sad to see him sign a seven year, $217 million contract with The Boston Red Sox a few weeks back.
Of course, it wasn’t Price himself sitting across the negotiating table from the Red Sox brass. He was represented by his agent, Bo McKinnis. Price—like just about every high stakes professional athlete—has an agent in his corner because there are just too many things that can go wrong, too many egos with the potential to be bruised, and too many zeroes at stake to negotiate on your own behalf.
The same is true when you sell your business. When there are more zeroes involved than selling a home, you need someone representing your best interests. That’s a lesson Alexis Martin Neely found out the hard way when she tried to sell her company on her own. What started out as a promising relationship with a buyer ended up as a DIY disaster.