Just finished the episode and really enjoyed it. Heard a lot of my own thinking echoed back to me in his feelings about how he wanted to run the business and thoughts around selling (and around taking VC money!) Laughed out loud a couple of times. Thanks again.
Can you elaborate on that? Why do additional owners make it easier to sell? If anything I'd expect the opposite.
Re double digits, if that means eg 10%, I would expect a good firm could likely provide at least that much value. Maybe I'm overestimating their capabilities.
If you find the buyers yourself you don't have to pay commission for them to buy additional equity in further rounds. Also, as they get more familiar with the business they won't need a big haircut to make the deal. What are you expecting the new owners to provide?
Thanks. It does look though like that site is targeted more at smaller companies than ours. My understanding is that at our scale we would probably want a firm representing our interests.
For sure, past growth will of course be looked at to gauge future prospects. Our growth has historically been driven largely by branding initiatives on our end, but our user retention is also really high. So all along we've tended to have spurts of growth around successful campaigns, followed by consolidation periods where it levels out. But I've never targeted maximum growth at any cost, but rather sustainable growth while maintaining a healthy profit margin, so it tends to come in bursts as profitable marketing opportunities present themselves. I think we have enough of a track record of those that a strong possibility of future growth is a reasonable assumption, but of course that would be a tougher case to argue than a company that has consistently grown X% per month for years.
Regardless, at this point I'm not looking to sell right away, just beginning to consider the possibility of selling at all. And one of the early steps in that process would be finding representation for the shopping and deal process, hence looking into M&A firms.
There are actually a number of potential strategic acquirers that we have or have had relationships with, so we would certainly consider those, but regardless I'd want someone representing our interests and shopping us around too. I've been approached by a number of such firms over the years, but don't really have strong criteria for narrowing down who we might want to work with if I did decide to pursue a sale, so that's what I'm trying to work out now.
You should take a holiday and really think about what you would like to achieve next and why you want to sell.
If your decision is to sell (not now, but it will take some time...), then talk to 2 or 3 of such companies, explain your situation, and ask them how they think you can maximize your earn out at the end (should you invest aggressively, expand into new markets, what are the KPIS which are relevant, etc...), and when you should go to market. Sure you will have to pay for this advice, but you can certainly afford.
And then you decide if you want to do this and invest/grow the company, or let the profits roll based on their input, and then start a process one year later (or whatever they say) when you have shown track record.
Yep, I'm not planning to sell immediately. Just starting to do some research on what would be involved. Honestly I don't know that I'd even sell at all at this point, but it's useful to know one's options. Certainly will continue to pursue further growth!
