BI 355: Selling Your Company For Maximum Value (Ft John Warrillow)
March 9, 2021
On the Bright Ideas eCommerce podcast, Trent Dyrsmid interviews today's most successful eCommerce, Agency, and SaaS founders and gets them to share all their most effective strategies and tactics for growth so you can quickly figure what you need to implement in your business today to get ahead of your competition. If you are looking for proven methods to scale up your eCommerce business, increase efficiency, improve your systems, and delegate more, this is the podcast for you. eCommerce, automation, outsourcing, standard operating procedures, workflow management, search engine optimization, social media, podcasting, Facebook, Twitter, YouTube.
Episode Highlights
[3:16] — John shares the current trends on how to sell a business
- They analyzed the data on pre-COVID value builder questionnaires last November.
- The results showed that the pandemic had made material differences on how to sell a business.
- Business owners are looking to sell 20% sooner, and they’re looking to sell to a third party.
[4:50] — John identifies the biggest mistakes in selling a company
- His book's whole idea was to provide a playbook on the best practices in selling a business.
- The most common mistake is getting lured into a proprietary deal.
- In this kind of deal, the buyer offers lower, knowing that there is a lack of competition. They may also protract diligence, leading to retrading or value diminishing.
[7:00] — Why businesses should create a market for their company
- Creating a market for your company will guarantee that the offer you’re getting is fair market value.
- Two to three legitimate buyers are enough to ensure a fair offer.
[9:44] — John shares the effective process of planning and preparation
- He uses the analogy of staging in home selling.
- Doing a "renovation" is a valuable strategic process. It is building a transferable business.
- Process documentation is a big part of the renovation project.
[11:17] — John explains pre-diligence
- Pre-diligence is having answers to all the questions you might be asked when marketing the business.
- Doing a full pre-diligence project ensures that the due diligence goes smoothly. Also, it signals to the acquirer that they have to compete with other potential buyers.
- Pre-diligence is having all possibly necessary documents on hand and in one place, such as your leases or employee agreements.
- Documenting your processes prepares you for pre-diligence and due diligence.
[20:26] — What’s the importance of having SOPs in how to sell a business?
- Having SOPs eases fears that business buyers have.
- Massively-acquired companies have tremendous resources and people, making it easier to run after the acquisition.
- Individual investors, who often acquire small businesses, need the checklists and a manual on how to run it themselves upon acquisition.
[22:42] — The three types of buyers
- Individual investors
- Private equity groups
- Strategic investors
[24:30] — How to gain leverage during the negotiation phase
- Signing a no-shop clause will make you lose your leverage in the negotiation.
- Before signing a letter of intent (LOI), ensure that the acquirer is aware of the other competing offers.
- Make sure you negotiate any conditions that are vital to you before signing the LOI