What do small business owners wish they had done differently before selling? While the attention on billion-dollar mergers and acquisitions, detailed information about acquisitions of smaller businesses is harder to find. Alexis Grant launched an online media platform, They Got Acquired, to help founders understand deal-making in the lower middle market. It’s valuable to think about your potential exit even if it’s years away. Lexi joins host Laurie Barkman on Succession Stories to discuss setting up your business for a successful sale regardless of its size.
Listen in to learn more about:
- Lessons from owners who have sold their businesses
- Handling the transition from entrepreneur to employee
- How to be better prepared personally to sell
- How to increase the transferability of your business with structured systems
Guest and show notes:
theygotacquired.com/newsletter
Succession Stories Episode 82: John Warrillow
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Transcript:
Laurie Barkman:
Lexi Grant, welcome to Succession Stories. I don’t often have people from the media on the show, but you not only have a perspective of what it’s like to be an entrepreneur, and finding your market fit, but also what it’s like to sell a business, grow and sell a business and of course, that’s what you’re doing today, and helping other people be mindful towards their future. Welcome.
Alexis Grant:
Thanks. I’m excited to chat with you.
Laurie Barkman:
Why don’t we start with a little bit about you and your company, and then we’re going to rewind. Tell me about They Got Acquired and what the company’s mission is.
Alexis Grant:
We’re a media company, and we help entrepreneurs sell their business so we tell a lot of stories of founders who have sold their businesses and we also offer resources for founders who are thinking about selling. We just launched about a year ago and we’re really one of the few. It’s a niche; there’s not a lot of information on the web about it. You can find some from different brokers, for example, but we’re really the only third party that’s offering this type of information for founders.
Laurie Barkman:
That’s awesome. We’re gonna dive a little deeper on that. Let’s talk about you and what got you into this mission and purpose for helping other founders. Tell me your story.
Alexis Grant:
My background is in journalism. I worked as a reporter for a bunch of years and then I started a content marketing agency. It was small, it was me and a team of contractors and eventually, it was acquired by one of our clients and that client was called the Penny Hoarder. It’s a personal finance media company, so at the time, we were running all the content for that company and they ended up buying my company so myself and my team, we all went in house at the Penny Hoarder and so I ended up working there alongside the founder to grow that business.
I was the second employee and it ended up selling; that business ended up selling as well in 2020. It was a big sale, it was a $100 million sale, and as a bootstrapped business. That was another data point for me, where I thought, “Hey, I find it really interesting that there wasn’t a lot of coverage of the sale,” when in fact, it was a huge success story and I thought it was something that could have been really interesting to a lot of people and I think there’s a lot of factors around that. The founder wasn’t everywhere, kind of talking about it but also, we didn’t have investors who wanted the world to know that they invested in this successful company so yeah, I had my acquirer, then I watched the Penny Hoarder be acquired and not get a lot of chatter about it and then I had also started a kind of a side business when I was running that my content agency, it was a website for writers and I ended up selling that a couple of years ago, I can’t remember what year it was now but a couple of years ago, before I started, they got acquired, so I had those three experiences.
When it came time for me to think about, “What do I want to do next?” I knew I wanted it to be some sort of niche publication, because that leverages my skills, my primary skills and content operations, managing content teams and I just felt like this was an underserved niche, like, when I was going through it myself, I didn’t know who to ask for help. It seemed like there were a lot of professionals out there for the much bigger sales, but for a six or seven figure, so who do you ask for help, and what do you need? For a lot of entrepreneurs, like we’re heads down building our business and when it comes time to want to sell it, either because someone approaches you or you just decide you’re burnt out and you want to get out or for whatever reason. There’s a steep learning curve to figure out how to go and do that and so that’s the pain point that I wanted to solve.
Laurie Barkman:
That’s great that and certainly, those are very common themes on this show, and something that I talk a lot about with business owners, because they’re not they’re not not often thinking about these things and until they do, then their minds really open to “Oh, my, what is the value of my business? What do I want my business to be worth? What do I think it can be worth? Who might be my buyers? What kinds of buyers are they? What kinds of transactions are we talking about?” There’s a lot of decisions and forks on the road and I think it’s a lonely place. It’s a lonely place in your mind where you might not know so therefore, there’s obstacles, therefore, I’m not going to let myself go there. It’s too uncomfortable. There’s too many other irons in the fire, too many other things I need to work on, so I’m going to wait and then what happens. They wait and wait and wait and as you said, these companies–to your point–if they’re selling for six or seven figures, they’re probably not very big companies, right? These might be companies that are 500,000 in revenue or a million in revenue types of businesses, but they can be healthy and they can be very interesting and compelling for the right owners who want to buy them.
Alexis Grant:
For sure. That’s kind of one of the perceptions that I want to change, which is like, you don’t have to sell for billions of dollars here to be a success. There’s lots of entrepreneurs who run smaller businesses, and you can sell and have a life changing exit. We don’t focus only on Bootstrap companies but we do feature a lot of bootstrap companies on our site because there’s just so many success stories there and people that you just don’t hear about.
Laurie Barkman:
I’m so curious about your experience. You said that your acquirer, it was a natural acquirer, that they were your largest clients that correct?
Alexis Grant:
Yep.
Laurie Barkman:
Did you have that in mind and see that potential before they came to you?
Alexis Grant:
Not at all, didn’t even occur to me. In fact, I was pretty set on never becoming an employee again, because I loved running my own business. I was clearly having growth in the business. In fact, I was getting to the point where I had a number of contractors that were working full time at that point and I was having to ask myself, like, “Do I want to make these people employees? Or what do I want this business to look like?” I was pretty surprised when the founder suggested that and then even more surprised that it was something that I ended up thinking, “Actually, this could be a fit,” that we’d worked together for a year and a half at that point. I knew I liked him and I liked how he was running the business and I liked his vision and then on the personal side, he didn’t know this when he approached me, but I was also pregnant with my first child and so I saw, well, there’s kind of pros and cons, right? Like, I think there could have been a lot of pros to staying on my own, and having complete total autonomy over my schedule when I had my first kid but I also felt like there would be something nice about being able to focus on one project instead of lots of different clients that I was overseeing so it was partly about the phase of my life as well.
Laurie Barkman:
It wasn’t an awkward conversation, that first conversation when they approached you and said, “We’re thinking about acquiring you?”
Alexis Grant:
I mean, I worked primarily with him in person, I’m sorry, primarily with him online but we had met up in person and that’s when he brought it up and I probably looked totally shocked, like, it’d never occurred to me, like, I never pictured that or thought it could happen but yeah, I just kind of sat with that and then we had more conversations virtually like this and at the time, he actually didn’t know I was pregnant, because I wasn’t showing when he told me so I had to later when I realized that I might actually want to do this. I had to kind of share that news with him and to his credit, did not even bat an eyelash.
Laurie Barkman:
Didn’t flinch.
Alexis Grant:
Nope, not at all. No. I think he knew my personality.
Laurie Barkman:
He had a long term time horizon, thinking of you coming on board, so that’s great and the transition to be part of that acquirer team for you as a business owner, and then as an employee, was that a difficult transition for you?
Alexis Grant:
No, it was really exciting. It was mostly good and I think that was because I had worked with him for a while so I knew him really well and basically, I got to do a lot of things I wouldn’t have done on my own because we grew and scaled very quickly. It was a bootstrap business so we had a lot of resources, because it was doing very well so I got to hire a lot of people and basically learn how to scale a startup, which I wouldn’t have done on my own so yeah, it was overall really good.
Laurie Barkman:
That’s great. Here you are starting a new business, then got acquired, and because of your skills; multifaceted. I know you know how to do market research and listening to the market in terms of what their pain points are. What do you hear most commonly, in this marketplace that you want to address?
Alexis Grant:
Well, there’s a few things. I mean, one is like just the general questions that people ask, like, how do I sell my business? I have no idea where to start. We’re actually preparing to launch a short one hour course that answers that question and over time will offer more in depth resources that go deeper on different parts of it but just the high level like how do I even think about this? How do I get started? Is my business even sellable? Answering all those questions.
I talk to a lot of people who have no idea where to start or don’t even know if they really could sell their business so that’s the big one. Another pain point that we’re trying to address is helping entrepreneurs have comps so for like if you want to sell a much bigger business, you can find information about other businesses that have sold and use that to try and figure out how much your business should sell for. In our market that really hasn’t existed unless, obviously, if you work with a broker, they might have access to some of that stuff but we are creating it, we put out different reports in different industries, like we have on SaaS businesses and content and media companies and we’re about to launch one on ecommerce that shows what other businesses have sold for and not just that top line item, because most of the of the deals we cover are private. Sometimes we have that sale price. Sometimes we don’t. When we don’t, we can usually get other data points that help people understand what the deal looks like and even the context is important. Like how did they find their buyer? What led them to wanting to sell? Like, what were some of the terms of the deal? Did they have an urn out? All those little pieces, I think can help a seller who’s looking to sell their business, think about what’s an ideal situation for them.
Laurie Barkman:
Because these are private companies, how do you get your information? Is it from the experience of the entrepreneur directly?
Alexis Grant:
We get most of it from the founders, yes. We ask them, but sometimes they don’t want to give us any information. That’s fine, too. It’s always you know, up to them and we’re really flexible about what we include. We don’t say you must give us X and Y or we’re not doing it. I mean, we have to have enough information to make an interesting story but we can almost always do that. Sometimes the buyer is a public company, in which case we look at a lot of SEC reports to try and pull information out of there. We also comb through podcasts and news articles and sometimes the founder might have talked about the business just a month or two before they sold and shared metrics that way, and we can pull them all into one place.
Laurie Barkman:
Smart. You said SaaS companies, ecommerce companies, are these mostly digital businesses that you’re working with?
Alexis Grant:
Yes, we only cover online companies but it can be any, and a lot of most companies now have some online components so it’s a little bit subjective, but we look for businesses that are primarily online, so we wouldn’t cover a brick and mortar yoga studio, for example.
Laurie Barkman:
Right. Do you find that owners want to sell their business by themselves? Are they looking for advisors to support them?
Alexis Grant:
It really depends across the board, I’d say even ones that want to sell by themselves are still looking for guidance and like someone to talk to who’s done it before. Even if they don’t want to engage a broker, for example, they are often really happy to talk. I do a lot of calls, I do free calls with founders who are thinking about selling just to like, help them think through their options and a lot of people say, “Thank you so much for talking to me, like I don’t know anyone in my life who’s done this before. I don’t even know where to go. I feel like it was serendipitous to kind of find you,” and obviously they’re kind of floating out there without the resources that they really need.
Laurie Barkman:
Are you building to sell again? Do you think that this is going to be a venture that one day you’re getting your mind towards the future?
Alexis Grant:
That’s not my goal. Right now, my goal is really to have a business that I enjoy running that makes healthy money for my family. Something where I can learn and help people like I want to grow something meaningful and also I want a business that’s flexible, like I work probably about 30 hours a week but I want to be able to work whenever I want and work from wherever I want and I find kind of creating that myself lets me do it the way I want but I would never build a business now without doing all the things that I learned from going through acquisitions, like, there’s things that you learn when you go through it that second time founders will tell you, “Oh, of course, I’ll do this from the beginning, next time, because I don’t want to end up in a position where it’s not done so,” and also I recognize that like I’m an ambitious learner type and even if I’m into this now, like five or 10 years from now, I’ll probably want to do something different so it’s inevitable. I think at some point, it makes sense for most everyone to sell.
Laurie Barkman:
You mentioned hindsight. What are a few things you learned that you would do differently if you could?
Alexis Grant:
Well, based off of my experience, but also a lot of the founders I’ve talked to, just keeping clean books, it sounds obvious, but a lot of entrepreneurs don’t do it from the beginning, especially if they have multiple projects. They’re all mixed in together, and it can be hard to untangle. The cool part about doing that from the beginning and doing it well is you also have better visibility into your business and what’s actually making you and spending the money. Just setting up good processes so things can be passed over to other people. I mean, as someone who’s funding a business with revenue, we’re bootstrapped. I’m hiring contractors as slowly as I can. I’m always thinking about like, “What can I pass off next?”
Whenever I figure out how to do something, I want to create a process for it so someone else can do it in an ideal world. I mean, sometimes that kind of backfires because I think, knowing that I want to do that and how my brain works that way. Sometimes I find myself trying to create a process too early, like before I figured out how to do the thing so that’s one thing that’s been a learning for me this time around is like, look, you can’t create processes right at the beginning. First, you got to experiment and try a lot of things and see which ones work and then you can create a process for it, but yeah, the idea of just not having everything rely on me is a big one. I think that’s ideal just for running a business. I don’t want anybody to rely on me, because if I’m sick, then it doesn’t get done but that helps both me right now in this moment and it would help me later if I sold.
Laurie Barkman:
I offer a business assessment for owners and there’s eight value drivers that we take a look at and compare them to their industry peers and one of the drivers, as you mentioned, as we call it, the hub and spoke. If your business can’t thrive without you, it is going to hurt your transferability, it’s going to create risks you’re not aware of, it’s gonna probably hurt your value. If I say it this way, it sounds extreme, but a business that can’t survive or thrive without its owner is a worthless business. Now, that’s not entirely true but it sort of makes the point that, as you’re saying, it’s really important to set up processes, decision capabilities within the organization so it’s not always bouncing back to you for answers on how to do something and that can be hard for people, because this is their identity, this is something they really care about their baby, right? Letting go is tricky but it’s good practice to let go to others in your team so that one day you can truly let go to even a new owner.
Alexis Grant:
Sure. In the media business, too, there’s like the branding piece. It’s always a fine line to walk in terms of you don’t want the brand to revolve around you and like, that’s been interesting to navigate as I built this business, because in the early days, you really do need the brand to revolve around you a little bit in media, because that’s how you get trust, like people, the initial people join because they trust you, and they want to see what you’re doing and they want to support you but kind of walking that fine line of obvious things like not naming the brand my name, for example, but even in the beginning other people helped me write the newsletter. At the beginning, I had signed it from our team, and I didn’t have any personal stuff in there and then I realized, like, sometimes that’s really interesting to readers; they want to understand how I’m building the business and they want to see what I’m seeing and like that personal element is just so much more interesting from like, you want to follow people, you don’t want to follow a brand you want to follow a person or people, so thinking about how can I infuse that early on, but building it in a way where like I can later transfer that trust to the brand.
Laurie Barkman:
That’s a really good insight. That’s a really good insight. Yeah, people want to know who you are, what makes you tick, what makes you interesting, and then what insights you have follows after that, right building that trust. Starting to think about now for the audience and people listening. If they are, as you describe a digital business, their revenues are growing, but perhaps they’re thinking about making a switch, what would be the benefit of finding your newsletter? How will that help them and how should they get in touch with you if they’re interested in learning more?
Alexis Grant:
For sure. I mean, our newsletter is at theygotacquired.com/newsletter. The earlier you can start reading this stuff and thinking about it, the better because even if you’re not ready to sell right now, and a lot of our audience isn’t ready to sell right now but they’re thinking about building with this in mind. I mean, there’s a great book that a lot of you have referenced called Built to Sell and it has a lot of the same ideas where you’re thinking ahead of time about what you can do to make this into a business that’s sellable. As we mentioned, a lot of the things that you would do to make a business sellable are also the things that make a business great to run for you right now. It’s profitable, it’s not reliant entirely on you and your time. You’re organized with your finances, so all the things that you want to do to set up to sell. They also serve you at this moment. I absolutely think understanding this stuff now and starting to read and absorb the stories of other people who are doing it is also inspiring because it helps you understand what’s possible, and gives you a Northstar to shoot for.
Laurie Barkman:
I’ll give a couple of plugs. One is for the author that you just mentioned John Warrillow, Built to Sell, and a couple other books that they call the Built to Sell trilogy and he’s the founder of the v
Value Builder System. He was also on my show and he’s written a testimonial for my book, which is called The Business Transition Handbook and everything that we’ve been talking about today about what are some of the pitfalls? How do you grow your business, what creates value? There’s a lot of great resources out there. Certainly, John’s book, mine if people are interested in taking a read, that’s what our mission is, collectively.
People like us want to help entrepreneurs be successful. You can’t build your business on your own, you’re not going to build it on your own so why would you look to transition and on your own, you might need some, some others to surround yourself with. Whether it’s virtually or literally, but of course, for me as an advisor I’m always an advocate for bringing those people into the fold when you can but there’s some great tools out there.
It’s been great to talk with you today, Lexi. I guess any closing thoughts? One of the things I usually ask everybody is if they have a favorite quote, and I forgot to prep you with that, so I don’t want to catch you off guard. Do you have a favorite quote ready?
Alexis Grant:
I’m gonna quote a friend of mine. Her name’s Sarah Peck, and she runs a community called Startup Parent. It’s a great newsletter, but she also has a mastermind and several different offerings in there but she always says, “We don’t have to do things the way they’ve always been done,” and I always tell myself that because it’s both a relief and it’s a reminder it’s a relief when you see things done a certain way and feel like, “Oh, if I can’t do it that way, then I can’t do it at all,” which isn’t true and it’s a good reminder to think outside the box, and there’s always an option C to consider.
Laurie Barkman:
Absolutely. Lexi, thank you so much for being with me on the show today, and I’m sure we will continue the conversation.
Alexis Grant:
Yeah, thanks. This was fun.
Laurie Barkman:
To the listeners, thank you so much. Be sure to follow Succession Stories on your favorite podcast player or YouTube. To maximize the value of your business and plan for future transition, reach out to me for a complimentary assessment at meetlauriebarkman.com. Join me next time for more insights from transition to transaction. Until then…here’s to your success.
