M&A Mistake #1: Waiting Too Long to Sell
Updated: May 11, 2020
One of the most difficult aspects of a successful exit is determining when to sell. Rarely does an ideal buyer come out of nowhere offering a sweetheart deal, thereby deciding when to exit an easy one. Neither selling too soon, nor holding on too long, is ideal; both yield sub-optimal results. The key is recognizing when exit conditions are ideal and your business is at an inflection point where new ownership would have a significant impact on the future growth trajectory. The story below comes from Chapter 4 from The $100 Million Exit and offers some great advice through the experience of a founder who wrestled with determining when to sell. The advice he got was to not wait too long.
For serial entrepreneur, speaker, bestselling author, and business consultant Andy Stefanovich, selling his first business was all about new chapters. In 1990 at the age of twenty-four, Andy founded Opus Event Marketing, which was originally focused on corporate event planning, but eventually shifted into creative marketing focusing on product development, branding, and positioning. Andy renamed the company Play in 1999 and grew the business significantly over the next decade. When the opportunity came to sell Play to the global strategic consultancy Prophet in 2008, Andy was intrigued. He sought advice from a long-time mentor and friend, Stan Peterson, who had sold several businesses over his decades-long career, and asked him, “How do you know if it’s the right time to sell?’” Stan replied, “I always think about selling earlier than others, because a sale provides new chapters for the founder, for the company, and for the employees. Not selling can keep those new chapters from beginning.” That advice resonated with Andy, who spent the next nine months in a trial courtship with Prophet that culminated in a sale in 2009. Andy remained with Prophet after the sale and began his second chapter, first as senior partner with Prophet and then later as the firm’s Chief Curator and Provocateur. That more expansive role would not have been possible had Play remained independent. The sale also allowed the Play brand to enter a new chapter, expanding with the aid of Prophet into new markets and more interesting clients. Lastly, becoming part of a larger organization created a new chapter for Play’s employees, about half of whom are still with Prophet and enjoying their roles within a more expansive firm. The other half of Play’s team that has now moved onto new opportunities could do so in part from the new beginning that the sale provided. Andy left Prophet in 2014 to start his third chapter, which has included publishing a best-selling book, Look at More: A Proven Approach to Innovation, Growth, and Change, as well as working as an advisor to C-suite executives of Fortune 100 companies and advising and investing in private equity-backed mid-cap companies. For Andy, it all goes back to that advice he received from his mentor. “It was great vision on Stan’s part to say do it earlier than you think and do it to challenge yourself, your brand, and your team.”
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In this article series, I share excerpts and stories from my book, The $100 Million Exit. I hope you enjoyed this post — if you did and want to connect, you can reach me via email at firstname.lastname@example.org or connect with me at https://www.linkedin.com/in/jbrabrand/. Also, you can find my book on Amazon here: https://www.amazon.com/dp/1641375175