How to Sell Your Business

About this video

Martell shares how to handle the emotional rollercoaster of exiting a business, drawing on his own exits he dates to Spheric at 28, Flowtown at 31, and Clarity at 34, noting the last two were venture-backed so investors had their own motivations. He warns interest from a buyer can distract founders into thinking about what’s next. His five areas are: 1) Keep it private — tell only lawyers, accountants, and leaders who need to know, or the team will count money and lose focus if a deal falls apart. 2) Escalation Ladder — from the start, list the 21 companies that should buy you (seven companies, three people in each), build relationships over three to five years, share updates, then create a competitive process when in talks; for $30 million-plus companies he suggests a sell-side M&A banker. 3) In Process — don’t stall out; keep growing, because a drop from 25-30% growth to a weak quarter makes buyers suspect momentum was pumped up. 4) The Red Zone — after an LOI is signed and diligence begins, have your lawyer/team over-communicate, launch nothing new, and coach the team for buyer interviews — he recounts a CTO saying he planned to leave in six months, which cut a deal’s valuation. 5) Vesting in Peace — after selling Flowtown, the pace and bureaucracy of a bigger company wore on him, so, following advice from a friend who sold to Myspace, block calendar time, don’t raise your hand for projects, avoid politics, and let integration go smoothly.

Key takeaways

• Keep an exit private except for people who need to know
• Build relationships early with 21 potential buyer companies and their people
• Don’t stall growth while in process — buyers watch current momentum
• In the Red Zone after an LOI, add no new information and coach the team
• After acquisition, ‘vest in peace’ — reduce friction and avoid extra projects

Episode details: published October 18, 2021 · 12:20 long. Summary written by Self Growth Videos from the episode itself. Business results and any income figures mentioned are Dan Martell’s own claims, shared for education — they are not typical or guaranteed.

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