Built to Sell Radio

Jim Beach sold American Computer Experience for $200 million, which sounds like a fantastic exit, but when I asked Beach if he had any regrets I was surprised by how long a list of lessons he had to share including:

How creating new divisions can help grow revenue but reduce the overall value of your company.

- The dangers of raising venture capital.

- Why growing faster than your cash flow may end up costing you more equity in your business than you want to give up.

- The perils of partnering with a celebrity entrepreneur.

- Why you should never take an angel investment from a friend or family member.

- How to avoid a $250,000 legal bill when selling your company.

In 1999, Andrew Weinreich sold Six Degrees, a social networking site based on the same idea that sparked the likes of LinkedIn and Facebook, for $125 million. In the following years, he went on to sell three other companies including one to IBM and another to Match.com.

Most founders are lucky to have one successful exit, but Weinreich has already had four. In this interview, you'll learn:

• The common denominator among all four of Weinreich's exits.
• Where to find the company with the highest probability of acquiring you.
• How to hire an M&A professional for a "Dual Track" mandate.
• The mistake most entrepreneurs make when they assemble a board.
• The simple technique Weinreich used to let buyers know he was interested in being acquired (without sounding desperate).

In 1999, Andrew Weinreich sold Six Degrees, a social networking site based on the same idea that sparked the likes of LinkedIn and Facebook, for $125 million. In the following years, he went on to sell three other companies including one to IBM and another to Match.com.

Most founders are lucky to have one successful exit, but Weinreich has already had four. In this interview, you’ll learn:

• The common denominator among all four of Weinreich’s exits.
• Where to find the company with the highest probability of acquiring you.
• How to hire an M&A professional for a “Dual Track” mandate.
• The mistake most entrepreneurs make when they assemble a board.
• The simple technique Weinreich used to let buyers know he was interested in being acquired (without sounding desperate).

Intellectually, you know you need recurring revenue, but how do you build an annuity stream in an industry where subscription billing is not the standard?

Take a look at the example of Laura Steward, the founder of Guardian Angel Computer Services. She was in the business of fixing her clients' computer problems when a valuation specialist told her that Guardian Angel was worth less than 50% of one year's revenue. Determined to get more for her business, she underwent a makeover focusing on her Angel Watch subscription program.

Steward went on to sell her business two years later for four times what the valuation consultant thought it was worth. In this interview you'll learn how to:

• Switch customers from hourly to subscription billing.
• Overcome the objections hourly customers have for making the switch.
• Ensure customers stop asking for your personal attention on their job through one simple idea.
• Maximize the value of your contracts in the eyes of an acquirer.

Intellectually, you know you need recurring revenue, but how do you build an annuity stream in an industry where subscription billing is not the standard?

Take a look at the example of Laura Steward, the founder of Guardian Angel Computer Services. She was in the business of fixing her clients’ computer problems when a valuation specialist told her that Guardian Angel was worth less than 50% of one year’s revenue. Determined to get more for her business, she underwent a makeover focusing on her Angel Watch subscription program.

Steward went on to sell her business two years later for four times what the valuation consultant thought it was worth. In this interview you’ll learn how to:

• Switch customers from hourly to subscription billing.
• Overcome the objections hourly customers have for making the switch.
• Ensure customers stop asking for your personal attention on their job through one simple idea.
• Maximize the value of your contracts in the eyes of an acquirer.

Rod Drury is the founder and CEO of Xero, a cloud-based accounting platform that competes head on with Intuit's QuickBooks.

Started in 2006, Xero now boasts 700,000 subscribers and a market capitalization of almost $3 billion. Xero was picked by Forbes as the World's Most Innovative Growth Company in 2014 and 2015.

Drury got the capital to start Xero from selling another software company, AfterMail, for $15 million plus another $30 million in a potential earn-out—not bad for a company with a little more than $2 million in revenue.

Drury offers all kinds of insight in this interview including:

• How to avoid the mistake he made in structuring his earn-out, which ended up costing him $30 million.
• The definition of R&D by acquisition.
• How to use public company arbitrage to increase the value of your company.
• How to transition from offering a service to a product.
• How to get an acquirer to come to you.
• How to exhibit at a trade show if your goal is to get acquired by someone in your industry.

Rod Drury is the founder and CEO of Xero, a cloud-based accounting platform that competes head on with Intuit’s QuickBooks.

Started in 2006, Xero now boasts 700,000 subscribers and a market capitalization of almost $3 billion. Xero was picked by Forbes as the World’s Most Innovative Growth Company in 2014 and 2015.

Drury got the capital to start Xero from selling another software company, AfterMail, for $15 million plus another $30 million in a potential earn-out—not bad for a company with a little more than $2 million in revenue.

Drury offers all kinds of insight in this interview including:

• How to avoid the mistake he made in structuring his earn-out, which ended up costing him $30 million.
• The definition of R&D by acquisition.
• How to use public company arbitrage to increase the value of your company.
• How to transition from offering a service to a product.
• How to get an acquirer to come to you.
• How to exhibit at a trade show if your goal is to get acquired by someone in your industry.

Have you ever stayed in a fancy hotel and wondered how much they pay Aveda for those little bottles of shampoo? Turns out, there is a company called Pacific Direct that acts as a middleman between the hotel chain and the company supplying the shampoo.

U.K.-based Pacific Direct was earning £3.3 million when founder Lara Morgan decided to sell. She got multiple offers for her company and ultimately sold it to a private equity group for £20 million. During our interview, Morgan shared her wisdom on how to sell your company, including:

• What to do if your acquisition falls apart at the last minute.
• How to reward your employees when you sell.
• How a "drag and tag" clause in a sale to a private equity acquisition works.
• How to evaluate multiple offers to buy your business.

Have you ever stayed in a fancy hotel and wondered how much they pay Aveda for those little bottles of shampoo? Turns out, there is a company called Pacific Direct that acts as a middleman between the hotel chain and the company supplying the shampoo.

U.K.-based Pacific Direct was earning £3.3 million when founder Lara Morgan decided to sell. She got multiple offers for her company and ultimately sold it to a private equity group for £20 million. During our interview, Morgan shared her wisdom on how to sell your company, including:

• What to do if your acquisition falls apart at the last minute.
• How to reward your employees when you sell.
• How a “drag and tag” clause in a sale to a private equity acquisition works.
• How to evaluate multiple offers to buy your business.

A direct competitor can often be the most likely buyer for your business. A competitor already knows your industry and may see your company as a way to consolidate market share and gain more pricing control. They may also be able to buy your business and eliminate redundancies in your back office, meaning your business is worth more in their hands than in those of many other potential buyers.

The challenge with negotiating the sale of your business to a competitor is, if the deal falls through, you can end up regretting all the secrets you shared with them in the process.

John Bodrozic is the co-founder of Meridian Systems, which offered project management software to the construction industry. In 2005, Bodrozic began negotiations with a direct competitor and ended up living to regret it.