28 Jun Built to Sell Radio: How to Sell a Service Business Without an Earn-Out
In 2011, Jodie Cook started an eponymously named social media agency, JC Social Media. Over the next nine years, Cook built the business up to 16 employees. Then, she decided to sell at the end of 2020 and thought her company could be worth in the 5-7 times EBITDA range.
Cook’s first offer was five times EBITDA, with approximately 20% of proceeds tied to a three-year earn-out. Cook realized she had failed to make it clear that she would not be accepting an earn-out. Cook pushed on, explaining why she was redundant and made the case to potential acquirers why her business would do better without her. Cook received two additional offers and accepted one at the top end of the range she was hoping for. She left two weeks later.
In this episode, you’ll discover how to:
- Make your company’s brand bigger than your own.
- Document processes people will use.
- Transfer something Cook calls “tacit knowledge” onto your team.
- Make everyone in your company a leader.
- Get clear on what you want from a team.
- Distinguish between a lifestyle vs. performance team.
- Think about “chemistry” meetings with potential acquirers.
- Merchandise your “second-tier” management to your potential acquirers.