As a companion piece to our latest blog, Andy and Doug discuss Deal Fatigue and how it impacts the seller in the two to four weeks leading to closing day.
Are you considering selling your business? Are you considering entering the world of entrepreneurship? If so, please get in touch for a FREE consultation. The best way to learn about us is at our website, which includes connecting with Doug, Andy, or the rest of the Apex Team.
While most of us are now familiar with deliver-to-your-door monthly subscription boxes, in 2015-2016, this sector was only starting to heat up, and while prepared meal plans were well-known, businesses who focused on protein-only didn’t have that much competition. Enter Marc Lafleur and truLOCAL, which was acquired at the end of 2020 for an eight-figure sum. Not too shabby when you consider that Marc and his co-founder bootstrapped the business with $40,000 of their own money to start.
Apart from focusing just on delivering lamb, beef, and chicken, particularly from locally-sourced producers (the earliest versions of the labels had the names of the farms and ranches on them), Marc and his team knew that profitability lay in scaling the operations. Their first angel investment of $100,000 allowed them to hire their first two employees and they hit profitability midway through their fourth year in business.
Marc knew that the concept would take off if people could see it themselves and one interesting way he went about marketing was doing pop-ups at Crossfit gyms. They were able to show the quality of the meat and let members know they could sign up right there and get quality locally-sourced proteins delivered to their homes. This worked really well for them.
They also dodged the large-scale influencer marketing (think more than 20,000 followers) and followed the same method they used at the gyms: meeting people and sharing their stories. In fact, they targeted what is known as “micro influencers,” those with between 1000-20,000 followers who have a lot of credibility with their circles. This created a strong grassroots demand for the brand.
For those who might not be familiar with the show, Dragon’s Den is the Shark Tank equivalent in Canada (it even features shark Robert Herjavec). If you want to go down a rabbit hole, Dragon’s Den is an offshoot of an even earlier Japanese show! In any event, Marc only has good things to say about his experience, and not only because he ended up getting a deal with tech investor Michele Romanow.
He sees the preparation for appearing on the show as important personal development milestones. Even the selection of when you appear on the show is strategically important, and Marc decided to go on Day 1. Even though the entrepreneur before him came out crying, Marc wasn’t daunted, and was prepared for any questions the dragons might sling at him. He agreed to a deal on the show, and eight months later the funding came through.
By that time, however, Marc knew the company was getting to the right run-rate and growth for acquisition and he engaged an M&A firm to help him identify potential buyers. The first list totaled 420 candidates! The data room was up and running and Marc got engaged with the more serious candidates throughout the process.
One question that kept coming up was, “Are you going to stick around?” Marc, who saw himself as more of a builder, had no desire to stay on and stuck to the idea of a six-month transition, tops.
He also wanted to make sure his team was taken care of. He had always told his team that he wanted to be the lowest-paid employee in the company to help it grow, until the day of sale, when he would get his payday. His employees knew that he wanted to sell one day, but also knew that he had their backs.
In fact, of the three final candidates for sale, one company offered a significantly higher final offer, but one of the conditions was a virtual cleanout of the team. Marc turned down the money and went with one of the other buyers that would honor his pledge to his people and help them continue to grow their careers with truLOCAL.
Marc offers some good lessons for business owners in any industry:
Want some ideas for marketing, digital and otherwise? We know some people who can help you. Give us a call.
Are you considering selling your business? Are you considering entering the world of entrepreneurship? If so, please get in touch for a FREE consultation. The best way to learn about us is at our website, which includes connecting with Doug, Andy, or the rest of the Apex Team.
You get an email or a phone call wondering if your business is for sale. It certainly wasn’t. In fact, you hadn’t even thought about selling your business for years to come. But then… an idea starts germinating. What if I could sell my business? Unsolicited offers for businesses are made every day, and this article will help you do a bit of preparing for what happens if you get that call.
Part of the magic of getting such an offer is feeling good. Running a business is a challenge and such an offer is a validation of your hard work. But, an offer isn’t always an offer. Sometimes it’s a fishing expedition. So too we as brokers sometimes make calls to businesses we find interesting, not necessarily with an offer, but with the question of, “Have you ever thought about selling your business?”
These sorts of phone calls, even if answered with an emphatic “No,” lead to wheels turning. Entrepreneurs weigh up how they’ve been feeling about the business lately. They think about a number that they would like to sell the business for. They think about what they would do with the money from that sale and the free time they might have.
We can’t tell you the number of times that a relationship started with a client because someone called them with an unsolicited offer. Whether that offer was genuine or fishing, whether it happens or falls through, a snowball has started in the potential seller’s mind.
Even if your answer is “Yes, I’d like to sell my business,” you need to bring in help. First-time sellers in particular have no sense of how much time it will take to close the sale and can underestimate the importance of having an unemotional negotiator by their side with lots of experience in business transactions.
Interview some business brokerage firms and let them know the situation. The best ones will do a back-of-the-envelope valuation with you to level-set before pushing for a professional valuation. Once that’s done, they can engage with the original unsolicited buyer about a now-established price and find out how serious he/she is.
That initial process might also uncover some opportunities. A broker might note areas that could be improved that would drive up value significantly in a short amount of time. Instead of pursuing a transaction with the unsolicited buyer, the company could be put into a process that will have it ready to go to market and court multiple buyers, not just one.
However, these conversations may also reveal that a business owner isn’t ready to be a seller…yet. But armed with more information, he/she now knows what needs to be done before a sale and now has a broker to periodically check back in with to find out what market conditions are like and what buyers have been sniffing around their industry.
So, if you get an unsolicited offer (or a cold call from a broker), a cautious congratulations! You’ve gotten some attention. You’ve built something that might be worthy of a sale. But now it’s time to look under the hood yourself and ask some searching questions about your life. And confer with your trusted advisors and a broker. It might just be that the unsolicited offer leads to a wonderful exit. Or if not, it gets you mentally prepared for the future.
Want some advice on those unsolicited offers or how to prepare for that call?
We can help! Give us a call.
Are you considering selling your business? Are you considering entering the world of entrepreneurship? If so, please get in touch for a FREE consultation. The best way to learn about us is at our website, which includes connecting with Doug, Andy, or the rest of the Apex Team.
Deal fatigue is exactly what it sounds like: negative feelings around a transaction that, in the worst case, can lead to the deal blowing up or not happening. While deal fatigue isn’t always preventable, it is easily treated. We’ve included a few warning signs and corresponding treatments in this article to help you deal with a case of deal fatigue.
Deal fatigue is most often caused by time delays:
These challenges lead to buyers and sellers feeling frustrated, hopeless, and at times, angry.
Remember when you are feeling frustrated to take a moment and remind yourself why you are going through this transaction in the first place. Whether you’re a buyer or a seller, whether this is your first transaction or one of many, it helps to remember that very rarely do business sales go off without any hitches whatsoever.
If you’re still feeling frustrated, call your broker. We’re here to be that sounding board and to hear all your frustrations. But when you’ve finished venting, we’re going to focus on solutions.
One of the ways we as brokers prepare our clients at the start of the process is by reminding them that this isn’t our first rodeo and that we’ve had to deal with deal fatigue ourselves at times. But as long as you follow a process set around reasonable expectations with parties acting in good faith, you can get to the finish line, even with a bit of deal fatigue. If you don’t deal with deal fatigue when you spot it, the likeliest outcome is the deal dying before closing.
Want to prepare for a transaction with minimum deal fatigue? The Apex team is here to help. Reach out today.
The Fed recently raised the prime rate to 8%. Andy and Doug discuss the difference between Good and Bad Seller Financing in a rising interest rate environment.
Are you considering selling your business? Are you considering entering the world of entrepreneurship? If so, please get in touch for a FREE consultation. The best way to learn about us is at our website, which includes connecting with Doug, Andy, or the rest of the Apex Team.
We’ve talked about the Great Resignation in relation to the changing world of work we’ve seen over the last two years, including some companies moving to a hybrid model. One of the news stories we continue to see is not just people deciding to move because of remote work, but businesses deciding to move for better business and tax conditions. Is it worthwhile to move your business before you exit?
The low hanging fruit when looking at business relocations is California. The Golden State is losing two $200,000+ income households for every one that comes in (that ratio is inverted for Florida). It’s the poster boy for a larger trend: of the 25 lowest-tax states, 20 enjoyed net in-migration in the last year. Just as individuals have used remote work to make major changes in their lives, so too businesses have chosen to go where they are treated best instead of just where they’ve always been.
The big storylines include tech’s migration to Texas, led by Oracle and HP, as well as Elon Musk’s Tesla and SpaceX, which purportedly saved hundreds of millions in taxes by coming to the Lone Star State.
If a business owner is looking to sell in the next 6-12 months, a move probably doesn’t make any sense. Key employees may not be willing to come and it will take a while to get your business up and running in its new location.
But if you’re a business owner who still has some gas in the tank and is looking to sell 2-3 years in the future, and beyond, there are several reasons why you might be willing to endure the difficulties of a move:
One more cherry on top? Business moving expenses are almost always entirely deductible!
It’s too early to tell precisely what the long-term effects of businesses and wealth creators leaving certain states will be, but it’s unlikely to be anything good. Hopefully that can serve as a wakeup to policymakers, if they’re listening to what people want instead of telling them what they should want.
Thinking about moving your business to another state? We’ve got people who can help you evaluate whether that’s a good financial decision, and we can help forecast the effect on the valuation of your business. Give us a call today.
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