I failed to sell Baremetrics for $5m. While failure is 100% a part of success, it’s only useful if you learn something. So, here are some of the things I learned from this little failure.
Hopefully these are some things you can apply to your own company (present or future) that can save you a bit of pain.
Know your price
When you’re building something that people want, you’ll inevitably get buyers who are interested in owning what you have. Know, or at least have an idea, of the revenue multiple you’d need to be at to even entertain a conversation.
That could change depending on what’s going on in life, but it’s much easier to say no to something when you’ve decided on a minimum already.
Know the economics
Turns out it’s not cheap to sell your company. It can easily get up to 6-figures in legal fees alone, depending on the size and complexity of the deal. Talk with a tax attorney or CPA to understand how taxes, fees, stock options and investor payback works and how they’ll (quickly) eat in to the purchase price.
I talk more about how taxes can play out in this asset sale vs. stock sale article, but understand that there are very few instances where you personally walk away with anywhere close to the original offer amount.
This circles right back to that “know your price” point as what your price is will depend on how all of these economics play out.
Avoid needing to sell
There’s an entire world of private equity who are waiting in the bushes, salivating, looking out for companies (and more specifically founders) who need to sell.
You want to be in the strongest negotiating position as possible, and the best way to do that is to not need to sell.
If you’re running out of money, if you’re in personal financial trouble, if you have a major life event that necessitates you stepping away from the business…all of those things will put you in the weaker negotiating position.
So, to the extent that you can control it, avoid the need to sell.
Talk to other founders
I have a group of a couple dozen founders that I regularly talk to and ask advice from and this whole situation was obviously worthy of some feedback.
Talking to founders who’d previously sold a company, founders who’d failed at selling a company and founders who were in the middle of selling their company all give really great insight in to how to handle various situations.
They can provide crucial outside perspective and give you a gut check that’s hard to come by when you’re in the thick of it.
Focus on mental health
One of the major contributing factors to me entertaining any offers earlier this year was the depression and anxiety I was dealing with. I wanted an “out” from that…I needed some mental relief and that made the idea selling the company very appealing from a “getting some weight off my shoulders” perspective.
It’s crucial to take care of yourself physically and mentally. For me, I really should have just taken some time off in the middle of all that instead of trying to “solve” things by selling the company.
Talk to a therapist, take a sabbatical, pick up some new hobbies, start running, get 8 hours of sleep every night…just do something to take care of yourself.
Selling your company is something every founder will eventually have to face. The more you can do it on your own terms, the better your outcome will be.
Maybe the next post in this series can be 50 things I learned selling Baremetrics for $50m. 😜