Alexis Grant, Founder of The Got Acquired, on Preparing Your Business for Sale
October 27, 2023
Alexis Grant is founder of They Got Acquired, a media company that features acquisitions of online businesses and the founders behind them. Previously, she was EVP of The Penny Hoarder, a personal finance media brand that acqui-hired her content marketing agency. She also founded The Write Life, an online community for writers she sold in 2021.

I talk to a lot of people who have great brands. They may have put the foundation of a business in place, but they're either not making much money or they're making revenue and then spending it all, so there's no profit at the end. The value of your business is going to be heavily dependent on how much profit you have so this is something that I always preach to founders when I talk to them, because even the ones that know that the money is important tend to focus on revenue. But when it comes to evaluation, your net profit, which is also called SDE, or seller's discretionary earnings for smaller businesses, for larger businesses, it's called EBITDA, that is going to be really important in terms of figuring out how much you can sell your business for. So if you focus on only one metric in growing your business, this is the one I would focus on if you want increase its value.

The biggest factor that determines whether it's sellable is whether you have profit.

Beware of timing. 

Timing can make or break your deal. A lot of people think of this as market timing, so timing the market conditions. When in reality, when we interview founders, for a lot of folks, the timing piece ends up being more about your own personal situation. It relies on the performance of your business, and your own personal energy to run and grow that business. So this is obviously really hard to get right. It's easy to look back in retrospect and say, oh, I should have sold earlier or later or whatever. But when you're in the moment, people often say, is now the right time to sell? Should I keep building this business? How long should I go before thinking about selling?

 A couple of things to think about:

  1. Sell before you burn out. I've talked to a lot of founders who are burned out and that's why they want to sell.
  2. Selling itself is a marathon, and you need energy to go through that process. If you already come to the table and you're already burnout, it might be hard to muster up the energy within yourself to properly go through the sale process and keep the business running at the same time.
  3. Often when founders start thinking about selling, say you talk to an advisor who says, oh hey, if you changed X or Y about your business, if you change something, you could earn a lot more money when you sell. For founders who are burnt out, they often don't have it in them to make those changes. So they go on and sell the business as it is now. And that might still be a great win. But if you do have the energy to make those changes, or you start thinking about this ahead of time, you're going to get a lot more money for your business. Sometimes those changes take months or a year to not only implement but also show on your balance sheet.
  4. You also want to sell and the business is going up. You are going to get a better multiple for your business if it is growing. Sometimes, this means pushing yourself to think about selling before you really feel like you have squeezed as much as you can out of the business.

Get your books in order as soon as possible.

You want your finances to be in tip top shape when you go into the sale process. This is something you can do now. And the cool part about this, as with many of the tips we're going to talk about, is that getting your finances clean and in shape is not only going to help you prepare for a sale, it's also going to help you run your business better right now. If you have great visibility into what's making the money and what's eating up expenses, you have to make better decisions for your business. 

Attract more than one buyer.

If you have more than one buyer, there's competition, and then you've created leverage. That's really the best lever that you can pull to increase your sale price. I see a lot of founders, especially first time sellers, who are really excited when they start to get incoming interest from someone who wants to maybe buy their business. That's a great signal. 

It should be a great prompt to think do I want to sell? What would my ideal scenario look like? Should I start getting the business ready for that? Do I want to talk to an advisor who can help me? You can start thinking about all those questions. But typically, you don't want to go with that first buyer without shopping the business around.


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