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Entrepreneur’s M&A Journal Episode 41—Interview With Todd Tresidder


Jim and Todd talk about Todd’s journey through building and owning his own hedge fund business right out of college and his eventual desire to sell.  They take you through a journey of great decisions and ones that left money on the table.  Join them now to learn everything you can about buying, maintaining and selling your business.

Main Questions Asked:

  • What is the business model of a hedge fund?
  • What led you to decide to sell after 12 years?
  • How long did it take from the point you talked to your partner about selling before you sold?
  • How did you market your business?
  • Did you have a firm sense of the business valuation?
  • If you would have held onto it, would you have had the same valuation today?
  • Did you come to the realization that you were selling for too little before you sold or after you had already signed the papers?
  • As you look back on the experience, what kind of advice do you offer?

Key Points made:

  • A hedge fund is skill based investing.  Passive investing is what you get 95% of the time. There is a small subset of skilled investors with different strategies.(5:00)
  • My partner and I were headed in different directions and the hedge fund business could no longer take us there. (5:36)
  • It took us about 2-3 years to sell once we first talked about it. (6:09)
  • Well, the nature of the business is that you can’t just take it to a business broker, we just put word out to the network. (6:24)
  • There was someone that wanted to buy it, that this business would complement his current business. (6:36)
  • One of the lessons I took is that I would rather be a buyer than a seller. (7:17)
  • In this case we sold for a multiple of its earnings. (7:30)
  • It was probably one of the dumbest decisions I ever made. (7:45)
  • It has to do with the nature of the business more than the business. (8:30)
  • We walked away from a regular cash flow stream for a small multiple. (9:15)
  • We knew before we sold it wasn’t a great deal, but it was a life decision to sell, not a financial one. (9:54)
  • My vision for the hedge fund business was to create a money machine and we did that. (11:10)
  • My mistake was I had linear thinking.  I had the mindset to run it or sell it, it never occurred me to bring in key employees and go do what I want. (12:40)
  • If you get successful, your mistakes are more expensive. (13:45)
  • I think there is a revolution in financial planning.  The days of a financial planner extracting 1% in fees to set up a passive portfolio are numbered. (16:45) 

Resources Mentioned:

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Tennessee Valley Group

Jim Cumbee established Tennessee Valley Group to help business owners fulfill their dreams for life after business ownership. It’s a mission that his 30+ year career history had prepared him well for—in addition to being an attorney, transition mediator and business broker, Jim has been a buyer, seller, and entrepreneur. His broad range of experience gives him unique insight into how business buyers and sellers can achieve their goals.

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