Summary:
John Warrilow walks Jim Cumbee through the ownership and selling of his marketing company. They discuss the ups and the downs of business ownership and the best way to set your company up to get the best possible offer when you decide to sell.
Main Questions Asked:
- How did you get into being an entrepreneur?
- Tell us about your marketing business?
- When you started your business, did you have an exit in mind?
- What led you to make the decision to sell your business?
- How did you determine the value?
- How did you find a buyer?
- How long did it take to close?
- Were the books in good shape, was the business ready to sell?
- What are the one or two things that you would tell business owners that you did right going through the M&A cycle?
- What compelled you to write the book Built to Sell? Did you anticipate what was to come after you wrote it?
- How long did it take you to get the book published?
- You just finished your second book, The Automatic Customer, how did you get the concept to write that book?
Key Points made:
- I worked at a radio station and had an idea for a radio program, the manager said it was a dumb idea, so I decided to do it on my own. (1:22)
- We migrated our traditional marketing business to a subscription business. (2:49)
- I had planned to sell the business at some point, I just didn’t know when. (3:30)
- My wife and I had our first child and that was a trigger because I wanted to spend time with my family. (4:22)
- When we made the transition from the traditional marketing to subscription, we lost a lot of staff and culture was important to us. (5:05)
- I became very bitter about my staff leaving when I had done so much to make a wonderful culture. (5:47)
- I became very mercenary about business. (6:46)
- In 2007 and 2008 I just wanted to sell it for the most money. (7:30)
- It took about 8 months from the time we found a buyer to close. (8:23)
- We spent a lot of time making sure our accounting was in order. (8:56)
- I am a big supporter of the professional M&A person. (9:53)
- M&A people create competitive tension. (10:17)
- M&A people create an emotional buffer between you and the buyer. (10:32)
- I felt like I had a lot of lessons learned and it came out pretty quickly onto the page. (1:14)
- I self-published Built to Sell and it probably took 90 days from the point of typing the last word to get it onto Amazon. (2:20)
- A good friend who wrote Small Giants, introduced me to his publisher, Random House. (2:48)
- We added a workbook to the book and titled it Built to Sell, Creating Businesses that can Thrive Without You. (3:22)
- After the first book, I would help clients increase their business. (4:26)
- It was in analyzing what happened with those clients that made me write the second book. (5:00)
- What the acquirer wants to see is that you have recurring revenue. (5:25)
- In whatever industry that you are in, you can create recurring revenue. (6:00)
- You can find one of the 9 models in the book that works for you. (7:26)
- There is a questionnaire to see where you are on salability. Most companies come in at the 59% mark. (9:15)
Resources Mentioned:
Website
http://www.automaticcustomer.com/
Website
http://valuebuildersystem.com/
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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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