Seller Stories and Tips with Steve McGarry, George Bandarian & John Chen
By Chris Warburton
In this session, you will hear from three sellers who have sold their businesses and some of the lessons they learned along the way.
John is a first time ETA (entrepreneurship through acquisition) business owner. He bought Blush and Bar, an eCommerce Jewelry business in 2017 for $7500 on Flippa and sold it only Flippa in 2019 for $550,000. Prior to Blush and Bar he worked at Kinderhook Partners, a private equity firm with $200M under management.
George is an angel investor, startup founder coach, and the founder and managing director at ValueScaler, a startup accelerator with virtual cohorts (and plans for a physical office in Glendale in the near future). George helps promising founders of venture-backed startups land their first dozens of customers, gain traction and prove product/market fit, so they can raise money, and scale their impact. He also speaks and teaches at startup events, incubators, accelerators and podcasts.
Steve is an entrepreneur content creator and investor based in Tampa, Florida in 2014 Steve raised 3.5 million dollars for his startup lend layer which was acquired by Max Levchin is the founder of PayPal max Libyan startup firm in the last five years Steve has built an online community that reaches 2.4 million people every month on social media and developed a portfolio of over 20 cash flow positive websites he’s an active seller and an active buyer.
Let’s get into the Panel and their insights.
Q: What surprised you most about the selling experience?
John: The time to sell was 4 months, which is quicker than most brokers who have an average sale time of 6-11 months. Most critically was that you have to ensure you keep running and growing the business like you were before you decided to sell. This is the most important aspect.
Steve: Mainly the cultural difference between buyers on Flippa and selling to someone locally in San Francisco for example.
Q: The getting to know you process is super important. What did that look like for you guys?
Steve: that is one of the most attractive things about Flippa, you are literally talking to someone who is similar to you on the other end. An entrepreneur who has made something valuable and you appreciate and respect. The getting to know you process is super important, I still talk to people I bought and sold to 3 years.
George: A number of key lessons. This is most likely the biggest transaction of your life, so invest a lot in it and understand that the buyer is investing a lot into it too. Get to know the buyer, meet them in person. Keep the cadence going because one of the biggest deal killers is time and timing. Realize that you have a goal in mind and that you have to do everything you can to get the optimal outcome.
Q: Can you talk through the emotional part of the selling experience for those people who have never been through it before?
Steve: It is an emotional rollercoaster. Especially when you grind it out for years. It is important to remember that it is a business. You should be able to build another business and do it again. The joy is in the process of building something and the reward is selling. Moving on to the next thing is a great way to get overselling.
George: Read built to Sell. Preparing mentally for the exit so it becomes a less emotional. The post-exit identity crisis is real. I got it. Prepare yourself for it. The emotional rollercoaster is the different stages of the deal. Figure out who you want to serve and get away from ego.
John: It’s stressful during the sales period as it’s a large percentage of your net worth. You become hyper-sensitive. Tell yourself the value was built over the years.
Q: How did the price fluctuate during the sales process?
Steve: The first two businesses in the portfolio I was selling I got a lot less than what I was expecting. I had no idea what to expect, but what I found that there were a lot of buyers that come in and low ball. It is much different than something where you are projecting the future value. In terms of getting what I deserved it works itself out over time. If you can hit the between that 15x and 25x monthly range, that is when a good auction happens and when good buyers come in.
John: You will get low-balled. It’s important not to get offended and continue the conversation with them.
George: It’s the difference between a financial buyer and a strategic buyer. A Financial buyer wants it for the cash flow and a Strategic buyer is looking at how it fits into their portfolio and the numbers differently. Let the offers come in as they come in and deal with them on a 1:1 face value.