I didn’t like Basil Peters the first time I saw his name.

Basil’s book “Early Exits” had a huge display at the Books for Business store in downtown Toronto. I sheepishly asked the clerk if she had a copy of a book with a similar theme called “Built to Sell”. She looked puzzled and turned to her computer terminal to search the title.

“Sorry sir, we don’t seem to have that book”.

I left the store cursing this Basil Peters fellow.

Then, begrudgingly, I got to know Basil.

What I discovered was one of the smartest, most experienced entrepreneurs I have ever met. Starting in school, he scaled a business up to a couple of hundred employees. He sold it and took his cash and invested in some start-ups. He promptly lost a bunch of his winnings but learned a lot in the process. He went on to be involved in a hundred or so deals –as an entrepreneur, angel, investor and/or advisor.

I’ve asked Basil to come to Las Vegas and spend a half day working with the 20 entrepreneurs selected for the Creating a Sellable Service Business Workshop on January 16 &17, 2012 (there are still a couple of spots if you’re interested – you can register here).

To give you a quick peek inside Basil’s mind, here’s a recent exchange between the two of us:

What exactly do you mean by an early exit?

There isn’t a precise definition. “Early exits” refers to a strong trend in the 21^st century economy, driven by buyers who want to acquire companies in the $10 to 30 million range. With “internet acceleration,” entrepreneurs can often create values in that range just 2 or 3 years from startup. The combination of those values, and that timing, are what I think of as an early exit.

What are the telltale signs that a business (or entrepreneur) is ready for an early exit?

Exit timing is one of the things I wish I had done better in my first five or six exits.  Now having watched about 100 exits reasonably closely, I am convinced that in the very large majority of situations, entrepreneurs wait too long to start working on their exit. They end up ‘riding it over the top’ and selling for much less than they could have. Or even worse, missing the optimum time often means the company never exits.  This phenomenon has not been discussed very much and is something that I am working hard to illuminate for entrepreneurs and investors.

What are the signs that it is too early/soon to exit?

It’s actually relatively easy to tell if it’s too early. I think the best indicator is that the price isn’t high enough to satisfy the shareholders. And it’s reasonably easy to determine the price (within a reasonable range of certainty.)

A lot of business owners are planning to wait until the market for privately held businesses recovers, banks are willing to lend more aggressively, and multiples start going up again. Is it worth waiting?

In my opinion, that time is now. Interest rates are lower than they have been in our lifetime, the private equity funds are back, and the corporate acquirers are very receptive. With everything going on in Europe, I wouldn’t wait.

What if you have a really small business, maybe only $500,000 in revenue with some promising technology, should you still think about selling early?

I don’t think of it as a question of selling “early” or not. I believe it’s a matter of the best time to sell. Often the best time is well before the company is profitable or hits $1 million in revenue. Recently, Google said: “we prefer companies that are pre-revenue.” How’s that for early?

Can you explain the structure of the typical early exit? Are businesses owners walking away with a check or are they selling a part of their business to a private equity firm with hopes of taking a “second bite of the apple” in 3-5 years, or are you seeing a lot of earn-outs?

Most of the exits I see these days are all cash, or possibly cash with a portion of vendor financing. Buyers know that if they try to reduce risk with earn-out formulas or risky structures, the sellers will just go somewhere else. The problem for most buyers today is that they have too much cash. So if the transaction is fairly priced, the structures today tend to be cash, or ‘near cash.’

Once a business owner makes the decision to sell, what are some of the mistakes you see them make in approaching a transaction?

The most common mistakes I see are:

1.       CEOs trying to do it themselves, and

2.       Selecting the wrong M&A advisor (i-banker)

Do you believe in running an auction for a company, or do you try to negotiate with one strategic at a time?

I believe multiple bidders are always desirable. In some cases, that’s not possible or isn’t what the sellers want to do. But in my opinion, it’s almost always a good strategy.

What are the idiosyncrasies of selling a service business?

These days, in North America, almost every business is a service business, or has a large service component. Software as a service (SaaS), for example, is probably the hottest sector of the M&A market. Non-service businesses – in other words, manufacturing and asset businesses – are harder to sell today.

How does having money change your life?

I think it’s a little like having your first child. Everyone will tell you what it’s like, or what it was like for them. But until the reality is right there in front of you, it’s actually pretty hard to describe. For me, having money created a lot of freedom. I enjoyed it a lot and strongly recommend it to everyone.

What were the mistakes you made after your first exit that you would like to take back if you could?

That’s another easy one. I could tell a long story, but I think the most common mistake, and I certainly made it, is to go out and make two really bad investments. When I sold my first company, a couple of my friends in YPO warned me that was what most of us do. But like all good entrepreneurs, I ignored them. So I learned that lesson with an education that cost about 20 times more than my Ph.D.

Basil Peters will be leading a half-day session at my “Creating a Sellable Service Business” workshop on January 16&17, 2012 in Las Vegas. Register here.

I first got the idea from an entrepreneur named Greg who had moved his family to Geneva for a mid-life sabbatical.

As I started to explore the possibilities of moving to Europe, I realized that – at least among the entrepreneurs I know – it was more popular than I had at first realized. My friend and the founder of Gazelles, Verne Harnish, had moved from Virginia to Barcelona, Spain with his wife and four children.

Robert Barnard, another friend and the cofounder and CEO of DECODE, had left Toronto for London, England with his wife and young family.

I think a sabbatical abroad appeals to an entrepreneur’s sense of adventure and is often more feasible for a business owner than it would be for a big company manager who has to stay on the career ladder out of fear of being passed over for a promotion or wait years for an overseas assignment that might never come.

Inspired by our friends, my wife and I moved our young family (we have two boys age four and six) to a town called Aix-en-Provence in France, which I picked after exhaustive research: I googled “the sunniest place in France.”  The extent of our family’s understanding of the language was a rusty old twelfth grade French credit I had taken twenty years before. We recently celebrated our first year over here, so I thought I’d share a few reflections in case you’re planning a similar adventure:

1. Send them to camp

Most entrepreneurs on sabbatical plan their arrival around the beginning of the school year, but I’d recommend moving in mid-summer to give your kids a few weeks of summer camp. Most developed countries have a network of camps (in France they call them “Stage”) where working parents can drop their kids off for the day. For the type A crowd, there are “language camps” that offer kids a fun way to learn a new language.

We decided to enroll our kids in a half-day sports camp to minimize the shock they would soon experience in full-day French school.  The first few days of summer camp were full of tears, as our kids felt alone in a country where they neither spoke the language nor had any friends. But at camp they knew they were only ever a couple of hours away from seeing their parents again and they soon acclimatized.  I think getting the tears out of the way in the summer made the first few weeks of the school year much easier.

DECODE’s Robert Barnard took a different approach to integrating his kids into a new country: “We took a one-month trip to London a year before we moved. I worked and the kids did some camps and museums, etc. Then when we said we were going to do London for the year, it was not a big deal.”

2. Picking a school

Picking a school for your kids can be a tough call. Places like London, Geneva, Aix-en-Provence and Barcelona are popular among North American entrepreneurs because they have international schools that follow the Baccalaureate program, which offers a curriculum close to what North American kids are used to.  Putting your kids in an international school also creates an instant network of (mostly) English-speaking parents eager to make friends.

My wife and I opted for a different route and put our kids in a local French school so we could integrate into life here a little faster. We’re happy with our choice because it has allowed our kids to be immersed in French and enabled us to meet local French parents.

In your case, I would make the call based on how long you expect to live abroad: if your horizon is one year or less, an international school will be less disruptive for your kids (although more expensive). If your time horizon is longer, I think the local school route will allow you to integrate faster.

Robert Barnard, who is in the UK at least in part to set up an international office for his company, has another good suggestion: “Pick the school first, then the house. Commuting with kids to school is tougher than commuting on your own to work.”

3. Wheels

When we first arrived, I had a big Citroen Berlingo (think French Magic Wagon) and regretted every minute of our ten-day rental. Trying to park that tank in a country where a Mini is a midsized car was an exercise in frustration. French roads and parking lots are designed for small cars, so my advice – especially if you’re planning to live virtually anywhere outside of North America – is to buy a car a lot smaller than what you’re used to. I opted for a Diesel Audi A3.  It goes 1,100 kilometers on one tank of fuel (in Europe fuel costs about fifty percent more than it does in North America) and fits down the cobblestone lanes of even the oldest French villages.

I also bought a 50 cc scooter and that has been a godsend. If you live in a European city, circulation can be atrocious. A scooter allows you to maneuver around most traffic jams and park on any street corner or sidewalk. Hands down, my scooter has been the best 900 Euros I’ve spent so far.

The other option is to pick a city where you can live car-free. “The advantage of living in a city like Barcelona is that we didn’t need a car,” says Gazelle’s Verne Harnish. “In fact, it was part of our strategy to jettison our ‘addiction to the automobile’ that we have in North America.” (For the record, Verne also bought a scooter, much to his wife’s chagrin!)

4. Unplug

Whether you plan to work on your sabbatical or completely unwind, be prepared to be without a reliable connection to the Internet for the first month or so of your time abroad. When we first arrived, it took about a month to get an Internet connection installed in our house. What made Internet matters worse was that there are very few Wi-Fi zones in the south of France. One of the only reliable Internet connections was at a local McDonald’s franchise, so instead of sipping Rosé in a café, I ended up loitering at the golden arches daily just to download email.

5. To ship or not to ship

Our cost of living here is about what we would be paying in Toronto, but there were a couple of one-time expenses that we’ll never get back. One was the $15,000 we spent to have the contents of our house in Toronto shipped here.

We struggled with the decision to ship our things or not. Personally, I could care less about furniture except for one precious item: our Tempur-Pedic mattress.  But there were also things like the kids’ bicycles and a few toys that we knew we would miss if we didn’t ship our stuff.

As with a lot of things, my advice would be to let the length of your stay drive your decision making. If you plan to stay for more than two years, I think shipping your stuff will make you feel more at home and will probably be less expensive when compared to buying everything – or paying the premium for a furnished house. If you’re staying for less than two years, it probably makes financial sense to rent a furnished home or make friends with the local IKEA.

One other important nuance about renting a house: in France – and I’m not sure what it is like in other parts of Europe – you can rent a house furnished or unfurnished and there is a big difference from a legal perspective. In a furnished house lease, most of the rights go to the landlord, so they can cut short your stay if they want their house back. In an unfurnished house lease, the rights go to the tenant and the landlord cannot cancel the lease prematurely, yet you have the opportunity to cancel it within 60 days of the anniversary of each year of your lease.

6. Play time zone arbitrage

“I love being in the European time zone,” says Gazelle’s Verne Harnish, “First, I’m not receiving emails from North America until mid-afternoon, so I have all this uninterrupted time during the morning and early afternoon – great for relaxing, working on interesting projects, or playing tennis. In turn, it’s so much easier communicating with India, the Middle East, China, and even Australia, being six time zones closer.  So I can be on with the East in the morning if I like, enjoy a long afternoon lunch with my Spanish friends and then hop on with the West in the afternoon and be finished by the time the children get home from school.  In essence, the epicenter of the global economy has shifted east and being in Europe puts me six time zones closer to the action – one of the main reasons I’m excited we’re staying in Europe.”

Recently I got a note from an Italian-American entrepreneur who, at age 44, is considering taking his family to live in Italy for a year. I told him that it was a “game changer,” which is the best way I can describe the decision. I think I now come at business problems with a broader perspective; but the real dividends have been on the home front, where our sabbatical has brought us closer as a family and given us some amazing memories and a larger world view than we had before we left. Bon Courage!

PS. I’m coming over to the U.S. for a couple of days in January and have decided to host a reader workshop. Details here.

It was my wife’s birthday yesterday. She’d kill me if I told you how old she turned but suffice it to say, it was a biggie (there is a zero on the end).

In an effort to preempt melancholy, I made my wife her favourite breakfast of all time: an egg McMuffin complete with a happy face made of HP sauce:

Kicking off a milestone birthday right

Finding English Muffins in this part of France is no easy task but I was determined to get this milestone birthday off to a good start. Which got me thinking, about milestones. Why is it that we celebrate birthdays or the start of a new year? On paper, it’s just another day, right? But milestones give us an excuse to hit the pause button and remind us of what we have accomplished, all the things we have to be grateful for and gives us permission to dream a little about the future.

So what are the milestones that you’re celebrating on your journey to building a valuable, sellable company?

If I may, here are a couple I think you should consider commemorating.

1. The day you go “all in”

Most of us start businesses while doing something else. You plan your business, maybe make a couple of sales but, as long as you have a job or a few credits left to get, you’re still on the fence. Then one day you decide to quit everything else and commit 100% to getting your business off the ground. Now that’s a day worth celebrating –  not for what you have accomplished, but for the courage it takes to jump off the fence and the adventure that lies ahead.

2. First time someone (or something) makes a sale

Making a sale as a business owner is a bitter sweet feeling. The sense of triumph is tainted by the realization that your business is dependent on you showing up. But the day that your salesperson walks into your office with a signed contract or someone hits the “buy” button on your website without you having to nudge them is a glorious moment in time.

3. A New home for your company

There is something special about moving into new space. A lot of business owners are creative souls at their core and a new environment to work in usually means you’re growing and investing in the future. Definitely a time to throw a party.

4. The million dollar mark

Hitting a million dollars in revenue is a significant achievement. Of the 27 million businesses in the United States, roughly 3%  do more than a million dollars in sales. You’re in an elite group – celebrate.

5. The first shot over the bow from an acquirer

The first time someone approaches you about buying your business is a special milestone. It’s usually an informal advance, maybe over lunch or at a trade show. I remember the first time I was approached by a big company who wanted to buy my marketing agency. The partner in charge of business development asked me to lunch and, once the plates had been cleared,  asked me if I would ever consider selling my company. I asked him what he was offering and he made a vague reference to “ten times”. I thought ten times was a very generous offer for a service business until he revealed he was referring to ten times net income after tax and that most of it would be made available on a five year earn out. While I passed on the offer, a little part of me was flattered to have been approached.

6. One million dollars of EBITDA

While you don’t need to have a million dollars of pre tax profit to sell your business, it is an important milestone to shoot for because it opens the door to a wider range of buyers. Some strategic acquirers won’t consider a business will less than a million dollars of Earnings Before Interest Taxes, Depreciation and Amortization (EBITDA). Also, financial buyers (e.g. private equity companies) have started to come “down market” and some will now consider businesses with a million dollars in EBITDA. You may not want to sell to a financial buyer, but having another offer at the table creates competition for your business.

7. First management team meeting

Cobbling together a senior team is a slow process but eventually you realize that your business is no longer all in your head and that other people have (and want) a say in things. Sitting down with your management team for the first time is a moment to savour – you’ve built a business capable of attracting senior talent and you have taken a giant step towards being sellable.

8. LOI / term sheet / Expression of Interest

Another big milestone is the first time you get a written offer to buy your business. More than empty chatter over lunch, this is a formal document where someone validates – in writing – that your life’s work has value to someone other than you. There’s still a long road ahead before closing day, but you deserve to celebrate.

9. Closing day

You need to down an entire bottle of your favourite bubbly for surviving the due diligence period which is a little bit like how I imagine a stoning to feel.

10. Your last day

In my last company, I remember the final day like it was yesterday. I had ridden my bike to work so when it was time to go, I put on my biking clothes, said my goodbyes, and road off down the street. The spring air has never felt so fresh, my bike had never felt so light. Freedom is a feeling to behold.

Out of interest, what milestones are you celebrating?

I started Warrillow & Co. in 1997 to help big companies understand the small-business market. The company was acquired in 2008. Over those 11 years, I built some relationships with people who work in the world of entrepreneurship—people like Bob Lapointe, the president of Inc. (Inc. magazine, Inc. 500, etc.), Curtis Kroeker, the boss at BizBuySell.com and Wendy Vinson, the president of The E-Myth, the coaching company behind the book of the same name.

A few weeks ago, I went groveling to people like Bob, Curtis and Wendy so I could pull together a package of goodies for you in return for ordering my new book this week. You know the drill: in a world of distracted readers and fragmented media, the week of a book launch—like that of a new movie—can make it or break it. So I leaned hard on my friends, pulled in all my markers and put together what I hope you’ll agree is a nice package of bribes for ordering Built to Sell: Creating a Business That Can Thrive Without You this week.

If you order one copy of Built to Sell between today and this Saturday, you’ll get five gifts worth a total of about $65 (offer #1):

1. A one-year, complimentary subscription to Inc. magazine

Every time Inc. arrives at my house, I steal away to a quiet corner and crack the spine. I start with Jane Berentson’s letter and then skip right to Norm Brodsky’s column, “Street Smarts.” Norm’s advice is so good that I consider him a mentor even though we’ve never met in person. Then I read Jason Fried’s latest rant. I study the “American Dream” article about the latest business for sale. Then I dig into the cover package.  After an hour with Inc., I invariably feel better about my decision to shun corporate life for the wild ride of business building. It’s one part therapy, one part inspiration and one part how-to manual. If you order my book this week, I’ve arranged to get you a complimentary, 12-month subscription to Inc. magazine.

And…

2. A two-hour conference call with me

At Warrillow & Co. we held an annual summit each year, and I used to hate listening to paid speakers stand up on stage and give their rehearsed spiel in exactly 45 minutes. I would sit restlessly waiting for the Q&A period. I got to moderate the discussion and always tried to get the speaker to go “off message.” I loved it when someone asked a question so good that the speaker needed to think. It was the gaffes, candid admissions and spontaneity that I craved—which is why I think you’ll like this call. I’m going to answer your questions about building a sellable business. I’ll be direct with you—I’m sure I’ll say things I’ll later regret—and the only thing you won’t get is a rehearsed speech.

And…

3. An e-book from The E-Myth on building a sellable company

When I started my first company, I read The E-Myth, and to this day, it is the book that most profoundly shaped my thinking on what it means to be a successful business owner. The E-Myth is so good that it has become the entrepreneur equivalent of What to Expect When You’re Expecting—practically required reading for business owners. So I asked the coaching company behind the book to develop a special package of content for you that applies the idea of “working on your business, not in it” to building a sellable company. This e-book is not available publicly—it’s just for the people who order my book this week.

Plus…

4. A free BizBuySell.com valuation report

I used to ask myself two recurring questions when growing my last business: “What is it worth today?” and “If I do x, y and z in the coming years, how much more would it be worth?” If you’ve ever wondered what your company is worth—or what it could be worth down the road—a BizBuySell.com valuation report is your answer. The report takes your key financial data and compares them against recently completed transactions in your industry to develop a benchmark for the multiple being paid for a business like yours. As the Internets largest marketplace of businesses for sale, BizBuySell.com has a deep data set of past deals to draw benchmarks from. If you order a copy of my book this week, you will receive a code to develop a customized BizBuySell.com valuation report for your business. Just plug in your basic financial stats and see what your business might be worth. (The report alone retails between $19.95 and $59.95, depending on the number of comps included).

And…

5. A $25 Kiva.org loan in your honor

I stumbled onto Kiva.org when we, at Warrillow & Co., were looking for a charity to support. I instantly loved its business model.  Through a website, it allows people to lend money to aspiring entrepreneurs in the developing world and follow their progress. If I’m ever feeling a little low or something is not going quite right, I make a loan and get an instant pick-me-up—a feeling that I’m helping someone in need and a reminder of how lucky I am to be able to lend.  If you order my book this week, I’ll make a $25 loan to a Kiva entrepreneur in your name. You can then follow the entrepreneur’s progress for yourself and see how you’ve helped someone pick him- or herself up by the bootstraps.

So that’s the deal. If you take two minutes now and order the book from Amazon (or Borders, Barnes & Noble, Chapters/Indigo, 800-CEO READ, etc.) for around $16 and forward your order confirmation to rachel@BuiltToSell.com, we’ll get you your package of five complimentary gifts today (please note, the Inc subscription is only available to U.S. residents. If you live outside the U.S., you’ll still get the other four gifts).

Get my advice on your business (offer #2)

Occasionally business owners ask me to consult for them about how to create a sellable business. It probably doesn’t come as a huge surprise to you that I hate the consulting business model. I just think it is flawed on so many levels, which is why I don’t consult.

But for this book launch, I’m bending my rule a bit.

If you have a specific question and want my advice—maybe it’s about valuation or creating a recurring revenue stream—I’ll spend an hour with you on the phone one-on-one to answer your question, provided you order 10 books this week. If you send me some details about your business before the call, I’ll also spend some time prepping for our discussion. Given my allergy to consulting, I’m limiting this offer to the first 10 takers.

Ten books is about nine more than anyone would ever need, so my suggestion is to give the ones you don’t need to friends who own a business. Or if you’re in an Entrepreneurs Organization (EO) chapter or Vistage forum, hand them out to your chapter or forum mates. If you can’t think of anyone to give them to, let me know, and I’ll donate them to an enterprise center where new entrepreneurs go to get business advice.

Just email your proof of a 10 copy purchase (e.g. Amazon order confirmation) to Rachel@BuiltToSell.com before this Saturday April 30, 2011 and we’ll be in touch to book your phone meeting.

Spend two intense days with me to make your business more sellable (offer #3)

I’m going to host a small, intimate session at the Four Seasons Hotel in Chicago on Sept. 28 and 29, 2011, for a group of 16 business owners interested in making their businesses more sellable.  The Sellability Workshop will be an intensive, two-day session designed for business owners running companies with between $500,000 and $5 million in annual revenue. I will lead a spirited discussion and Q&A around the following themes:

• Recurring/subscription revenue models
• Pricing psychology
• Branding and packaging
• People and leadership
• Positioning yourself for a strategic acquisition

The limit of 16 people is a luxury. We’ll have lots of time to get to know each others businesses and provide our lessons learned and war stories. I’ll lead the conversation, but it will be a workshop format with lots of discussion, Q&A and time to reflect.

The Sellability Workshop is $2,495, but if you buy 50 copies (at a cost of around $800) of Built to Sell between now and Saturday, you can come as my guest. Again, just forward your order confirmation to rachel@BuiltToSell.com. Please give the other 49 copies of my book to friends or forum mates who run companies, or we can donate them on your behalf to an enterprise center library, where they will be well loved. This offer is obviously limited to the first 16 people who send in their confirmation of a 50-book order between now and Saturday. (Hint: often times 1-800 CEO READ or B&N are better at handling large bulk orders).

Have me as a guest speaker (offer #4)

From time to time, I get asked to speak to Vistage chapters or EO forums.  Usually it is not a fit because I charge to speak, and most groups are looking for me to speak in exchange for exposure to their audience. That model doesn’t work for me because I don’t have a follow-on product to sell: I’m not a consultant or an M&A professional who speaks to gather leads. The upside is, if you have me speak, your members get 100 percent content with no hidden agenda. The downside is, I don’t do freebies. To that end, I’d be happy to speak to your group, provided you order 400 books by this Saturday (this offer is limited to the first two takers).

Just email your proof of a 400 copy purchase to Rachel@BuiltToSell.com before this Saturday April 30, 2011 and we’ll be in touch to book your speaking engagement. (Hint: often times 1-800 CEO READ or B&N are better at handling large bulk orders).

Q&A

Q. What’s the difference between the first edition of Built to Sell and the second edition being launched this week?

A. In the second edition of Built to Sell, the story of Alex Stapleton remains intact and is accompanied by an all-new 10,000-word Implementation Guide, which outlines my experience, war stories and lessons learned from starting and exiting four businesses. The Implementation Guide is a practical, nuts-and-bolts manual for turning a business into one that can thrive without you.

Q. What if I order after Saturday, April 30?

A. Sorry, April 30, 2011, is a firm date. Send Rachel your order confirmation before 6 p.m. Eastern Time on April 30 to take advantage of any of the offers above.

Q. What if I live outside of the United States?

A. All offers are valid except for the complimentary subscription to Inc., which is just for U.S. residents. If you live outside the United States and you send Rachel your order confirmation by April 30, 2011, you’ll still get the other four gifts.

Q. What if I have already ordered the new book?

A. First of all, thank you. Provided it is the second edition (Built to Sell: Creating a Business That Can Thrive Without You), dig up your order confirmation and send it to rachel@BuiltToSell.com, and we’ll send you your five-pack of gifts.

Q. What if I ordered the first edition, Built to Sell: Turning a Business into One You Can Sell?

A. Thank you. Unfortunately, these offers are just for people who order the second edition, called Built to Sell: Creating a Business That Can Thrive Without You.

Q. Are these offers good for e-book purchases (e.g., for Kindle, Nook, iPad)?

A. No. Unfortunately, these offers are good only for hardcover book purchases.

Q. What if I don’t need that many books?

A. Let us know, and we’ll arrange for the books you don’t need to be donated to a small-business development center (SBDC) or enterprise center library.

Q. What are the logistics on the Sellability Workshop on Sept. 28 and 29, 2011?

A. We start at 9:00 a.m. on Sept. 28 and finish by 4:00ish each day.  We’ll grab dinner together somewhere nice the evening of Sept. 28. You’re responsible for your own travel and hotel costs (there are lots of choices in Chicago, from super-swank to very modest). There is no long-distance or webinar access to the session. This is an intimate and small-scale group. Plus, Chicago is a great city in the fall—it’s worth the trip, promise.

DONE DEAL

By Nick Whitmore

Colin (not his real name) sold his central Virginia business-referrals firm after 11 years of running the franchise he’d created.

Prior to closing, Colin’s business generated revenue of $420,000. He decided to sell to focus fully on a new business-advisory enterprise he’d set up.

The business had two divisions: one in Shenandoah Valley and one in central Virginia.

“My mentor told me, ‘You have two businesses within that business, so you could split it up into two and sell them separately,’” said Colin.

Colin didn’t place a single ad to sell his business. He gave his assistant, who was running the central Virginia arm of the business, the option to buy it. However, the assistant wasn’t able to purchase it because of finance issues. In the end, Colin received four offers on his business before finally closing a deal.

The buyer of the central Virginia division was a good friend of Colin’s. “He said, ‘Are you selling it?’ I said, ‘Well, we weren’t, but we’re always open to selling it.’ We really liked the guy, so we said we’d sell it.”

Colin’s former bookkeeper purchased the Shenandoah Valley arm.

In total, Colin’s business was generating $206,000 of earnings before interest, taxes, depreciation and amortization (EBITDA). The business was sold in two parts for a combined total of $550,000, representing an EBITDA multiple of 2.67. The business was sold “as is.” There was no earn-out or seller finance involved.

Deal Snapshot

Business type: Business-referrals
Revenue: $420,000
EBITDA: $206,000
Selling price: $550,000
Multiple paid: 2.67

(photo courtesy of sxc.hu/blary54)