Bobby Martin had built First Research up to $6.5 million dollars in revenue when he sold the business to a Fortune 500 company for 26 million dollars.
Despite getting four times revenue for his business, Martin ended up feeling empty after the sale….
In this week’s episode of Built to Sell Radio, I interview Bobby Martin. Bobby built his business from the ground up and had a great exit. He sold his business to a Fortune 500 company for $26 million dollars – four times his top line revenue at the time.
Martin’s exit was a financial success but life after the sale took a big turn for the worse.
About Bobby Martin
Bobby Martin is the founder of The Hockey Stick Principles, a research project to figure out how good ideas become successful firms; and he is the president and co-founder of Vertical IQ, a leading provider of sales research insight for banks. Martin also co-founded and served as president of First Research, a leader in sales intelligence.
In 2007, First Research was sold to D&B Corporation. Today Martin is an active angel investor and serves as an active board member with innovative start-ups Local Eye Site, Boardroom Insiders, LifeSite Logics, and etailinsights.
Before founding First Research with Ingo Winzer in 1998, Martin spent more than six years with Bank of America managing a large commercial banking pool of customers in Wilmington, North Carolina. Martin graduated magna cum laude, earning an economics and banking degree from Appalachian State University, in Boone, North Carolina.
“Don’t take selling your business lightly. There’s a lot of buzz around how cool it is to sell your business, but for me it wasn’t cool.”
About First Research
- Bobby Martin found that the more he knew about a business or industry, the more successful his sales calls tended to be. That was when he started creating cheat sheets for each business.
- In 1999, he quit his day job and started First Research as a subscription business that provided industry profiles, or cheat sheets, for industry sales and marketing professionals.
- The early customers were large financial institutions, then other large organizations and thousands of small organizations like CPAs and consultants.
- The start-up was bootstrapped; no venture capital. Then Bobby took on two partners that took 35% and 10% of the company.
- In 2006, the company did 6.5 million in revenue and then started adding a couple of million each year.
“The more I knew about a business or industry, the better my sales calls tended to be, so I started creating cheat sheets.”
- “The business was really fun to grow from 0 to a million, and from 1-5 million – really exhilarating and challenging. But it was becoming clear that 5-20 million would be a little less fun – more complexity.”
- “I wanted to keep growing fast, and I had hired a management team and a lot of new salespeople, and the business was becoming more stressful to run.”
- “I wasn’t looking to sell the company, but on the other hand I was open-minded.”
- “Then a Fortune 500 company came calling.”
“It became a different culture. It was transformed from a relationship-building sales model to a more software type sales model.”
- “I recall saying I didn’t really want to sell the business and talking about why I didn’t. I was pushing for a partnership, though I guess I did acknowledge that everything is for sale.”
- The deal was for 26 million dollars, more than 4X top line revenue.
- The negotiation went smoothly. Both parties were motivated and there wasn’t a lot of complexity because Bobby controlled the First Research shares.
- “The due diligence was very detailed but I put myself in their shoes. If I was going to acquire a company, I’d want to understand as many details as possible.”
- “A lot of details about process, about how we served our customers. They wanted to learn everything about the business before they bought us.”
“From 0-5 million, I could be an entrepreneur, but then I had to grow up and be an executive—but I really wanted to be an entrepreneur.”
- Telling the employees was tricky because the merger had to be kept confidential.
- The employees knew something was going on because Bobby had so many meetings to go to and he was completely distracted.
- He had always been open—that was the culture—but now he couldn’t be. So it was awkward.
- “The announcement of the sale took place at a meeting with everyone, and everyone’s questions were answered.”
- “The new company had great benefits, and the employees did well financially because they had stock options in the former First Research.”
After The Sale
- “It was very difficult for me emotionally and physically for many reasons. One was the sense of loss – I was no longer in charge and I had to adapt to the way that they were doing business. They were great methods, but they weren’t mine.”
- “I actually ended up having chest pains, but it wasn’t my heart, it was just stress. So I was visiting a psychologist and not sleeping well.”
- “And of course it affects your marriage. My wife was great, but we had small children at the time, so it wasn’t easy; it was a tough time.”
- “That’s part of the reason I say I wouldn’t have sold my business – just how much it carries over to your personal relationships.”
- “Now I have five businesses that I’m really involved in personally, so it has worked out in the end. Everything has come full circle.”
- “And I’ve written a book called Hockey Stick Principles in which I interviewed some really interesting entrepreneurs. It’s due for release in 2016.”
- Bobby also ended up buying a “really cool mountain place” that he and his wife and children love.
- “I connect that mountain place with the sale of my business; and the more we use it, the more we have become bonded as a family.”
- Looking back, Bobby says that if he knew then what he knows now, he wouldn’t have taken the process of selling his business so lightly.
- First Research had defined his professional career, and that career was important to him and to who he was as a person. It was his dream come true.
- When he released the business, it was “like a divorce.”
“Most of my being naïve was around the emotional consequences of selling one’s business. If I had read Bo Birmingham’s book “Finish Big” before my business got acquired, I wouldn’t have been quite so naïve.”
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