Learn the secret to negotiating a sale with a multi-billion dollar corporation

Along with her father and brother, Laura Coe grew Litholink into a $10M business with 50 employees. Then one day, a multi-billion-dollar business called.

In this episode of Built to Sell Radio, you’ll hear the amazing story of how Laura re-positioned her company as a technology play rather than a simple lab company. That shift allowed the founders to attract an offer of almost 20 times earnings – an incredible multiple for any industry.

You’ll also hear the one thing Laura wished she had done to structure her earn out differently.

Also, be sure to check out Laura’s new book Emotional Obesity and her website: http://emotionalobesity.com

About Laura

Laura Coe is an entrepreneur, author, and certified coach working to help you find fulfillment one day at a time through daily emotional workout routines, nutritional thoughts and other tools.

Laura co-founded Litholink Corporation, a healthcare company serving over 350,000 patients per month nationally. When Litholink sold to a Fortune 500 company, she left corporate America to pursue lifelong passions.

Now she devotes her energy toward writing and coaching, helping others implement spiritual teachings in their everyday lives. Her first book, Emotional Obesity, is available for purchase.

 

What’s it like to sell a family business to a multi-billion-dollar corp?

History of LithoLink

• LithoLink is a technology healthcare company that was founded in 1995 and is still in existence.
• Because of the way information was disseminated at the time, Laura’s father’s work wasn’t getting out to doctors nationwide.
• The company was developed into existence with the goal of bringing a high standard of care to doctors nationally so that doctors everywhere could get the benefits of the data.

 What LithoLink Does

• LithoLink is a laboratory company that created a state-of-the-art database and started testing and conducted interpretative analysis on the data.
• Healthcare doesn’t list you with a patient level ID but rather for every single test.
• The database was the asset in the sale of the LithoLink business.
• The ability to collect data and look at chronically ill patients over time was transferable. This meant that LithoLink moved to osteoporosis and other chronic diseases.

Trigger Event To Sell

• At the time of the sale, LithoLink was $10million top line and had 50 employees.
• LithoLink was taking enough of the market share away from the entire sect of doctors. It was starting to eat away at revenue in the entire area.
• The lab industry is an acquisition-based industry.
• LabCorp was a $4billion dollar company.

“Spend time understanding their needs & goals & why they’re at the table.”

Negotiations

• The most important part of negotiations was having a great legal team.
• LithoLink was extremely aggressive about taking on any kind of post-deal burden.
• Once you walk away from a company, it’s hard to remain liable for things that happen afterward.
• LithoLink positioned themselves based on the technology model rather than a lab company.
• Lab companies get small multiples whereas technology companies receive larger multiples.
• The thing that got the deal was understanding the needs of LabCorp.
• Efforts to get to know the purchasing team as people were made in order to negotiate the deal.
• LithoLink was shooting for a multiple of 5 to 6 times but ended up getting twenty.

“We were very aggressive about taking on any kind of burden, post deal.”

 The Earnout

• This was two years; however, the goals were easy to meet and reasonable.
• LabCorp withheld 30-40% on the backend over two years, so the business didn’t lose money.
• In retrospect, a bigger upside would have been ideal with regards to milestones on the earnout.
• The challenge is recognizing that the payroll, legal, and accounting is no longer under your control and now in the big system.

“We were able to grow the company aggressively for a period of time & we didn’t set up aggressive bonuses.”

 Employees

• LithoLink staff were told about the sale on day one when the deal was started.
• Getting the team on board was as important as getting the deal done.

 Lessons Learned

• Be prepared for the politics that comes with a bigger corporation.
• Ask for more of an upside if you do well in the earnout period.
• As entrepreneurs we think ‘we are going to be happy when…,’ but selling a company isn’t a ticket  to happiness for the rest of your life.

Enjoying Built to Sell Radio? Leave us a quick review on iTunes. After your review, email support at Value Builder System dot com and we’ll send you a free copy of Built to Sell: Creating a Business That Can Thrive Without You.

Links to Resources Mentioned

LithoLink / LabCorp of America  / Emotional Obesity

Click To Tweet

What’s it like to sell a family business to a multi-billion dollar corp? Find out w/ @JohnWarrilow @BuiltToSell & @laurascoe

What is the secret to negotiating on a sale with a multi-billion dollar corp? Find out! @JohnWarrilow @BuiltToSell & @laurascoe

“Get them excited & on board about what the potential is instead of turning it into just a numbers game.” – @Laurascoe w/ @BuiltToSell

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