In eight years Ryan Born built Audio Micro into an Inc. 500 company. Born went on to sell it for more than $20 million in 2014 – a deal that only happened because he put an expiry date on the “no shop” clause on his Letter of Intent.
One of the reasons Born was paid handsomely for his start up was the positive cash flow model he had created. Instead of buying media rights and reselling them, he sold the rights first and then paid the content owner 30 to 120 days later. This “float” allowed him to keep more equity for his eventual exit. Cash flow is our focus in Module 10 of The Value Builder Engagement. Get started by getting your Value Builder Score™ now.
About Ryan Born
Ryan Born is a media entrepreneur best known as the founder of AdRev/AudioMicro Inc., a digital rights management and content licensing network, the majority of which was acquired by Zealot Networks in 2014-2015 for $20 million. AudioMicro Inc. ranked as the LA’s fifth fastest growing media company in the 2015 Inc. 500 list (#162 overall).
Previously, Born was an investor in and VP of Finance for WireImage (acquired by Getty Images in 2007 for $208 million), and he was an angel investor in NewCondosOnline and Internet Marketing SEO, Inc. He has been a guest lecturer at Emory University, UCLA, UCSB, Loyola Marymount and numerous industry conferences and events.
Some Highlights of the Show
Business: AdRev / Audio Micro, Inc.
2:00: “Audio Micro, Inc. was a digital media company… In short, we would aggregate content from the around the world. We specialized in music and photos and we’d license the content.”
4:48: “You don’t have to pay for inventory…”
6:02” “I started out of my apartment, on my own, with my own money… I went about a year without a pay check and I went about $60,000 into zero interest credit card debt… That’s how I financed it.”
7:03: “Over the life of the company we only raised $1.25M.”
8:23: “I had a very low pre-money valuation. My investors actually had majority ownership.”
9:05: “We sold the majority of the company for north of $20M.”
9:46: “Success kills all problems… I don’t have any reasons to change it.”
9:58: “Audio Micro, Inc. had eight products that it launched … two of them were singles, a million or less in revenue a year but self-sustaining; five of those were complete strikeouts, complete failures; and one of those was a home run and it went over the fence.”
10:30: “Our investors believed in us along the way and I never bailed on them. When things failed we never just shut the company down and re-formed a new one for the new product.”
10:40: “In retrospect you can make an argument that you could have done Ad Rev as its own entity and you didn’t really need VC money for that because it had revenue from the get-go, but I’m not really thinking like that… Everything worked out for everybody.”
11:05: “One piece of advice, you gotta think about whether you want to cash-flow that business and its making profits and you want to keep those for your lifestyle … or, if you want to take on an investor, who really couldn’t care less about dividends and interest payments and who, at the end of the day, really wants you to grow that thing and sell it.”
12:30: “The best thing an investor can do is do no harm… If your investors are causing problems, being difficult … you should steer clear. You need to find an investor who will be there during the downs and will root and cheer for you during the ups.”
14:45: The finances.
16:36: The triggering event. “I remembered things don’t always last forever… Timing is everything.”
18:28: “I did not hire a banker… I have a CPA background… I tried and did do it myself, but the process was wild.”
20:40: “If I could go back and do it again, I might have engaged a banker. My life was crazy… I wish someone had run a formal process [for me].”
23:40: “[The first offer’s] number wasn’t great. The second potential acquirer was twice as large an offer over the first.”
26:23: “We were pretty much done with the [second] deal. Term sheet was signed and I negotiated an exclusivity period with an expiration date on it.”
27:20: “I incurred $200,000 in legal on that [deal]… It got to the end and we started to experience pushback on the most minor of things.”
28:07: “Once the exclusivity period expired … within the week, I had another term sheet.”
32:15: “‘At this point exclusivity has expired, and the other offer is significantly better than yours; would you consider moving your price up?’ They wouldn’t move.”
35:30: ryan.l.born[at]gmail[dot]com | ryanborn.net | @bornryan
36:00: “After the business was acquired, I felt that I had been on a long difficult journey for eight years… For me it was a lot on my body … stress. I had gained some weight… I resigned. I’m still an advisor… I got back in shape… I got bored, so I started drumming up some stuff.”
28:30: “For me I have to stay busy and active. I have to work on something that can grow.”
Want to Increase the Value of Your Business by Up To 71%?
Take the 13-minute survey and get your Value Builder Score
The Value Builder Score was inspired by the book, Built to Sell. Complete the questionnaire and instantly get your Value Builder Score out of 100. Companies with a score of 80+ typically get offers that are 71% higher than average scoring businesses.
Get Your Score Now It’s free and 100% confidential.