In 1992 Stephanie Breedlove started a payroll company to make it easier for parents to pay their nannies. By 2012 they had hit $9 million in annual sales when she got a call from the CEO of venture-backed Care.com.
In 1992 Stephanie Breedlove started a payroll company to make it easier for parents to pay their nannies. It began small and she self-funded their growth, which averaged 20% per year.
By 2012 they had hit $9 million in annual sales when she got a call from Sheila Marcelo, the CEO of venture-backed Care.com. Marcelo wanted to buy Breedlove’s company and offered her almost $40 million—more than four times Breedlove’s revenue, an astronomical multiple that only serves to underscore Breedlove’s audacity when she turned it down.
Breedlove wanted more and ultimately settled on a price of $55 million for her $9 million business. In this episode, you’ll learn:
- how to strategically walk away from an offer.
- what to do when you reach a negotiation impasse.
- three criteria every owner should consider when selling.
- the pros and cons of accepting stock as compensation.
Breedlove’s story illustrates the importance of having a unique point of differentiation—we call it The Monopoly Control. Breedlove had created a special niche in paying caregivers. It was a powerful point of difference that would have been difficult for Care.com to replicate on their own, which is why they paid such a high premium for Breedlove’s company. To find out how you’re doing on The Monopoly Control value driver, complete the Value Builder questionnaire now.
Click to Tweet: Ep. 74 of Built To Sell Radio: Would You Have The Audacity To Turn Down $40MM for a $9MM company?
At Built to Sell we’re all about shifting the balance of power from the buyer to the seller. If you support our mission, please write a review on iTunes—and if you have any comments or questions you can find us on Twitter and Facebook. Tune in every Wednesday for another episode of #BuiltToSell Radio with John Warrillow.
About Stephanie Breedlove
Stephanie Breedlove has been a successful entrepreneur for over 20 years. After launching a career in corporate America with Accenture, she found her true calling as co-founder and CEO of Care.com HomePay (previously Breedlove & Associates), the nation’s largest and most comprehensive household payroll and tax firm. Her startup grew to national leadership, was later acquired for $55 million, and plays a vital role in the quality and professionalism of the in-home care industry.
Breedlove’s deep experience along with her rare ability to combine scale, profitability and quality has made her a sought-after business expert, thought leader and speaker. Breedlove and her firm have been recognized as the Austin Business Journal’s Best Places to Work, the Austin American Statesman’s Top Work Places, the Greater Austin Business Awards Finalist for Executive Leadership, and the Greater Austin Business Awards Finalist for Superior Client Service.
Breedlove’s expertise has been showcased in The Economist, The Wall Street Journal, Working Mother, The New York Times, and more. She is author of All In: How Women Entrepreneurs Can Think Bigger, Build Sustainable Businesses, and Change the World, is a member of Central Texas Angel Network (the nation’s most active angel network), and is engaged with organizations that share her passion for strengthening entrepreneurship.
Some Highlights of the Show
Business: Breedlove & Associates, acquired by Care.com
- Largest payroll company for nannies. [2:30]
- “The business model is volume based.” [5:15]
- Average client lifetime of four years. [6:55]
- $9M Revenue and 10,000 clients. [7:10]
- Deciding to sell. [8:40]
- Defining next: criteria for selling. [11:05]
- Click to Tweet: Three criteria every owner should consider when selling.
- The Letter of Intent. [17:40]
- “I took the lead during negotiations, my husband was the silent council and we had a lawyer.” [17:23]
- The final numbers: $55MM, 50% in cash and 50% in stock of Care.com. [18:15]
- The earn-out. [18:51]
- How to strategically walk away from an offer. [22:15]
- A valuation of seven to eight times EBITA. [23:50]
- Click to Tweet: What to do when you reach a negotiation impasse. [25:30]
- Click to Tweet: How to strategically walk away from an offer. [27:00]
- Click to Tweet: Stock limitations and the pros and cons of accepting stock as compensation. [31:50]
- After the sale. [34:17]
- I’m focused [now] at giving back through entrepreneurship. [35:45]
- Stephanie is now the author of, All In: How Women Entrepreneurs Can Think Bigger, Build Sustainable Businesses, and Change the World. [37:00]
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