When you get an acquisition offer, your employment contract can be a key element. Just ask Eric Sit. Sit’s company was acquired by Detection and six months later, Detection was acquired. Sit lived to regret the employment contract he signed.
When you get an acquisition offer for your business, it is natural to focus on the offer price, but your employment contract can be a key element of your remuneration.
I know, you don’t want to be an employee but, when you sell, you’ll likely have to sign on for a transition period or earn-out where you will officially be an employee again. The terms of this employment contract are a key element of any deal.
Just ask Eric Sit.
Sit’s company was acquired by Detection Technologies in 2013. Six months later, Detection was acquired and Sit lived to regret the employment contract he had signed.
When Sit sold CyberWAVE, he was offered shares in Detection rather than cash because 70% of CyberWAVE’s revenue was coming from one customer. Sit could have lobbied for more of his proceeds to be paid up front had he had less customer concentration, something we help you eliminate during module eight of The Value Builder System™. Curious to see how we work with business owners? Complete this form and we’ll have one of our local market Certified Value Builders™ get in touch.
Click to Tweet: Ep. 73 of Built To Sell Radio, The Second Most Important Thing to Negotiate When Selling Your Business.
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 Eric Sit
Eric Sit started his first business in 1995. Started as a dial-up Internet provider, the Internet service business was acquired by a large local ISP in 1997. After that, Sit focused his efforts in Internet-based software technologies. He started an offshore development firm in China in 2004 to support the demand of the business. In early 2013, the business was merged with a large customer and later that year, it was then acquired by a growth equity firm.
In 2010, Sit saw an opportunity for another business and started Epic Photo Ops. With his IT background, photography background, along with his keen sense of efficiency and process, he has grown the company to be the largest Photo Ops provider in the Comic Con world and provides services to shows all around the world.
Sit’s key strength is his ability to see a situation and introduce systems, processes, and IT infrastructure to maximize efficiency. His core values are efficiency, passion, integrity, innovation, and fun.
Some Highlights of the Show
- Internet-based software application consulting. [3:30]
- Acquired by Detection, their largest customer in 2013. [4:40]
- Evaluating alternatives. [7:30]
- Detection hires an advisory firm. [8:50]
- Valuation Metrics. [10:08]
- Talking risks. [15:00]
- The sale of Detection that same year. [17:40]
- The deal terms and currency of Detection’s sale. [20:21]
- Sit’s relationship with Detection’s founder throughout the sale. [23:00]
- Click to Tweet: The Do-Over: “I’d hire a tax lawyer.” [25:11]
- Click to Tweet: “I was thinking what benefited him would benefit me. but that was a huge misconception.” [28:10]
- Click to Tweet: The employment contract is the second most important document in an acquisition offer. [31:00]
- Working for the new acquirer. [33:00]
- Sit founded EpicPhotoOps.com to provide photo ops for Comic Cons around the world. [35:08]
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