When negotiating to sell your company, the fastest way to spike your earnings is to introduce a competing offer. But you don’t always have that luxury. It may be better to simply fake it, which is exactly what Trent Dyrsmid did to boost his take.
Trent Dyrsmid is a serial entrepreneur, author, founder of GrooveDigitalMarketing.com, and host of the BrightIdeas.co podcast. Prior to starting his online businesses, Trent was the founder of Dyrand Systems, an IT managed services provider based in Vancouver, BC, that was twice ranked as one of Canada’s PROFIT 100 fastest growing companies, before he sold it in late 2008.
More important than all that… Trent is also a husband, a father, and an avid motorsports enthusiast. Trent and his family currently live in Boise, ID.
Some Highlights of the Show
Business: Dyrand Systems
2:30: The ah-ha moment.
4:20: Switching into the “managed service space.”
4:40: “I had one focus in life after that and that was to increase my monthly recurring revenue, because I knew that that would make my life easier and my company more valuable.”
4:55: Selling in 2008, $2 million in revenue and 12 to 13 employees.
5:23: Searching out larger customers.
5:44: “It was a real challenge trying to grow revenue with large enough customers and the smaller customers who didn’t want to pay a monthly fee.”
7:01: The trigger to sell.
7:50: “I was in a mastermind [group] with a bunch of other IT providers from the States… they were all growing faster than me.”
8:15: The move from Vancouver to Seattle.
8:30: “One of my failings in hindsight was that I didn’t build consensus, I just did whatever I wanted to do because it was my company.”
10:06: “Two months after I moved I got an email from my co-founder: ‘I’m not happy, here is my offer to buy you out, if you don’t except it in twenty-four hours, I quit.’ That was the beginning of the end.”
10:40: The shareholder agreement and the initial offer.
12:55: “Three or four months before this, another IT company had approached me with an all cash offer for $1 million.”
13:30: Threat of dilution or play nice.
15:30: “I had shown my hand… because previously, when he had asked how long the co-founder would stay on, I had said three or four years. He smelled some disagreement and immediately cut his offer in half: $500,000. After eight years of work that was not a doable deal.”
20:30: “[I got] every penny [of the valuation] over four years.”
21:30: “7% net [profit before tax]… and it was one of the things that I really started to dislike about the company. It was so incredibly difficult to get that thing to make any money.”
23:50: The multiple of EBITA valuation.
24:45: “The future of the company, the vision and going to Seattle – I would have spent a lot more time getting them on board with that decision. The whole decision to hire the COO – he was hired because he had a Rolodex, but six months in he hadn’t leveraged it and I should have fired him.”
28:30: “One of my semi-regrets after was that there were certain things that I wanted to do for my next business and because I didn’t have any cash I couldn’t do them.”
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