- It sounds crazy,
but I just wanna argue with you
that maybe your best thing to do is,
if you expect it,
that it's gonna be the same,
it is so rarely the same.
(upbeat music)
Hey there, I'm Dan Martell, serial entrepreneur, investor,
and creator of SAAS Academy,
and in this episode, I'm gonna share with you
how to deal with the emotional,
like the crazy emotional roller coaster
of considering or exiting your business,
'cause it can literally strain on your mind,
and I'm gonna teach you how to deal
with the team conversation
and be sure to stay with the end
where I'm gonna tell you how to get access
to an exclusive training called Future Living.
And it's really my framework
that I use to project into the future
where I wanna go and act today
because I don't, the identity needs to be existing today
for you to achieve an outcome.
And I call that future living.
I'll share with you later
because I really wanna address kind of five core areas
that will show up
if you're going through an exiting process
to hopefully learn from my experience, gone through it
to avoid that pain.
Let's get into it.
So I remember back in the day
when I was in my late twenties,
I think it was 27, almost 28
when I first had the opportunity,
somebody even showed an interest
in potentially in buying my company.
And it like, what,
you think this thing is valuable.
You wanna buy it, really?
And it was just like this incredible feeling.
I mean, if you've been building a company.
I mean even if it's as little as three years,
but most of us, five, seven, eight, 10 years,
and all of a sudden you have something
that shows up is like,
"Hey have you ever thought of selling the company?"
And you're like, "No, I haven't.
I've been just building what I do."
It's a lot of entrepreneurs we just do what we do
and it never occurs to us.
And all of a sudden now our mind shift,
because for most founders, we're always driven to create.
We're always looking for the next thing.
And as soon as somebody tells us
or asks us if we're looking to solve.
All of a sudden, we're thinking about like, what's next
and it's a dangerous place to get in our mind
it can be a huge distraction.
It could be detrimental to our mental state.
And, you know, having gone
through it three times with Spheric I exited when I was 28.
Flowtown I did when I was 31 and then Clarity
I think I was 34 years old.
And when I exited that company or yeah, 34
just the emotional rollercoaster, the phases
of the exiting processing, getting advice from my mentors
my investors, and my last two companies I've exited.
I had, I was venture backed.
I had investors and they have their own motivations.
And I'll tell you what money starts getting, you know
to the final levels of, of opportunity
elbows start getting sharp.
And there's a lot of things that
both the acquire my do this kind
of wonky that you need to know about and also
your investors and just, how do you compartmentalise this
so that mentally you can deal
with the increased emotional support because it can be
for you, maybe I know, it was for me with Spheric,
that was my identity.
Building that company being the CEO
of that company was who I was.
So I wanna share with you five different areas
of thinking that's going to help you deal
with that crazy emotional rollercoaster to get
you an incredible exit or what I call the perfect exit.
So let's get into it.
Number one, keep it private.
I will tell you from experience, if you have a team.
And I know if you're like me, I'm a very,
I wear my heart on my sleeves.
I share people what I'm doing in real time
I get excited about stuff.
But when it comes to exiting a business, you know
by even selling 51%, selling a controlling interest
in your business, unless the transaction is done
or you need certain people involved in that process
obviously your lawyers and your accountants and stuff
maybe your executive leadership team, for the most part
you don't want to inform anybody.
Does it need to be informed?
Why? Huge distraction, literally it could be
I mean, people start counting their money even before
and you'll do the same thing.
Maybe they start thinking about what's possible.
And if for whatever reason, you go down this path
and it falls apart, trust me then what?
Then, now you gotta explain to them why, Oh
they didn't see it as valuable as we thought it was.
So we're just going to keep building.
It's just a huge distraction.
It's a different mindset of where they should be focusing.
And the truth is, is, is you need to make sure
that nothing changes in the business anyways
but just make sure that you try to keep it to yourself
and only disclose it to people that need to be aware.
So that'll help on the mental strain right off the bat.
Number two, Escalation Ladder.
So one of the things about exiting a company that's
gonna impact your, your, your emotional feeling
behind it is if you have enough offers from other people.
And if you're at the size where kind of like 30
million plus you wanna work with an M&A banker on the
on the sell side
you wanna get somebody involved in helping with the press
totally do that.
And it's important.
But the escalation process is the idea
of how do I reach out to a potential buyer?
Right? My thing is, is I start early.
I start literally like when I start a company
personally, and what I coach my clients on
is you should have the list of the 21 companies
that should buy your business.
And over the next three to five years
your job is to build relationships with those 21 people,
not 21 companies, 21 people, cause there's seven companies
in three people inside of each one of those companies.
I'm not going to get into those three people
but that escalation is really like reaching out,
sharing your origin story, getting advice from them
on your situation, and really like sharing with them
everything you learned, keeping them in the loop.
And then if you're in process, informing them that you're
in process to exit, right, or somebody, you know
you had an inbound request.
Somebody made you think twice about remaining
independent would be some language you could use in an email
and then trying to create a competitive process.
But that's the escalation process
from reaching out, you know, asking good questions
about their origin story, what they've learned
share what you've learned as a thought leader
don't give away your secret sauce, keep them in the loop.
Maybe you have some press releases
and product releases some good news
about the business over time.
That's why I do it over a period of years.
And then when you're in process, you could reach out to them
and see if they wanna participate in that conversation.
Number three In Process.
So In Process means that you're looking to exit.
Okay. So when you're in process
that means you're just trying to generate demand.
You have those relationships, you hire a banker and you're
you're trying to create a competitive process.
The key at this stage to reduce the emotional strain.
Okay. Cause it will be
is don't stall out.
So many entrepreneurs at that stage
take their eye off of the ball of the business.
And what happens is a business that was growing 25,
30% a year, all of a sudden stalls out
and there's three months or a quarter worth
of like 10% growth compounded in that quarter
where before you were a lot higher.
That is a dangerous place to get to because
when you're going through the process, yeah, it's great.
What you've done before, but what are you doing right now?
What's your strategy, keep doing that.
And if for whatever reason you stall out on that growth
then potential buyers might decide that or might think
that you kind of amplified or pumped up the momentum.
You know, so many times to see people like
you know, you know, we're growing at X percent.
It's like, yeah, but you're spending more money
than you're making from your customers.
So you're buying revenue, right?
But if you have a profitable business, the key is
is you gotta keep the team.
That's why you don't wanna disclose to too
many people is you wanna keep the eye on the prize
and don't stall out as you're growing
and going through that process.
Number four, The Red Zone, the reds
I call it this because this is the part where
you've got an LOI letter of intent signed and
you're going through due diligence to close, okay.
A few strategies that are going to help with the mental
thing.
One, make sure your lawyer and your team is like
part of your like in your corner,
they're going to bat for you.
They, they over-communicate
you contact them on a daily, well, not daily
but often enough to be in the loop of what's going on.
My big thing is no new information.
No, no big launches
no big partnership announcements, no nothing.
And coach your team.
I've seen so many deals fall apart
because when they're in this red zone
they don't coach their team to interview properly.
If someone's going to buy you and your business
they're going to wanna know who are these people
we're buying that comes along with this acquisition.
And if somebody says something, this happened to me
I was an investor in a company.
And one of the, the CTO of the company said, you know
I'm looking to go and leave in six months anyway.
So this is perfect timing.
Well, guess what if the acquire deem that person
as a critical person to follow along
and have an earn-out and be part of that succession
and they've already communicated
they're not sticking around.
That took literally cut the whole deal down
because the valuation was lower
than what was going to be acceptable to leadership team.
So make sure red zone sign the LOI
and just get the deal done
push it forward and just be diligent again.
Don't stall out, don't get distracted.
All those things have to be true, but I'm just
wanna give you this information so you can be aware of it.
So it doesn't come as a surprise.
Number five, Vesting in Peace.
When I sold my company, Flowtown, you know
I was really excited about the acquire were we showed
up guns a blazing team was ready.
We try to move the offices.
We were pumped to integrate our technology
and their platform.
And it was awesome for about two weeks.
And then we realised
that we were now just a cog in a bigger machine
and I get it running big companies myself.
I get that like, you know, you, can't, there's a process
for communicating quarterly planning and strategic planning,
but it really waned on me because for most of my career
I was part of startups
and we move really fast and we made decision.
All of a sudden, I didn't have the ability.
And I called my buddy Brian
and I just asked him, I said, man, after you sold it
he sold his company to Myspace.
And I said, how did you deal with that?
And he said, dude, you just got to vest in peace.
I was like, what do you mean?
He goes, go in your calendar, block it out
block out your calendar.
Nobody can book meetings with you and nobody will bug you.
Just still go into the office.
They'll see you there,
they'll think you're working.
But I mean, it sounds crazy, but I just wanna argue
with you that maybe your best thing to do is
if you expect it, that's going to be the same.
It is so rarely the same.
Like I don't think I've ever met a founder
after the acquisition that said that was better
than pre getting acquired.
So knowing that try to reduce the amount
of waves that you create in the acquiring company.
Cause I was horrible at it.
Try to reduce the main, the amount
of friction that comes on to you by being invited
to stuff that you may not wanna be participating in.
Don't put your hand up to run projects.
If you really don't wanna do it
because you're like an eager beaver
and you wanna show them that you're capable
and you wanna like justify the acquisition costs.
Literally just, just make sure the integration goes smooth.
Stay out of the politics, invest in peace.
So quick recap, five strategies to help you
with the emotional rollercoaster of going through an exit.
Number one, keep it private.
Only disclose it
with people that need to know.
Escalation ladder so
that you can create enough demand so that it feels
like you're going through a competitive process.
When you're in process.
That's number three, don't stall out number four when you're
in the red zone, be sure to not introduce a new information
and then vest in peace because it will not be the same.
So as I mentioned, the beginning of the episode
I wanna share with you an exclusive, incredibly powerful
a training called Future Living.
I taught this at one of my early workshops.
It's a framework that helps people understand where they're
at now, where they wanna be in six months
and speak that future into existence is incredibly powerful.
It's how I run my life
because I like to live into the future.
It helps me communicate my vision
but you can click the link below to get access
to that training.
It will absolutely help you serve, especially
if you're going through an exit.
You want future live that process and how amazing
it's going to be, even though I told you
it may not be as great as you think it is, but that's okay.
Let's get the deal done.
Click the link below to get access to that.
If you like this episode
be sure to subscribe to my channel, smash the like button
and share it with somebody that you care
about that you think it could serve.
An as per usual
I wanna challenge you to live a bigger life
and a bigger business, and I'll see you next Monday.
(upbeat music)