7 Reminders For When I Sell My Next Business
On March 15, my partner, Ben and I, sold WeHero to WizeHive, a software platform in the social impact space backed by LLR Partners. I wrote a specific post about what drove us to the deal from a business perspective and why we’re so excited about. If you want to get nerdy, you can read it here.
Unless you work in an investing role, most people may only do one deal in their entire life. Since it’s a such a rare occurrence, there’s so much to learn from the process. To ensure I don’t forget my takeaways, I wanted to write a list of reminders to myself. Here are the 7 key reminders:
1. Invest in Business Structure and Records:
When we started WeHero, we assumed it would be a fun side-project that we could experiment with. Because of this assumption, we underinvested in legal, accounting, and overall business set-up. While you could argue this was the right call at the time, as the business transitioned to becoming what it is today, we invested more, but never took a pause and ensured everything was structured correctly. We were lucky nothing was wrong, but there were a lot of things that just weren’t clear. We had to work with legal and consulting teams throughout diligence to wrap our heads around the situation and document everything appropriately. There’s absolutely zero reason not to invest the money to get things structured correctly and to update it often.
In a fast growing company, things move quickly and we should have slowed down to set our contract storage process better. Our sales team was sending out contracts via PandaDoc, but because we work with a lot of large companies, they would send back executed contracts via PDF or they’d ask us to sign it via their Docusign. This became a headache to track from a business perspective. Even worse, during the diligence process, we were slogging through our CRM to find each and every contract. There’s no reason to do this and I should have fixed it long ago. Going forward, this will be one of the first processes to implement.
2. Data is Power. Lean into your CRM:
When selling a business, the clearer the information, the easier it is for all sides to make a decision. I tend to believe that clear information drives a higher sales price. We were lucky to have a great sales team who were rigid about our Hubspot usage. This made it a breeze to pull all relevant information in diligence and allowed us to have a strong grasp on our performance and business prospects.
3. Document Everything:
In 2020, a good friend of WeHero, introduced Ben and I to Notion. We were amazed by the product and it quickly became a second-brain for our operations. Anything our team was doing needed to be documented in Notion. This made it more efficient for us day to day, but also provided built in operating procedures to highlight how our business was run and how we would train new people. This not only helped us scale, but also made us more attractive of a target.
4. It’s All About the People:
Business is all about the people. Deals are all about the people. Building good relationships between both sides is crucial and can help you get through the challenging parts of each deal. Spend the money to meet the people in-person. This is one of the biggest decisions of your life and you want to make sure you’re doing business with the right kind of people. Don’t be afraid to do reference calls to hold your “gut” reaction accountable.
5. Build a Pros & Cons List:
After being approached to sell the business, Ben and I spent a while contemplating whether it was the right decision for the two of us, the company, and our team. We built a long pros and cons list to outline our feelings of excitement and reservation as we thought about the deal. These were our “guiding lights” throughout the negotiation process. Going back, I think we could have improved our process by sharing this list more publicly at the start of the process. We were transparent about our reservations, but by sharing the list, it may have made the negotiations go a bit quicker. No deal is ever going to be a 100% no-brainer. There are too many factors at play.
6. Deal Fatigue is Real:
Deals take a long time to close. The process can be painful. If you don’t pace yourself, you may want to walk away just because the deal is frustrating you. Acknowledge the deal fatigue, and go back to the core reasons why you want to do the deal. Leverage third party support as much as you can.
7. Trust the Experts:
Most people only do one deal in their life. You need to partner with the right folks who have spent their career helping people get deals across the finish line. They know more than you. Lean on them to do their job. It’s important to remember that you’re the deal quarterback and should never forget that you’re responsible for closing the deal. However, you need to lean on a team to make sure you’re getting the right inputs and guidance.