Creating competition 🤼

Welcome back to another edition of The Wise Exit!

In today’s newsletter: 

• 3 lessons from Dan Martell about his exits from Clarity.fm, Spheric and Flowtown 🤼‍♂️

• A brand new episode of the Cashing Out podcast 🎧

• Our round-up of interesting M&A transactions from the past week 💰

Let’s dive in!

Buyer Spotlight

Every week we feature 4 buyers who are looking to acquire businesses in specific industries:

• Buyer seeking industrial businesses, light manufacturing, field services and industrial distribution - with EBITDA > $4M.

• Buyers looking for tech-enabled services companies (B2B businesses with strong cash flow that have or could enable technology to gain an edge) - with EBITDA > $2M.

• Buyers seeking healthcare staffing companies, ideally nursing related, as well as IT/technical staffing - with EBITDA > $2M.

• Buyer seeking niche custom US-based fabrication and precision manufacturing - with EBITDA > $1.5M. 

If you’re interested in learning more about these opportunities, reply to this email and let us know!

Featured Founder

Dan Martell is a 5-time SaaS company founder who has made 3 successful exits. He sold Spheric Technologies to Function1, Flowtown to Demandforce and Clarity.fm to Fundable (which then became Startups.co).  

Although Martell specializes in SaaS companies, his M&A lessons below are relevant to founders in any industry.

M&A Lesson 1: Start conversations early

Martell reached out to others in his industry in the early stages of building Clarity.fm. He was looking to better understand his potential buyers. This helped him make decisions that made his business more attractive.

He also developed strategic partnerships with them. Knowing that companies often buy growing businesses rather than starting from scratch in a particular niche, he partnered with them early so that conversations about acquisition later were more natural.    

M&A Lesson 2: Create a competitive atmosphere (part 1)

When conversations turned from partnerships to an interest in acquisition, Martell let his partners know that he’d received a request from another partner that had made him rethink remaining independent. 

He offered to chat with them before the conversation with the other partner got too far along. This created an atmosphere where partners believed they might miss out if they didn’t take action.

M&A Lesson 2: Create a competitive atmosphere (part 2)

If there is interest from one company, Martell believes there is likely to be interest from others – this demand is essential in providing leverage during negotiations. 

When selling Clarity.fm, he invited 5 potential buyers to an event, signalling that when the company went on the market, they might have to out-bid each other.

M&A Lesson 3: Get their number early

As Martell continued discussing options with his partners, he was well-prepared and upfront about the economics of his own business. This in turn encouraged buyers to talk about the price they’d offer sooner.

This qualified buyers and gave him real numbers to begin negotiations. He could then match who was most aligned with his exit priorities with the number they were willing to offer. 

Cashing Out: Building Businesses That Can Run Themselves, And Then Selling One From Prison

Chris Wise is the founder of Wise Profits, a company that guides $1M – $20M revenue companies to scale, prepares them for exits, and provides M&A services. 

He has over 30 years of experience as a business advisor, racking up 14 successful exits, 34 M&A transactions, and 2 IPOs. 

In this episode, Chris talks about:

• Asking for help when building your company for the future

• Coaching founders on how to remove themselves from their businesses to create transferable value

• How taking care of yourself as a founder or business owner can significantly increase productivity and prevent burnout

M&A News 📰

• Pharmaceuticals: AbbVie to acquire neuroscience drugmaker Cerevel Therapeutics for $8.7 billion in order to expand its drug pipeline.

• Data Management: Global investment firm Francisco Partners has purchased data-wiping company Blancco Technology Group for about $221 million.

• HR Tech: Montréal-based Workleap (formerly GSoft), an employee software solutions company, has acquired Austin-based HR tech firm Pingboard as it looks to expand and unify its offerings.

• Audio equipment: Pro audio giant Rode acquires rival Mackie to expand its focus on consumer-grade streaming products.

That’s all for now. 

Tune in next Wednesday for another set of M&A lessons, and have a great rest of the week. 👋