The Impact of Remote Workforces When Selling Your Business

Welcome to another edition of The Wise Exit!

I'm Brian Dukes, Managing Partner at Exitwise.

In today's newsletter we'll cover:

• 3 lessons learned from selling a business built on remote workforces.

• How delays can kill the sale of your business.

• 4 signs that it might be time to exit.

You can listen to this episode on any popular podcast player or on our website: https://podcast.exitwise.com

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Spotify: https://tinyurl.com/3umw2ske

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Now let's dive in!

Featured Founder:

Name: Nathan Hirsch

Title: Co-founder of FreeUp

In a nutshell: Nathan co-founded FreeUp, an outsourced labor platform for e-commerce companies that grew to $12 million in sales with 30 employees, all based in the Philippines.

Nathan sold the business in a life-changing exit, and shares insights on how using remote workforces can maximize the sale of a business.

M&A Lesson 1: Invest in good bookkeeping from day one.

When Nathan and his partner started FreeUp, they hired a bookkeeper immediately. This decision proved invaluable during the sale process, as they had clean financials and could confidently answer the buyer's questions.

Nathan emphasizes the importance of having accurate financial records from the start, as it not only helps with day-to-day decision-making but also builds trust with potential buyers. During due diligence, the buyers were impressed by how well Nathan knew his numbers, and the financials matched what he had initially presented.

This level of transparency and organization accelerated the sale process and gave buyers confidence in the deal.

M&A Lesson 2: Prepare your team for the transition.

Selling a business built on remote talent requires careful communication and planning. Nathan ensured his team was taken care of financially and emotionally during the transition. He worked closely with the buyers to address any concerns and maintain trust.

Nathan and his partner allocated half a million dollars from the sale to their team in the Philippines, demonstrating their commitment to their employees' well-being. They also communicated openly with their team about the acquisition, addressing fears of job loss and changes in management.

By involving the buyers in this process, Nathan helped build relationships between the new owners and the existing team, ensuring a smoother transition post-sale.

M&A Lesson 3: Understand your "why" for selling.

Before entering the sale process, Nathan and his partner carefully considered their motivations for selling. They assessed the market conditions, their ability to continue scaling the business, and their personal goals. Having clarity on their "why" helped them navigate the challenges of the sale.

Nathan and his partner realized that while they had grown FreeUp to $12 million in revenue, scaling to $24 million would require significant changes to their business model and potentially compromise their remote work culture. They also recognized that the economy was at an all-time high, and they had received a life-changing offer.

By understanding their reasons for selling and aligning them with their personal and professional goals, Nathan and his partner could make a confident decision and move forward with the sale.

Featured Blog Post

Time is of the essence in M&A transactions. Delays can derail even the most promising deals. In this featured blog post, we explore the most common causes of M&A delays and how to mitigate them.

From lack of preparation to not having the right M&A team, we cover the key areas that can slow down your sales process. We also provide actionable tips on how to keep your deal on track, such as organizing your financials, documenting SOPs, and defining your exit "why."

Read the blog post: The Ticking Clock of M&A: How Delays Can Kill The Sale of Your Business.

M&A Tips of the Week

Are you considering selling your business? Here are 4 signs that it might be time to exit:

1. Business is good: When you're growing and profitable, it's a great time to explore your options. Don't wait until your growth starts to flatten.

2. Someone made you an offer: If you receive an unsolicited offer, consult a valuation expert to determine if it's a fair deal. Exitwise offers a free valuation tool - check it out here: https://exitwise.com/valuation-calculator

3. The business demands more than you can give: If you're struggling to keep up with the challenges of growth, it may be time to bring in new owners with the right skill sets.

4. Burnout: The toll of long hours and constant stress can be immense. If you're running on empty, consider selling before it's too late.

For more M&A tips, follow me on LinkedIn.

That's it.

I hope you enjoyed this edition of The Wise Exit.

Tune in next Wednesday for more lessons and insights from the world of M&A.

Have a great rest of the week.

Best,

Brian Dukes, Managing Partner.