Make yourself replaceable

Welcome back to another edition of The Wise Exit!

In today’s newsletter: 

• 3 lessons from Danielle Simpson and Arvid Kahl about their exit from Feedback Panda 🧑🏼‍💻

• 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 precision manufacturing business with > $2 million EBITDA.

• Buyer seeking Michigan-based light manufacturing with diversified customer base > $1.5 million EBITDA.

• Buyer seeking construction or related business with > $4 million EBITDA.

• Buyer seeking disaster recovery services business with > $3 million EBITDA.

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

Featured Founders

Danielle Simpson and Arvid Kahl co-founded Feedback Panda in 2017. Simpson was an opera singer teaching ESL online and dreamed of a way to organize student feedback better.

She asked her partner Kahl, a software engineer, to build a tool that would help her save time on this task.

By 2019, they were making $55,000+ per month with no other employees. They sold to SureSwift Capital for an undisclosed 7-figures. 

M&A Lesson 1: Listen to your community

Kahl is a proponent of being an “embedded entrepreneur,” which is also the title of one of his books. 

Instead of building a tool or service and then looking for customers, his approach is to go to potential customers and listen to what they’re complaining about and what kind of help they’re asking for. 

He considers this to be the least risky and community-centric way of learning how to help people through your product or service. They will also be your target audience for marketing, so get to know them well.   

M&A Lesson 2: Make yourself replaceable 

Simpson and Kahl’s mindset when they created Feedback Panda was to build it as an automated business, as much as they could. The goal was for the day-to-day operations to run without them (although Kahl says they still worked “24/7”). 

That meant they didn’t have to hire other employees and it was an easier transition when they were approached to sell. Finding ways to automate any business can make it easier to run and attractive to buyers. 

M&A Lesson 3: Diversify your wealth

Like most business owners, Simpson and Kahl tied up all of their money in Feedback Panda. After 2 years, they realized that it would be better to have more diversified finances.

Says Kahl, “We had a great business but we also had a lot to lose in the second year.” This was a main factor that led them to consider selling.

Simpson adds that, because they felt they had so much to lose, they found themselves making safe and comfortable business decisions, rather than taking calculated risks in order to grow the company.

Cashing Out: The Top 3 Attributes Of Any Sellable Business

Mike Finger learned the hard way how to sell his business. After 10 years of growth, he attempted to make deals with several buyers but his investment bank finally told him his business wasn’t in a position to sell.

He did end up selling, after 4 additional years of fixing his mistakes, and now uses the lessons he learned to advise other small businesses how to successfully exit.

In this episode, Mike talks about:

• Are your business results desirable?  Will an acquirer see value and opportunity in what you have built?

• Can a buyer duplicate your results?  Can the buyer run the business without you?

• Can you document your results?  Is there a playbook written that can be followed once you are gone?

M&A News 📰

• Marketing & Advertising: Adtech company Perion Network is acquiring digital out of home (DOOH) advertising platform Hivestack for $100 million.

• Publishing: Penguin Random House acquires Hay House, a hugely successful self-help publisher operating in the US, Australia, India and the UK.

• Watches & Jewelry: Swiss watch brand Breitling acquires historic Swiss watchmaker, Universal Genève.

• Industrial Refrigeration: Haier Smart Home enters into a definitive agreement to buy Carrier Global's commercial refrigeration business for an enterprise value of $775 million.

• E-Commerce: Mainfactor acquires e-commerce and direct-to-consumer acceleration company Gimme Radio, a platform that aims to resemble an independent record store.

That’s all for now. 

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