You are part of the package 🤝

Welcome back to another edition of The Wise Exit!

I’m Brian Dukes, a Managing Partner at Exitwise. 

In today’s newsletter, I’ll cover: 

• 3 lessons from Brian Dean about his exit from Backlinko 👨🏻‍💻

• Who should you hire to help sell your company? 🙋🏻‍♂️

• Selling your business is like building a championship NBA franchise 🏀

• Interesting books, podcasts, and more 📚

Let’s dive in!

Featured Founder

Name: Brian Dean

Current position: Co-Founder, Exploding Topics

M&A history: Sold Backlinko to Semrush for 7-figures

Accolades: Forbes named Backlinko one of the “20 Rising Web Development And Design Blogs To Follow In 2017”

In a nutshell: Brian earned undergraduate and graduate degrees in nutrition but took a surprising turn to writing during the 2008 financial crisis. After a few unsuccessful ideas, he came up with Backlinko, a search engine optimization (SEO) and digital marketing blog. He’s now a household name in the online marketing world, with Entrepreneur.com calling him an “SEO genius".  

Brian Dean bootstrapped Backlinko to 500,000+ website visits a month and an email list of 200,000. 

When he opened his inbox one day in January 2022, he saw an email from the SVP of marketing at Semrush, a competitor. “Backlinko is one of the best resources for content marketing,” it said. And they wanted to talk acquisition.      

Within a few days, the basics of the deal were jotted down and eventually they agreed to a mid-7-figure deal. 

M&A Lesson 1: Get expert help

Brian had no previous M&A experience and dealt with the heightened stress on his own. He had to Google what a Letter of Intent was and searched for an M&A lawyer on Upwork the night before his flight to meet the Semrush team. 

From there, he followed their lead. And to be honest, he got lucky.

While the deal ended up going through, I always recommend getting ahead of the game and having M&A expertise on your team well before a transaction is kicking off.  

They can foresee potential obstacles, make sure you have an accurate valuation, prepare you for due diligence, and advise you so you’re not searching basic terms the night before your first meeting!  

M&A Lesson 2: You are part of the package 

When Semrush flew Brian to Boston for their first meeting, he thought the deal was done: he was simply there to sign the paperwork. (See the lesson above about getting expert help.)

But Semrush wasn't just buying his assets – what they wanted at that point was to get to know Brian. 

The in-person meeting was about the fit. And it heavily influenced both the content of the agreement and ensuring the deal made it to the finish line.

M&A Lesson 3: Freelancers need contracts

Brian used numerous freelancers to build Backlinko, but none of them had a contract. They simply provided their PayPal addresses and he sent them payment as needed.

But the buyer was worried that freelancers would hear of the deal and come out of the woodworks to say, “I own a piece of that” or “I’m owed something”. 

So he had to reach out to every single freelancer he’d ever worked with and get them to sign a contract agreement to protect the buyers. This was doable (except for the ones who ghosted him), but took precious time and caused much additional stress.   

Featured Blog 📰

Not to harp on this again (but I will), it’s so important to have the right people around you when considering an M&A. A business broker is probably fine for deals under a few million dollars, but over $5 million, I recommend hiring an M&A advisor or a boutique investment banker.

I wrote an article to help you understand what the difference is between those two professionals, which one you should hire and why, and what to consider when you start looking for one. 

If you’ve been reading this newsletter for awhile, you’ll know I love a good sports comparison. “You've won and lost plenty of games, but as you approach each new season all that really matters is setting up your team for a run at a championship.”   

Read the blog post: Who Should You Hire to Help Sell Your Company? 

M&A Tips from Brian Dukes 💡

Can you handle one more sports comparison? I like to tell founders that selling your business is like building a championship NBA franchise. 

You want to create the perfect mix of players and coaches, and then add a superstar to the roster: in business, your superstar is the process of streamlining.

You want to optimize your workflows, automate repetitive tasks, outsource non-core functions, manage inventory sharply, and empower your employees. 

Perfecting those things is a huge selling point for potential buyers (and good for business). You’ll be on your way to an NBA championship in no time.  

For more M&A tips from someone who’s been there, follow me on LinkedIn.

What I’m Watching 👀

Succession (TV show on HBO) 

For me, the show Succession has been a blend of entertainment and business, offering a lens into the lives of an excessively wealthy family with trust fund heirs who miscalculate their own capabilities. 

First and foremost, the show’s theme of succession planning resonates deeply in the business world. The lack of a well-defined succession plan exposes significant risks as a business expands and its leaders age. 

Succession dives deeply into the consequences of such oversight, where the business lieutenants, lacking clear guidance, forge their own narratives, sometimes conflicting with the overarching goals of the business.

The series also dives into the emotional roller coaster of M&A deals - the delicate balance of price negotiations, the struggle for control, the intricacies of transition planning, the future of the company name, and the legacy at stake. 

These elements, though often overlooked by owners as they approach an exit, are portrayed with nuance on the show.

Succession further highlights the importance of brand recognition in M&A. Even negative publicity can play a pivotal role in the acquisition and valuation of a business. 

Lastly, the storyline underscores the critical role of having limited options to drive competition, as competition drives compelling offers, and compelling offers create a deal. 

In the first episode of the fourth season, the character T aptly advises the siblings that the company is only “worth what the top bidder will pay,” speaking the truth of all M&A negotiations.

While Succession may not be a textbook for M&A education, its portrayal of these real and relatable aspects provides valuable insights into the complexities of corporate maneuvering and succession planning…  and has been an incredible joy to watch.

That’s all for now. 

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

Best,

Brian Dukes, Managing Partner