Abramson’s story is so rich with insight that we’ve decided to dedicate this week’s newsletter entirely to lessons from the show. First, let’s get the headline numbers out of the way: Abramson owned the vast majority of Teepublic, which he sold to Redbubble for $41 million, so by any measure, Abramson is a magnificent success and his story is full of insight for business owners.
If you’ve built a successful business, deciding when to sell it can be gut-wrenching. You’re making good money. You don’t need to sell and your business acts like a giant, tax-efficient slush fund to pay for just about anything you want to buy. Nobody likes living off their capital, so why on earth would you sell the goose that laid the golden egg?
Last week Darden, the owner of The Olive Garden restaurant chain, announced it was acquiring Ruth’s Chris, the legendary steak house, for $715 million, implying a valuation of around one times last year’s annual revenue or about ten times their adjusted EBITDA for 2022.
Last week Tesla announced they were cutting prices on their vehicles and the stock tanked by 10%. LVMH, the owners of premium brands like TAG Heuer and Fendi, saw their market capitalization go the other way. The maker of fancy watches and handbags saw their market capitalization eclipse $500 billion for the first time, while France reported that 3 of 4 of their most valuable companies are luxury brands.
If you don’t have to sell your business, you are in a better negotiating position. However, have you ever considered that an acquirer may also have a BATNA?
A BATNA, or Best Alternative To a Negotiated Agreement, is a plan B if a negotiation to sell your business falls through. While it’s essential for you to have a BATNA when putting your company up for sale, it’s equally important to understand your potential acquirer’s BATNA.
Last week, Ernst & Young cancelled plans to break the firm into two businesses. While the deal is dead, the sordid details of the proposed split provide insight into the inner workings of the usually secretive partnership and provide entrepreneurs with a rare glimpse into the relative value of cash and shares in an M&A transaction.
As an entrepreneur, you’re optimistic. I know this because if you weren’t optimistic, you would have let doubt and uncertainty creep into your decision to start your business. You’d still be sitting on the sidelines, thinking of everything that could go wrong.
Imagine walking into a car dealership knowing the lowest price the dealer will accept. That knowledge would give you an unfair advantage in negotiating. Instead, buying a car from a dealer often leaves us wondering if we could have pushed for a better deal.
Now imagine selling your business knowing exactly how far you could push an acquirer. Knowing an acquirer’s upper limit is challenging unless you have a bug planted in their board room. However, suppose your potential acquirer is a publicly-traded
Even if you have no plans to sell your business, it’s nice to be approached by an acquirer. Having acquirers court you can help identify which parts of your business are most attractive and where any weak points might be. That way, you can shore them up before putting your company on the market.
There are lots of reasons big companies buy little ones. Maybe a strategic acquirer wants to enter a new geographic market or thinks owning your company will give them more pricing authority.
One of the most compelling reasons a large corporation would acquire a seven-figure business is to give their sales reps another product to sell. A sales team is one of the most expensive investments a large corporation can make. Good salespeople cost money to recruit, years to train, and a small fortune to keep happy.
When building a valuable company, social media is a double-edged sword.
On the one hand, creating a personal brand can be an inexpensive way to funnel leads to your business.
Paul Graham first introduced the distinction between a maker and a manager in a 2009 blog post.
How much time are you getting for creative work these days? If you don’t have time to think, it may be worth understanding the framework of the maker vs. the manager.
Paul Graham first introduced the distinction between a maker and a manager in a 2009 blog post.
Abramson’s story is so rich with insight that we’ve decided to dedicate this week’s newsletter entirely to lessons from the show. First, let’s get the headline numbers out of the way: Abramson owned the vast majority of Teepublic, which he sold to Redbubble for $41 million, so by any measure, Abramson is a magnificent success and his story is full of insight for business owners.
If you’ve built a successful business, deciding when to sell it can be gut-wrenching. You’re making good money. You don’t need to sell and your business acts like a giant, tax-efficient slush fund to pay for just about anything you want to buy. Nobody likes living off their capital, so why on earth would you sell the goose that laid the golden egg?
Last week Darden, the owner of The Olive Garden restaurant chain, announced it was acquiring Ruth’s Chris, the legendary steak house, for $715 million, implying a valuation of around one times last year’s annual revenue or about ten times their adjusted EBITDA for 2022.
Last week Tesla announced they were cutting prices on their vehicles and the stock tanked by 10%. LVMH, the owners of premium brands like TAG Heuer and Fendi, saw their market capitalization go the other way. The maker of fancy watches and handbags saw their market capitalization eclipse $500 billion for the first time, while France reported that 3 of 4 of their most valuable companies are luxury brands.
If you don’t have to sell your business, you are in a better negotiating position. However, have you ever considered that an acquirer may also have a BATNA?
A BATNA, or Best Alternative To a Negotiated Agreement, is a plan B if a negotiation to sell your business falls through. While it’s essential for you to have a BATNA when putting your company up for sale, it’s equally important to understand your potential acquirer’s BATNA.
Last week, Ernst & Young cancelled plans to break the firm into two businesses. While the deal is dead, the sordid details of the proposed split provide insight into the inner workings of the usually secretive partnership and provide entrepreneurs with a rare glimpse into the relative value of cash and shares in an M&A transaction.
As an entrepreneur, you’re optimistic. I know this because if you weren’t optimistic, you would have let doubt and uncertainty creep into your decision to start your business. You’d still be sitting on the sidelines, thinking of everything that could go wrong.
Imagine walking into a car dealership knowing the lowest price the dealer will accept. That knowledge would give you an unfair advantage in negotiating. Instead, buying a car from a dealer often leaves us wondering if we could have pushed for a better deal.
Now imagine selling your business knowing exactly how far you could push an acquirer. Knowing an acquirer’s upper limit is challenging unless you have a bug planted in their board room. However, suppose your potential acquirer is a publicly-traded
Even if you have no plans to sell your business, it’s nice to be approached by an acquirer. Having acquirers court you can help identify which parts of your business are most attractive and where any weak points might be. That way, you can shore them up before putting your company on the market.
There are lots of reasons big companies buy little ones. Maybe a strategic acquirer wants to enter a new geographic market or thinks owning your company will give them more pricing authority.
One of the most compelling reasons a large corporation would acquire a seven-figure business is to give their sales reps another product to sell. A sales team is one of the most expensive investments a large corporation can make. Good salespeople cost money to recruit, years to train, and a small fortune to keep happy.
When building a valuable company, social media is a double-edged sword.
On the one hand, creating a personal brand can be an inexpensive way to funnel leads to your business.
Paul Graham first introduced the distinction between a maker and a manager in a 2009 blog post.
How much time are you getting for creative work these days? If you don’t have time to think, it may be worth understanding the framework of the maker vs. the manager.
Paul Graham first introduced the distinction between a maker and a manager in a 2009 blog post.
