The Downside Of Being Upfront With Employees

In 2011 Josh Holtzman, the founder and CEO of American Data Company, gathered his employees into a conference room to announce “Fifteen Cubed”, a company-wide initiative to grow to $15 million in revenue by the year 2015.

As part of the program, Holtzman had “Fifteen Cubed” bracelets made for each employee and promised to share 15% of the business’s sale proceeds with his team.

His team left the conference room energized. The only problem was, American Data failed to grow: it remained stuck between $3 million and $4 million in revenue for the next two years.

Fast approaching the 2015 deadline, Holtzman decided the only way for American Data to reach their goal would be for him to sell his business to a similar company.

In this episode, you’ll learn:

• How to value your shares when you merge with another company.
• Why an earn out should never be tied to your employment contract.
• The definition of personal risk tolerance and how to know when you’ve reached it.
• The surprising power of a great name.
• The metrics around how many pitches you’ll have to make to get a term sheet.
• One little known reason companies make strategic acquisitions.

Magnet 360 acquired American Data for an amount about equivalent to their top line revenue because Magnet 360 was looking for a fast way to create a geographic beachhead on the West Coast. Have you considered how your location might (or might not) make you attractive to a buyer? That’s one of the questions you’ll ponder when you complete The Short List Builder, Module 11 in The Value Builder System™—get started for free by completing your Value Builder questionnaire.

Check out our article on How To Get Your Employees To Care About Your Business.

Check out our full M&A Glossary

About Our Guest

Josh Holtzman is an entrepreneur and business coach based in Los Angeles, California. Holtzman began his entrepreneurial journey at the age of 26 and grew his technology consulting firm into one of the fastest growing companies in the nation. He ultimately sold the organization to a national player. Together they grew that business 300% in three years and ultimately sold it a second time to a publicly traded global IT services firm. Holtzman currently works with entrepreneurial leadership teams to help them get what they want from their organizations through a simple set of proven tools and disciplines.