How Mainspring Went From a Valuation of 1 to 5 Times Revenue
September 20, 2017 |
Want to increase the value of your business by up to 71%?
Take the 13-minute survey and get your Value Builder Score
About this episode
Subscribe:
In 2014, Hank Goddard got an offer of one times revenue to buy his software company, Mainspring Healthcare Solutions.
Goddard said, “No, thank you”.
A year later, the acquirer came back and doubled their offer to two times revenue. Again, Goddard declined.
It wasn’t until the acquirer came all the way up to five times revenue that Goddard agreed to sell.
In this episode, you’ll learn:
- How to get an acquirer to quintuple their offer
- How to structure employee stock options (structure vesting, etc.)
- The biggest mistake to avoid when hiring “C-level” leaders
- The definition of a preferred share and how venture capitalists use them to wipe out founders
- How to get employees to buy in when you need to pivot your business model
- When to strategically ignore acquirers
Goddard shifted Mainspring from selling perpetual software licenses to a Software-as-a-Service (SaaS) model that enabled him to maximize the proportion of Mainspring’s sales that were recurring—a key driver in getting five times revenue for their business. Have you figured out your recurring revenue model yet? If not, you’ll nail it in Module 5 of The Value Builder System™. Get started for free by completing Module 1 now.
About Our Guest
Hank Goddard is an entrepreneur and investor based in Boston, Massachusetts. Over the course of his career, Hank has designed jet engines, made a living flipping houses, acquired and sold multiple companies, and built companies from scratch. Hank’s most recent operating role was the CEO of Mainspring Healthcare Solutions, one of his portfolio companies that had been under performing. He took the company through a restructuring and turnaround, grew the business five-fold, and sold it in early 2016 at a very healthy multiple of revenue.
Related to this topic
Why Policy Medical Got 7.2 x Revenue
Saud Juman built PolicyMedical, a company enabling hospitals to document their procedures and policies, into a software company growing 100% a year when he sold it for 7.2 times revenue. It was a remarkable exit for a business Juman started in his mother’s basement.
From Paper Sketches To $441M Sale
Oribe sold in early 2018 for $441M, but in 2008 they were just a few sketches of shampoo bottles on a piece of paper. Tev Finger shares the surprising tactics they used to drive revenue.
, John Warrillow interviews Phil Carson, the founder of a diabetes testing supply company. Carson wanted out of the business he and his partner had built from the ground up.
Is Your Business Worth Less Than You Think?
Bert Martinez started Accelerator, a supplements company. When Martinez started to worry that one of the supplements he sold, ephedra could be banned, he put his business on the market, only to realize it was worth a lot less than he thought.
The Backstory Behind Dream Water's $34.5M Exit
David Lekach started Dream Water; a natural sleep aid bottled in a 5 oz shot similar to the famous 5-Hour Energy Drink.
Lekach built Dream Water up to almost $10 million in annual revenue before selling it to Harvest One, a cannabis company, for $34.5 million in cash and Harvest One stock.
How To Sell Your Family’s Business
Ross Organic was a family business, so when Stephanie Leshney took over from her father, she knew she had to make some changes if it was going to grow into a more valuable company.
How Jennifer Aniston And Reese Witherspoon Helped Viviscal Exit For 15x EBITDA
With celebrity endorsements like Jennifer Aniston and Reese Witherspoon, Viviscal hit €50 million in revenue…so, why would the CEO want to sell it?
How One Key Hire Helped Dimple Up Their Value By 500% in 2.5 Years
Teetering on the brink of liquidation, a key hire at Dimple led to a dramatic turnaround that resulted in a $13.4M exit.
How to Get 10x EBITDA in an Industry That Trades at 5
In 2002, Lee Richter and her husband bought Montclair Veterinary Hospital in Northern California. Californians were embracing alternative medicine, and the Richter’s wondered if their affluent customers would invest in holistic therapies for their pets. They began offering acupuncture and chiropractic treatments for animals.
What to Do When Your Partner Is Not Ready to Sell
Tyler Jefcoat co-founded Care to Continue, which provides in-home care for seniors, in 2012. Jefcoat built the company to more than 100 employees when he got an offer from a private equity group for more than five times EBITDA. Jefcoat was thrilled. The only problem? His partner wasn’t ready to sell, which kicked off an acrimonious battle ending with Jefcoat selling his shares back to his partner.