Cut Your Earnout

In this episode, Stephan Spencer details three strategies he pursued to withdraw from his business’s day-to-day operations. By 2010, he was able to take a six-month sabbatical which ultimately lead to a sale in 2010 with only a six-month earnout.

Stephan Spencer went to sell his consulting business in the late 1990s but buyers all wanted him to sign up for a long, painful, and risky earnout. Keen for a clean exit, Spencer took the business off the market and set out to make it less dependent on him personally. In the episode, he details the three unique strategies he pursued for withdrawing from the day-to-day operations of his business. By 2010, Spencer had the business running so independently that at one point he was able to take a six-month sabbatical. That’s when he knew he could sell without such a lengthy earnout. Ultimately, Spencer sold his business to Covario in 2010 for a combination of cash, stock and a six-month earnout—an earnout so short it’s almost unheard of for a marketing services business sale.

Spencer was able to make a clean break from his company because he had transitioned from being a “Hub & Spoke” manager to being what we call an “Apple Picker”. To find out where you sit on this continuum, get your Value Builder Score now. This will rate your business for its dependency on you, as well as the other seven drivers of company value.

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About Our Guest

Stephan is an internationally recognized SEO expert and bestselling author. He is the co-author of The Art of SEO and Social eCommerce, author of Google Power Search, and the inventor of the GravityStream SEO technology. Stephan founded Netconcepts in 1995 and grew it into a multinational SEO agency before selling it to Covario in 2010. He now works as a much sought-after SEO and digital strategy consultant. His past clients include Zappos, Sony Store, Quiksilver, Bed Bath & Beyond, and Chanel. Stephan has spoken at hundreds of marketing events, including SES, SMX, PubCon, Internet Retailer, and Shop.org, and he’s been a contributor to the Huffington Post, Multichannel Merchant, Practical Ecommerce, Search Engine Land, and DM News.