The best time to sell your business is when someone wants to buy it. It can be tempting to want to continue to grow your business forever – particularly when things are going well. However, not selling at the right time can come with a significant downside.
At Maximum Possibilities, we understand the significance of this decision and the impact it can have on your future. With our expertise in connecting business owners with the right investors, we are committed to guiding you through the process of selling your business to the perfect investor.
It’s All About Decisions
Let’s take a look at the story of Rand Fishkin. He started his entrepreneurial journey when he joined his mother’s marketing agency as a partner.
At that time, Fishkin realized how much his mom’s customers were struggling to rank on Google. Therefore, he started to focus on the emerging field of Search Engine Optimization (SEO).
He began writing a blog called SEO Moz, which led to an SEO consulting and software company. By 2007, Moz was generating revenue of $850,000 a year. At that time, Fishkin decided to drop consulting to focus solely on his software business.
The company began to grow 100% per year. By 2010, Moz was generating around $650,000 in revenue each month. As a result, Fishkin’s success grabbed the attention of Brian Halligan, co-founder of marketing software giant – HubSpot.
HubSpot wanted to buy Moz and was offering $25 million and shares in the HubSpot stock. This offer was almost five times Moz’s $5.7 million revenue in its last financial year.
However, Fishkin wasn’t satisfied and did not accept the offer. He believed that the fast growth of the Software-as-a-Service (SaaS) company was worth four times the future revenue and was confident Moz would hit $10 million by the end of that year.
Fishkin counter-offered, saying he would be willing to accept $40 million. HubSpot declined.
Creating a Successful Business Plan
Instead of selling Moz, Fishkin raised a round of venture capital and started to diversify away from SEO tools into a broader set of marketing offerings. Unfortunately, the further Moz veered away from its core in SEO, the more money his business began to lose.
By 2014, Moz was in full crisis mode, and Fishkin was suffering from depression. He decided to step down as CEO. He described his resignation as “a lot of sadness, a heap of regrets, and a smattering of resentment.”
Fishkin became a minority shareholder in the company. He no longer had authority over the areas where venture capitalists had preferred rights.
Business Plan Failures – A Lesson Learned
After Fishkin turned down Halligan’s offer, HubSpot went public on the New York Stock Exchange and its value increased by approximately 20 percent.
Fishkin revealed that today, his liquid net worth is $800,000 – much of which that will go towards funding the elder care for his grandparents. The Moz stock he holds may or may not have value after the venture capitalist gets their preferred return.
At the same time, if Fishkin accepted the initial HubSpot offer of $25 million in cash, he currently would have had HubSpot stock would now be worth more than $100 million (based on the increased value of HubSpot’s stock).
Fishkin’s tale is a cautionary reminder of why the best time to sell your company is when someone wants to buy it. This short story that is shared in his book Lost and Founder: A Painfully Honest Field Guide to the Startup World.
What if an offer was made for your business today? Are you ready to sell? Would you regret if you said no?
How to Sell a Business?
Selling your business requires careful consideration, strategic planning, and a good understanding of marketing dynamics. Determining the best time to sell is one of the ways Maximum Possibilities helps you. Our financial experts ensure that you connect with the investor who appreciates the value you have created and possesses the resources, expertise, and shared vision to propel your business to new heights.
At Maximum Possibilities, we can guide you through the complexities of selling your business and unlock the full potential of your hard-earned achievements.
Let’s discuss the best options for your business sale to safeguard the future of your business and transform your financial goals into reality.