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Long ago in a world far, far away (Cape Town, 2010), I started and ran a group-buying website. Yes, I was taken in by the amazing allure of Groupon, the “fastest growing company in the world“. Little did I realise growing too fast was not actually a positive.
Nevertheless, I was hooked and put together a small team that would launch a site and start selling deals within a month. It took us just over four weeks to put up our first deal, selling 42 spa vouchers. We were elated. UbuntuDeal was live and trading.
Things progressed very fast from there. We were doing well, Groupon came to South Africa to make our lives difficult, competition grew daily and South African were starting to buy online a lot more than before. We tripled our user count one month. Then we did it again. At some stage I was approached by a potential buyer and all in all this occurred five times. Two of them were very serious and eventually bidorbuy (led by Tiger Global LLC) bought out 100% of UbuntuDeal.
I learnt a helluva lot during those six months of incredibly hard work and incredible luck. Before I share one or two secrets on how I sold, note what I say: you’ve got to put everything in and be lucky. You control the hard work. Life controls the luck. If this sounds hard, know that the harder you work, the more life tends to be kind.
How will it work without you?
If you’re selling a company, you might stay on forever. But entrepreneurs have a habit of moving on. Buyers doesn’t necessary want this and will attempt to tie you in. Although I wasn’t prepared to sign something in this regard, something I was amazed to get away with, I did agree to a minimum of a year working for bidorbuy. I also warned that I would probably leave within two years. I stayed 18 months.
Negotiating this may have reduced the sale price, but I wasn’t happy to take a lesser immediate gain from the sale for a potential upside at a later date. Entrepreneurs and owners would do well to assess this key part of selling a company before they take it to market.
Determine your involvement and risk
I was adamant I wanted to sell 100% of UbuntuDeal. Not only was bidorbuy happy with this — it actually preferred this. But why wasn’t I keen to hold onto even 10% of the shares? Well, I simply wasn’t so bullish about the market that I was prepared to keep funding any share of the company. Knowing how involved you want to be once the company is sold, and whether you are still keen to part-own, is something to consider deeply before selling.
Let the market know you’re up for sale
After receiving the first two emails from interested parties, I realised that the market had potential for a sale. I then started telling people that we were up for sale. Low and behold, two of the remaining offers came from people who had heard about it from someone else.
In short, my lessons were to think carefully about what I wanted, so as to be able to negotiate better. And as I’ve written in another post on selling your company, once you know this, together with what the buyer wants, you can only end up with a positive result.
Image by Kevin Dooley via Flickr.