You've built a valuable company that's attractive to potential buyers. How do you cash in without selling out?
All successful growth company CEOs contemplate the cash-out. As you grow your company, one day it dawns on you that you've built something that's valuable and you have options. Monetizing that value provides founders with financial security and diversification, but in many cases it doesn't mean they have to give up their growth dreams.
Brad White and Brian Hankin spent the last nine years building their company, (r)evolution, into a supremely respected innovation firm that has served many of the most respected brand companies, including Pfizer, Colgate-Palmolive, UPS, Georgia Pacific, Coca-Cola, Heineken, and others. Brad and Brian recently decided to sell (r)evolution to Prophet, a larger brand, marketing and innovation firm. Both have stayed with the company in senior leadership positions. We asked Brad about his decision process.
When you built the firm did you think you would sell it one day? Honestly, no. There was no stated exit plan like you might find in many business plans. We just started doing work we loved to do and after nine years realized we had created something with real value that other firms may be interested in.
What made you decide to look for a strategic buyer? We had done cutting-edge work with marquee clients but, with only 20 people in a single office in Atlanta, no one knew who we were. We got to the point where the next phase of growth would require significant investment in scale and we were faced with either investing to build that scale ourselves or finding and joining someone who had already built that scale.
How did you approach the process? We began with an informal search among the firms where we already had relationships. We decided that we'd involve professional advisors only if we couldn't find a good fit within our existing network. Over the course of a year we had seven high-level discussions with potential buyers. We looked for firms that had a scalable model and we paid close attention to the values and culture fit.
Why did you end up with Prophet? With 250 people in eight offices in the U.S. and Europe, Prophet had already invested in a scalable infrastructure. But beyond the platform, values were critical. We weren't selling the firm and walking away. Our entire team would become part of Prophet so the cultural and values fit was critical. We ended up with Prophet because of the platform and values but, to tell you the truth, it just felt like the right fit. It's like dating--when you meet the right one, you know it.
How did the sale impact the value of the company? It turns out that there is more value for the buyer and the seller when the buyer has a plug-and-play platform. This applies not just to business processes and infrastructure but also to the values, culture and how well the team will be plug-and-play.
KARL STARK AND BILL STEWART are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree. @karlstark