* * *
MORGAN: I knew I would sell my company from the time I founded it. I don't regret selling it, although the moment I did it, even though it was a logical conclusion, the emotional impact was great. I wanted to sell because if I didn't, I was afraid I'd grow old and still be running it. I was 55 -- that was the driving incentive.
* * *
INC.: Not that it had peaked?
* * *
MORGAN: No, I had shaped up that business to last forever. In fact, the company was accelerating. When I sold, it was doing $40 million; it was at $70 million two years after. Dynatech got something of real value. Then they screwed it up.
* * *
WURTS: The buyer screwed up mine, too. It's painful to watch them change your company. But then, they paid for the privilege.
* * *
INC.: Yet you stayed on.
* * *
WURTS: I had to. I signed a three-year contract because it was a public company and they needed to show that management wasn't going to bolt. But I knew I couldn't stay for three years; I just didn't know how I was going to get out. And I felt since I had taken all that money from them, I had an obligation to stay, and it was the worst nine months in my life.
* * *
INC.: What went wrong?
* * *
WURTS: The company that bought us was not much bigger than we were, and they wanted to merge the companies totally, and there's not room for two CEOs in a company like that. I wasn't about to go from a CEO to an operating guy. So there wasn't anything for me to do.
* * *
INC.: Had you planned to sell from the beginning, like Dodge?
* * *
WURTS: A lot like Dodge. We had always intended to go public or sell out in a blaze of glory. We thought we'd do it in a couple of years; had we known it would take 15, we never would've started it. But it turned out to be more fun to run a larger company than I thought. I was 21 when we started, and I couldn't imagine what it would be like to have 16 people, much less 250. Then there was a stretch in the middle '70s when you couldn't sell a software company like ours, so we went through a period of not even trying. We figured we were paying ourselves probably twice our market value, we owned the business 100% and had no outside investors, we were growing the thing at 50% a year, it was profitable, and we were having a great time. But I was frustrated because I couldn't get any data on what going public was like. I used to grab everyone who was public and ask, do you spend half your time doing boring stuff? Can you still run your own company? And I didn't know anyone who had sold a company.
* * *
INC.: Eric, you're a bit different in that you were picked by a venture firm to build and run a company.
* * *
KRISS: My decision to sell the company was relatively easy: there didn't seem to be a whole lot of alternatives. When I started MediVision in '84, it was venture-backed from day one. It wasn't even my idea. Stockholders need liquidity, so there was no question of a hundred years. I always assumed that at some point soon, I wasn't going to be there.
* * *
WURTS: I always assumed we would sell when the numbers looked good for the right number of quarters and we were profitable and growing, and we'd sell with amazing timing. Eventually it hit me that that's wrong, that you can't control when you get the best price. The stock market goes crazy every number of years and pays ridiculous multiples and IPOs are easy. At other times, you can't even do them. It's out of your control. So I changed the strategy completely. I said, I'm not going for this blaze of glory and then sell the company. Instead, I'm going to keep it profitable and always acceptable, so if somebody wanted it, they could buy it. If someone offers me a fair price for the company, I'm going to turn them down. I'm going to be prepared to wait until somebody comes along who's willing to pay a ridiculous price, then I'm going to take it on the spot. That's how you make real money with your business -- not selling it for a fair price.
* * *
GOLDHIRSH: I have a question about regrets. You may start a company with the intention of selling it, but what if you get emotionally involved? Many people who start a company, or even are asked to run one, unexpectedly get absorbed in it. The relationships they have with their employees and their customers become their identity. The company justifies their existence in ways that are totally different from when they started out.
* * *
MORGAN: I view myself as having only been my company's steward for a while. When a buyer comes up with cash, you revert back to what drove you to build the business from scratch in the first place, mortgaging your house and all that. "Hey, there's a buyer out there -- that's why I grew this business."
* * *
INC.: And you had something else you wanted to do right away. That must have helped.
* * *
MORGAN: Anyone who sells his company and doesn't have something else to do is going to run into trouble.
* * *
GOLDHIRSH: But you didn't have to take the cash and leave. You could've gotten somebody to run it, sailed around the world for a year as you did, come back, and continued on with it. Don't you regret not having done it that way?
* * *
MORGAN: No. The regrets I have about selling have more to do with the loss of the culture we created in the company. We had built a decentralized decision-making machine. There were no officers, no trappings of rank anywhere in the company. We were institutionalizing chaos in a way. To see that stepped on was what I regret; I thought the power of the people would keep rolling, despite the new leadership style.
