Ep 492 Mastering the Deal: How Greg Alexander Got $162M for a 30-Person Firm—and What He’s Learned from Watching 50 Other Exits Up Close
May 2, 2025
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Greg Alexander, founder of Collective 54 and seller of his consulting firm SBI for $162 million, shares invaluable insights from his experience with over 50 service firm exits. He highlights the importance of productizing services and implementing recurring revenue models. Greg discusses the unique challenges boutique firms face and the significance of client diversification through strategic acquisitions. He also delves into valuation intricacies, emotional negotiation pitfalls, and the importance of building community connections post-exit.
Understanding and improving key financial metrics, especially EBITDA, can significantly increase a service firm's market value and sellability.
Leveraging AI effectively presents both challenges and opportunities for service firms, enhancing service delivery while increasing their appeal during prospective exits.
Building a supportive entrepreneurial network, like Collective 54, offers invaluable insights and community support crucial for successful business exits and personal growth.
Deep dives
Strategic Changes for a Successful Exit
Understanding key financial metrics, particularly EBITDA, is essential for enhancing a service firm's value. By shifting focus to profitability at a project level and incorporating recurring revenue models, firms can transform from lifestyle businesses to more sellable assets. For instance, integrating subscription-based services allows firms to provide ongoing value while creating predictable income streams. Such strategies not only improve financial performance but also significantly impact a firm's appeal during the sale process by presenting clear revenue models.
The Impact of AI on Consulting Firms
The integration of AI presents both challenges and opportunities for service firms, reshaping the landscape of consulting. While some believe AI capabilities might threaten the viability of consulting firms, others see it as a means to enhance service delivery and value. For example, firms focusing on user experience design are in demand as AI changes the way software interacts with users, signifying a heightened need for specialized services. Knowing how to leverage AI can thus influence perceived value in prospective business exits.
Buyer Expectations in Today's Market
In the current market, buyers prioritize proof over promises during the acquisition process, highlighting the importance of documented performance and stability. Buyers scrutinize elements such as client diversity, proving the need for a well-balanced client portfolio to mitigate risk. Additionally, a firm's ability to demonstrate dependable leadership and operational success is critical for gaining favorable acquisition terms. Organizations showing clear evidence of growth, profitability, and reduced founder dependency are more likely to secure lucrative offers.
Learning from Exit Attempts
Entrepreneurs learn valuable lessons through both successful and unsuccessful sale attempts, with failed deals often revealing critical insights. Among the common pitfalls are emotional unpreparedness and an inflated perception of business value, which can lead to poor negotiation outcomes. Additionally, many business owners wait too long to prepare for an exit, potentially missing market opportunities and damaging their firm's future sale potential. By addressing these issues proactively, founders can better position themselves for successful exits.
Community and Networking as Success Factors
Building a supportive network within a community of entrepreneurs, such as those in Collective 54, can greatly enhance business success and personal growth. These networks provide unique opportunities to learn from peers who have navigated similar challenges, ultimately offering invaluable insights for aspiring sellers. Engaging with like-minded individuals can also foster friendships, ensuring founders are not isolated post-exit. Ultimately, establishing a strong community provides a resource for guidance, accountability, and motivation during the often-challenging journey of business ownership.
Greg Alexander sold SBI, his 30-person consulting firm, for $162 million. Since then, he’s had a front-row seat to 50 other service firm exits through his peer group, Collective 54. In this episode of Built to Sell Radio, Greg breaks down what separates firms that sell from those that stall.
This is a Mastering the Deal episode of Built to Sell Radio—designed to help you punch above your weight in a negotiation to sell your business.
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