Intentional Growth

#285: Understanding The Emotional & Technical Details of Buying & Selling a Business with Lowell Ricklefs

Jan 27, 2022

59:51

Lowell Ricklefs is a 30-year veteran in the SaaS and M&A space. He is currently co-founder & CEO of Traction Advising, a company that helps B2B SaaS companies get acquired. Before starting his firm, Lowell was the COO of a publicly traded company he helped bring to a $260M exit.

We cover a lot of ground on today’s show around why buyers want to purchase a business and the real reasons why sellers want to exit. With decades of experience in mergers and acquisitions, Lowell gives his thoughts on business owners tying their identity to the business and the impact that has on everything else, from your family to your health. He has seen this many times — as a buyer as well as an investment banker — and when it comes time to sell, these kinds of owners have a really hard time letting go . . . even after saying, for years, that they want out. We get into the weeds about why it’s so important to understand what you want from the business, emotionally and financially, and the potential challenges you’ll face if you aren’t clear on your intention. If you’re ready to run a better business, this episode is for you!

What You Will Learn

The drivers behind financial buyers vs strategic buyers
Why strategic buyers will buy a company to avoid losing out on a competitive advantage rather than the benefits the new company will provide
Why playing “the emotional game” will place your business in the right hands when selling
Why Lowell believes selling a business is no different than a product or service
Why certainty and alleviating risk (that the buyer identifies) before the deal is final will suppress the “ripple effect.”
How the owners identity impacts what they want long term for the company
Why it’s important to understand what you “what you want to leave behind” when it comes to an exit
Why Lowell moved to SaaS startups after being in the corporate world for years
How a consulting company can create automated platforms to solve a problem in their business and sell it to similar companies with the same problem
Why no attorney should solely do a deal and who they need on their deal to get the deal done right

// USE YOUR FINANCIALS TO CLARIFY A PATH TOWARDS A MORE VALUABLE BUSINESS: Intentional Growth Financial Assessment

Bio:

Lowell is the CEO & Founder of Traction Advising which specializes in helping B2B SaaS companies with >$5M ARR get acquired. Lowell’s been a Co-founder/CEO/Chairman, COO of a $120M public company, Startup CRO and Global VP Rockwell. He’s a Global Mentor, Investor, Board member and CEO coach.

With company buying/selling experience of more than 30 organizations, he knows what internal stakeholders need to approve a transaction. As a founder/CEO he knows what it’s like to start up a company, build a product, hire employees, raise money, find customers, keep them happy and make payroll. He leverages this experience to craft acquisitions that get the best outcome for the founders/investors structured to maximize success.

Quotes:

09:21 - “Ultimately the company is worth what somebody is willing to pay for it. And that can be wildly different, and they can pay for it in different way.” - Lowell Ricklefs

22:53 - “The goal is to have multiple options because it drives competition and drives the price up.” - Lowell Ricklefs

28:00 - “I find some people don’t realize how much of the business has become an extension of themselves as a human being.” - Lowell Ricklefs

30:35 - “It’s easy to lose perspective when you’re in the middle of a deal, when the emotions and the stress are high.” - Lowell Ricklefs

32:52 - “Many people don’t realize that you can sell to a financial buyer and you can still run your business.” - Lowell Ricklefs

36:06 - “There are a lot of singles, doubles, and triples that are good businesses. They’re real businesses. They add real value to other businesses. But they don’t have the hockey stick growth.” - Lowell Ricklefs

46:50 - “Understand how the buyer operates.” - Lowell Ricklefs

50:05 - “A truly risk-free deal is never going to happen because neither side will agree to it.” - Lowell Ricklefs