In The Trenches

John Warrillow, host of Built to Sell Radio, shares lessons from 400+ post-exit entrepreneurs. Topics include navigating forecasts and due diligence, struggles faced by post-exit entrepreneurs, and challenges of employee communication during a business exit.

This episode is brought to you by ⁠⁠⁠⁠⁠⁠Oberle Risk Strategies⁠⁠⁠⁠⁠⁠, the leading insurance brokerage and insurance diligence provider for the search fund community. The company is led by ⁠⁠⁠⁠August Felker⁠⁠⁠ (himself a 2-time successful searcher), and has been trusted by search investors, lenders, searchers and CEOs for over a decade now. Their due diligence offering (which is 100% free of charge) will assess the pros and cons of your target company’s insurance program, including any potential coverage gaps, the pro-forma insurance pricing, and the program structure changes needed for closing. At or shortly after closing, they then execute on all of those findings on your behalf. Oberle has serviced over 900 customers across a decade of operation, including countless searchers and CEOs within the ETA community. * This episode is brought to you by ⁠⁠⁠⁠⁠⁠⁠Symphony⁠⁠⁠⁠⁠⁠⁠. Symphony not only performs technical due diligence engagements for search funds, Private Equity firms, and strategic acquirers, but they also partner with those buyers on an ongoing basis on all things product (outsourced development, team augmentation, new product prototyping, UI refreshes, QA professionalization, and so on). Symphony is offering a full 15% off of any of their services for listeners of In the Trenches. Just go to ⁠⁠⁠⁠⁠the ⁠⁠Contact form on their website⁠⁠⁠⁠⁠⁠⁠ and tell them that you’re a listener of the podcast to receive this discount! * If one were to attend a randomly selected group of Search Fund conferences, they'd be forgiven for thinking that every search fund is a smashing success. When I was both a searcher and a CEO, I often left these types of events with a certain sense of insecurity and self-doubt, as everybody seemed to be more successful, more confident in their abilities, and more decisive in their actions. Yet, the data does not at all support the idea that everybody seems to be doing better than you are: One-third of search funds reliably fail to acquire a business, and of those that do, roughly one-third of them fail to return more than 1.0x the original capital. In today's episode, we speak with four entrepreneurs whose ETA paths deviated from their original plans, not only to learn from their hard-earned wisdom, but also to celebrate their courage and the wonderful professional successes that they've all gone on to achieve since.

This episode is brought to you by ⁠⁠⁠⁠⁠⁠Symphony⁠⁠⁠⁠⁠⁠. Symphony not only performs technical due diligence engagements for search funds, Private Equity firms, and strategic acquirers, but they also partner with those buyers on an ongoing basis on all things product (outsourced development, team augmentation, new product prototyping, UI refreshes, QA professionalization, and so on). Symphony is offering a full 15% off of any of their services for listeners of In the Trenches. Just go to ⁠⁠⁠⁠⁠the ⁠Contact form on their website⁠⁠⁠⁠⁠⁠ and tell them that you’re a listener of the podcast to receive this discount! * This episode is brought to you by ⁠⁠⁠⁠Oberle Risk Strategies⁠⁠⁠⁠, the leading insurance brokerage and insurance diligence provider for the search fund community. The company is led by ⁠⁠August Felker⁠ (himself a 2-time successful searcher), and has been trusted by search investors, lenders, searchers and CEOs for over a decade now. Their due diligence offering (which is 100% free of charge) will assess the pros and cons of your target company’s insurance program, including any potential coverage gaps, the pro-forma insurance pricing, and the program structure changes needed for closing. At or shortly after closing, they then execute on all of those findings on your behalf. Oberle has serviced over 900 customers across a decade of operation, including countless searchers and CEOs within the ETA community. * Like many of you, I’m a sucker for a good quote. The best quotes often distill a lifetime of wisdom into only a few words, which is likely why some of them continue to resonate for decades (and in some instances, even centuries) after first being articulated. Over the years, I’ve compiled quotes from countless books, mentors, podcasts, and blogs, and in today's episode, I present this collection of quotes to you, in hopes that some of them impact you as much as they’ve impacted me. Most importantly though, I’m proud to finally be able to tell my wife that all of those years of highlighting books in bed have finally led to a tangible piece of output. Please enjoy!

This episode is brought to you by ⁠⁠⁠Oberle Risk Strategies⁠⁠⁠, the leading insurance brokerage and insurance diligence provider for the search fund community. The company is led by ⁠August Felker (himself a 2-time successful searcher), and has been trusted by search investors, lenders, searchers and CEOs for over a decade now. Their due diligence offering (which is 100% free of charge) will assess the pros and cons of your target company’s insurance program, including any potential coverage gaps, the pro-forma insurance pricing, and the program structure changes needed for closing. At or shortly after closing, they then execute on all of those findings on your behalf. Oberle has serviced over 900 customers across a decade of operation, including countless searchers and CEOs within the ETA community. * This episode is brought to you by ⁠⁠⁠⁠⁠Symphony⁠⁠⁠⁠⁠. Symphony not only performs technical due diligence engagements for search funds, Private Equity firms, and strategic acquirers, but they also partner with those buyers on an ongoing basis on all things product (outsourced development, team augmentation, new product prototyping, UI refreshes, QA professionalization, and so on). Symphony is offering a full 15% off of any of their services for listeners of In the Trenches. Just go to ⁠⁠⁠⁠⁠the Contact form on their website⁠⁠⁠⁠⁠ and tell them that you’re a listener of the podcast to receive this discount! * To say that it's been an active 6-12 months in the banking sector would be an understatement: Beginning as recently as January, 2022, we've seen the US Federal Funds rate increase from .08% to 4.83%, the rapid collapse of Silicon Valley Bank, and the rescue of First Republic Bank by JPMorgan, representing the second largest bank failure in the history of the United States. Against this backdrop, CEOs and prospective acquirors of small businesses understandably have a lot of questions about their banking partners, their ability to secure loans, and the terms under which they might be able to do so. To get us up to speed on the state of lower-middle-market credit in North America, I'm joined by Anthony Rodriguez and Conor Tidgewell of Avidbank, who walk us through what has changed, the "new normal", and what it all means for entrepreneurs and CEOs running (or seeking to acquire) a small business. Please Enjoy!

This episode is brought to you by ⁠⁠⁠Symphony⁠⁠⁠. Symphony not only performs technical due diligence engagements for search funds, Private Equity firms, and strategic acquirers, but they also partner with those buyers on an ongoing basis on all things product (outsourced development, team augmentation, new product prototyping, UI refreshes, QA professionalization, and so on). Symphony is offering a full 15% off of any of their services for listeners of In the Trenches. Just go to ⁠⁠⁠the Contact form on their website⁠⁠⁠ and tell them that you’re a listener of the podcast to receive this discount! * This episode is brought to you by Oberle Risk Strategies, the leading insurance brokerage and insurance diligence provider for the search fund community. The company is led by August Felker (himself a 2-time successful searcher), and has been trusted by search investors, lenders, searchers and CEOs for over a decade now. Their due diligence offering (which is 100% free of charge) will assess the pros and cons of your target company’s insurance program, including any potential coverage gaps, the pro-forma insurance pricing, and the program structure changes needed for closing. At or shortly after closing, they then execute on all of those findings on your behalf. Oberle has serviced over 900 customers across a decade of operation, including countless searchers and CEOs within the ETA community. * When acquiring small to medium sized businesses, buyers often utilize a tool called an “earn-out”, which is a form of contingent consideration that sellers may receive at some point in the future in addition to the cash that they stand to receive at closing. Though earn-outs can be useful and mutually beneficial tools for both buyers and sellers under the right circumstances, without careful structuring and consideration they can fraught with risk and unintended consequences. Before you propose an earn-out as part of your own acquisition, I’d encourage you to think through some of the risks and considerations that we discuss in today's episode. Please enjoy!

This episode is brought to you by ⁠⁠Symphony⁠⁠. Symphony not only performs technical due diligence engagements for search funds, Private Equity firms, and strategic acquirers, but they also partner with those buyers on an ongoing basis on all things product (outsourced development, team augmentation, new product prototyping, UI refreshes, QA professionalization, and so on). Symphony is offering a full 15% off of any of their services for listeners of In the Trenches. Just go to ⁠⁠the Contact form on their website⁠⁠ and tell them that you’re a listener of the podcast to receive this discount! * This episode is brought to you by ⁠Avidbank⁠. Avidbank is one of the most experienced search fund lenders in North America, having funded over 40 separate transactions since 2014, for a total of over $300M. They are deeply familiar with the search fund model, and understand the nuances of the fundraising process, dealing with sellers, communicating with your equity investors, LOI reviews, and everything else in between. Reach out to Anthony Rodriguez (arodriguez@avidbank.com) or Conor Tidgwell (ctidgwell@avidbank.com) to learn more. * My guest this week is Andy Johns, whose memoirs could be titled "a tale of two careers". In his "first" career, Andy was an executive within the start-up and technology ecosystems, with growth and product oriented leadership roles at Facebook, Twitter, and Quora, among others. Following his time at these three companies, Andy became VP of Growth, VP of Product, and eventually President at Wealthfront, an automated investment platform that currently boasts $27 billion AUM across 470,000 accounts. Now, in his second act, Andy spends his time helping others heal from emotional pain, transform themselves, and discover their life purpose. He is the Founder of clues.life, an online collection of wisdom, information, stories, and research on mental health, personal transformation, and the pursuit of meaning and purpose. He is also the author of a very popular substack, where he writes about the mental health struggles often faced by high achievers like himself.

This episode is brought to you by ⁠⁠Avidbank⁠⁠. Avidbank is one of the most experienced search fund lenders in North America, having funded over 40 separate transactions since 2014, for a total of over $300M. They are deeply familiar with the search fund model, and understand the nuances of the fundraising process, dealing with sellers, communicating with your equity investors, LOI reviews, and everything else in between. Reach out to Anthony Rodriguez (arodriguez@avidbank.com) or Conor Tidgwell (ctidgwell@avidbank.com) to learn more. * This episode is brought to you by Symphony. Symphony not only performs technical due diligence engagements for search funds, Private Equity firms, and strategic acquirers, but they also partner with those buyers on an ongoing basis on all things product (outsourced development, team augmentation, new product prototyping, UI refreshes, QA professionalization, and so on). Symphony is offering a full 15% off of any of their services for listeners of In the Trenches. Just go to the Contact form on their website and tell them that you’re a listener of the podcast to receive this discount! * Though search funds have historically acquired companies within countless different industries, software has been among the most popular and sought-after industries among searchers for many years now. Because of this, I chose to conduct a survey of SaaS CEOs (who became owners/CEOs by way of the search fund model) for two reasons: (1) To better understand the complexion of the "typical" software acquisition within the search fund ecosystem; & (2) To see whether or not the the complexion of the "typical" software acquisition has changed over time. As you will see from the data presented in today's episode, I feel safe in concluding that, yes, the profile of the typical SaaS acquisition has indeed changed over the past few years, in some cases quite materially. Today's episode will walk you through how and why I arrived at this conclusion. *Special Note for today's episode*: Because this post is necessarily heavily on stats and graphs, I would strongly suggest viewing the blog post (as I can only verbally describe graphs so well!), which you can find at this link.

This episode is brought to you by The Profit Line.  The Profit Line is a boutique finance and accounting firm that provides a wide range of accounting services to small and medium businesses generating anywhere between $5M to $50M in revenue. On a fractional, outsourced basis, they do day-to-day bookkeeping, bank reconciliations, month-end accruals, tax compliance, and financial statement preparation, among countless other things. I was a customer of theirs for 7 consecutive years while running my own company,  and am speaking as a happy customer. Book a call with Founder and CEO, Fern Gordon (Ferngordon@theprofitline.com) or visit their LinkedIn page to learn how they might be able to help you exactly as they helped me. * This episode is brought to you by Avidbank. Avidbank is one of the most experienced search fund lenders in North America, having funded over 40 separate transactions since 2014, for a total of over $300M. They are deeply familiar with the search fund model, and understand the nuances of the fundraising process, dealing with sellers, communicating with your equity investors, LOI reviews, and everything else in between. Reach out to Anthony Rodriguez (arodriguez@avidbank.com) or Conor Tidgwell (ctidgwell@avidbank.com) to learn more. * Today, I'm joined by Kent Weaver, somebody who has decades of experience serving on the Boards of SMBs. Kent is an acquisition entrepreneur himself, having acquired a Sacramento-based health care business after a ~2 year search. After running the company for close to 9 years, he exited successfully, and has been investing in SMBs ever since. He has invested in over 150 search funds and 80 operating businesses, and has served on over 25 boards spanning health care, software, business services and consolidation strategies. Given Kent’s depth of governance experience, I thought he’d make a great resource for current or prospective CEOs who might be wrestling with questions related to how to construct, communicate with, and learn from their own Boards. Please enjoy!

It's not hard to understand the importance of persistence to the entrepreneurial journey. Entrepreneurs who overcome substantial hardships on their eventual road to success are (rightly) applauded for the otherworldly persistence that they demonstrated in doing so.  Yet many entrepreneurs are able to finally achieve success only after moving on from several prior ventures whose prospects eventually grew to become much less promising. These entrepreneurs are also (rightly) applauded, though this time it’s for the foresight, objectivity and courage that they demonstrated in making what must have been an incredibly difficult decision to “quit”.  So, which is it? Should entrepreneurs persist at substantially any cost, or should they be wise enough to know when they’d be better off doing something else entirely? How does one know when to perceive persistence as an asset, and when to perceive it as a liability? In late-2020, I decided to step down as the CEO of my own company after approximately 7 years at the helm. Since then, I have spoken to countless entrepreneurs and CEOs wrestling with similar decisions. In each instance, they asked how I made my decision, which is why I’ve decided to write this post.  Though I can’t tell you specifically what you should do, I can at least share with you the questions that I asked of myself in coming to my own decision.

This episode is brought to you by Avidbank. Avidbank is one of the most experienced search fund lenders in North America, having funded over 40 separate transactions since 2014, for a total of over $300M. They are deeply familiar with the search fund model, and understand the nuances of the fundraising process, dealing with sellers, communicating with your equity investors, LOI reviews, and everything else in between. Reach out to Anthony Rodriguez (arodriguez@avidbank.com) or Conor Tidgwell (ctidgwell@avidbank.com) to learn more. * This episode is brought to you by The Profit Line.  The Profit Line is a boutique finance and accounting firm that provides a wide range of accounting services to small and medium businesses generating anywhere between $5M to $50M in revenue. On a fractional, outsourced basis, they do day-to-day bookkeeping, bank reconciliations, month-end accruals, tax compliance, and financial statement preparation, among countless other things. I was a customer of theirs for 7 consecutive years while running my own company,  and am speaking as a happy customer. Book a call with Founder and CEO, Fern Gordon (Ferngordon@theprofitline.com) or visit their LinkedIn page to learn how they might be able to help you exactly as they helped me. * Among the countless strategic decisions that software CEOs must make, the decision of which end markets to serve doesn’t seem to command the time, attention, and level of thoughtfulness that it probably should. More specifically, substantially every small or medium-sized software company must answer the following two questions: Should I sell to SMBs or to larger enterprises? Should I sell my product into a single industry vertical, or multiple industry verticals? Though these are of course not the only questions that software CEOs must answer with respect to the markets that they serve, they tend to be among the most important and most frequently posed ones. The purpose of this blog is to speak to both of these questions in turn.