Thomas team has closed over 1,500 deals with a combined value of over $50bn throughout their careers working with investors and founders all over the globe. With experience dating back to the early 2000s, he offers technical, diligence, and negotiation advice to early-stage and seasoned business owners alike SaaS, ecommerce, cloud.
Click HERE to find the 2023 FE International Market Report on SaaS.
Key Takeaways
(00:04-14:40) M&A Exit Strategies for Small Businesses
(14:41-18:30) Building a Good Business with Buyers
(18:35-25:00) Build a Sellable Business Growth Strategy
(25:03-33:32) Scaling and Managing a Growing Business
(33:36-41:15) The Challenges of Management and Parenting
(41:09-51:00) Selling a Business: Challenges and Considerations
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Building to Sell
The discussion highlights the significance of having a well-defined exit plan and the potential benefits of selling to strategic buyers who may offer premium valuations. The advantages of achieving financial security through a business sale are explored, alongside actionable steps entrepreneurs can take to enhance their sellability. A key takeaway is the importance of prioritizing the creation of a fundamentally strong business, as opposed to solely focusing on building one for sale, and seeking informed advice to avoid common pitfalls that could jeopardize a deal. Revenue growth and overall business size are presented as critical factors influencing valuation.
1. M&A Exit Strategies for Small Businesses
Thomas Smale, the founder and CEO of FE International, explains that entrepreneurs should have a specific financial exit goal in mind, and when they reach that goal, they should consider selling their business. He also describes different reasons why people may choose to sell their business, such as changes in personal or financial circumstances or the emergence of a new opportunity. Lastly, Thomas talks about how the current economic conditions are impacting the M&A exit strategy and how there is still demand for profitable and path-to-profitable small businesses.
I've never met anyone who has built a successful business, who's only ever been able to do it once. Then, once you sell your first business, you then create to the kind of financial platform where you can go do it again. — Thomas Smale
2. Building a Good Business with Buyers
The speakers discuss the importance of having an exit plan and the advantages of selling a business to a strategic buyer who may be willing to pay more than market value. They also explore the benefits of having sold a business and the advantages of financial security. Finally, the speakers consider the steps entrepreneurs can take to increase their options for sale and the importance of focusing on building a good business.
I am very much unashamedly a capitalist. I always think you should take money and go build something else. There's no A, there's no shame in that and there's no limit to good ideas out there. — Thomas Smale
3. Build a Sellable Business Growth Strategy
Thomas Smale shares his insights on the importance of revenue growth and the absolute size of the business in terms of valuation. The speakers also discuss the pitfalls of building a business with the intent of selling it and how taking the right advice can help entrepreneurs avoid potential deal killers.
You definitely should not go into a business and say I'm never going to sell it, so I don't care. You also shouldn't go in and say all I'm thinking about is how do I make a million dollars as fast as possible? That doesn't work. — Thomas Smale
4. The Challenges of Management and Parenting
The importance of learning emotional intelligence (EQ) to become a better manager is discussed, as well as the difficulties of managing people when factors outside of your control come into play. The differences in approach between venture-backed businesses and self-funded businesses are explored. The role of accountability in VC-backed businesses and the need for an HR or people function within these organizations are also considered.
If you said someone, I need you to learn how to be the best manager in the world, you have six months. That's basically impossible Because you have to learn EQ. If I said you need to be the best person in the world at Facebook ads, you have six months. That's it almost objectively possible because it's kind of like technical. You can learn that as a skill. — Thomas Smale
5. Selling a Business: Challenges and Considerations
The speakers discuss the challenges of raising money at high valuations and how it can make it difficult for businesses to exit. They explore how businesses with realistic valuations may be able to exit in a way that is profitable for everyone involved. The speakers also look at the impact that VCs can have on a business, such as pushing for hypergrowth, which may not be optimal for the business or its customers. Finally, they consider how entrepreneurs can maintain longevity for their customers even after the company's exit.
If you are going to sell your business, you need to accept the fact you are selling your business. It's no longer yours anymore. — Thomas Smale
Check the episode's Transcript (AI-generated) HERE.
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