Thomas Green here with Ethical Marketing Service. On the podcast today, we have Brandon White. Brandon, welcome.
Hey, thanks a lot, Thomas. It’s afternoon there in the UK, isn’t it?
Yeah getting towards the end of the working day now.
Right on. Well, I’m just starting – trying – so thanks for having me.
That’s my pleasure. Would you like to take a moment and tell the audience a little bit about yourself and what you do?
Yeah, sure. I think the best way to describe me is I’m just an entrepreneur, I say just, right, you and I both know how hard that is. But I started my career in 1996 but I’m not counting the lemonade stand because I think most people do that. So I’m moving forward to when I was in my early twenties but I started my first company which became the largest social networking and e-commerce site on the internet and through an interesting journey of boots dropping raising money and then buying it back from the investors after the internet crash which some listeners may or may not remember happened in 2000 and one.
I ran it as a really good cash flow business and then eventually sold it to a media company. And from there I had an interesting journey. I was an early person. What I really did is when I bought the company back, I automated most of it and I was running it as a side household quite candidly had a plan at the end to sell it which took me about on a five-year plan to do that. And I went back towards the end full time. But in between there I was an original early guy say at America Online. I was a venture capitalist working for to eventual firms, investing mainly in the internet security and enterprise software. And, and then I started several other companies. Not all that went well. Um, but I’ve had to exit so far. Currently, I’m an angel investor. I live in Half Moon Bay California, which is on the peninsula that I think Silicon Valley has expanded. It used to the proper Silicon Valley used to be San Jose, but with companies moving all along the San Francisco peninsula, I think anything on the peninsula called Silicon Valley.
So, we get to look at the ocean while still having the advantage of being in this tech mecca. I do angel investing. I have a newsletter that I actually print a newsletter. If you can believe that. That goes out once a month called build a business success secrets that is only available in print. You can’t get anything. But it’s designed for entrepreneurs who want to get the most out of their time talent ideas. And I actually have a few other companies and working on a SAS company that software as a service company that helps you find files, you know, you have on your computer or drives but can’t find, I think most of us have had that problem. Uh, I got tired of wasting time and me and another founder did that. And then I have a security company that does cyber and actual physical, physical security for companies looking, um, to fortify whatever they have, whether that’s a corporation or a plant or a school.
So that’s what we’ve been doing and I ride bikes a lot and hang out with my wife. So you’ve got a lot going on. There’s one thing which I immediately wanted to pick up on and that was, am I right in saying that you said that you sold the same company twice? Well, what I did was, so I’ve sold to companies and I effectively on the first one – let’s call it, I think there’s this thing new thing called like restart or something like re entrepreneur, I don’t know. But I had started this company and then I bought it back from the investors actually myself. So I bought the company that I really bought the assets Thomas candidly, but um, and then I restarted it and then eventually sold it to a large media company in Canada that seemed like a very savvy moved. Is that an appropriate description of it? Well, in hindsight Thomas, it is savvy because it got me my house that I’m talking to you from Half Moon Bay paid off a lot of debt and a lot of other things.
Some people called me dumb at the time, some called me stubborn, crazy and a bunch of other things, but candidly, I really, for whatever reason, believed that the internet was not going to go away and in 2000 and one there was, believe it or not. And you probably remember there were a lot of questions whether this internet thing was actually going to be feasible, and feasible meaning not that the internet was going to go away, but could you really build a business online? And most the answer was, was that there was some successful businesses happening. What I believed at the time was that we got ourselves into trouble because we grew to, we raised money, um, which at the time, looking back on it, I believe that money was going to solve the problem. Money covers up problems and it in many ways stifles your creativity.
I’m not saying that there’s time in a company’s life cycle when you absolutely need capital and you need to pour gas on the fire because then, and at that point is when you’re going to scale meaning, um, you, I could tell you are exact process. And if you’re half a decent salesperson or, or online marketer online to build, I think we now call them funnels a caller process to get the sale, uh, until you figure that out, You know, it’s not time to raise money and a lot of companies raise money too early before they figure that out. And I think in our case, we probably raised money a little bit too early, but didn’t have the choice if we were going to go down that route because of the way the internet dot com craze at that time, from 98 really up until the crash of 2000 and one was just wildfire and um, I realised that this could be a profitable business.
The online world could be a profitable business with the business model. I find it very ironic Thomas, I don’t know about you, but everybody’s like, oh, you need membership and you need all these things. Well, we were doing membership. We had three revenue streams. We were doing membership with a forum, believe it or not. We had a third from membership, a third from advertising and a third from e-commerce. And at the time, not everybody believed that that was possible. And what I thought was one, I think I was candidly Thomas, angry, I was angry that the market crashed, I was angry that we made mistakes and I didn’t want to give up whether that’s pride, stupidity, uh, ego. Um, but a belief that the internet really had the opportunity because I was a kid sitting on the eastern shore of Maryland, which for anybody out there is like, it’s a very gorgeous place, but it’s nowhere. I mean, it’s like it’s like being in just in the middle of nowhere, but with a modem at the time and a computer was able to reach the entire world and you know, I just thought that that was incredible and if you could figure out how to gain, get more people at a low cost that that business could work.
So I we had to shut down, we let everybody go and I bought it back and within a few months I’m thinking back how long it was, but it wasn’t long time us until we were running a profitable, profitable venture. So you know, I think, and look, I made a bet, that was right, I mean, we were podcast in the 1990 eight mainly because I didn’t want to write 3000 words, fishing, report articles every month and I was like, well if I could just record this, and I actually recorded it, we did do video, believe it or not, back then for those who remember 14, 24 what is it? 14 baht, and then 56 came on or whatever we had but we were able to get audio on the internet wasn’t called podcasting. It was really just an audio file that we put up on a flat file, html site and said click this thing and it would play in the browser or they could download it and play it.
And we were just doing these things and I was so amazed that I was always a computer Greek, I started on a commodore Vic 20 and then I think I upgraded to a Commodore 64 but, you know, the ability to do that from your house Thomas and market was just, I just felt like it was the Wild West and everybody was equal even amazon at that time you know, it wasn’t, it was a level playing field furthermore, the hard time, many people on the internet candidly. Well, a really interesting story. I feel like I could actually speak to you about this whole episode about just the concept of your story, because I’m sure there’s tons of learnings there, but are you happy to speak about how to sell a business today? Well, sure, I’d love to talk about that. I think that I you and I were talking beforehand a little bit yesterday and the email and I agree with you. You had said something that I think is really important is, you know, a lot of people, don’t they?
That’s the dream, right? Like, oh, I’m going to sell the business Thomas and then you just throw that out there and you have no idea what that means, nor is there a strategy to do it. And I think there’s some negative connotations around selling the business that don’t need to be there. I think if you want to run a business forever, I think that’s great, I think, you know, that’s great. I think for other people who want to get an exit so that they can do other things in their lives. I think that’s great too. And there’s nothing wrong with that. I think that you have to take care of your employees and the people that have worked really hard and make sure that you do the very best for them, but I don’t think there should be a negative connotation. I do want to say this because I was really thinking about it, I was thinking about this morning when I was drinking tea. I think it’s important for entrepreneurs out there listening or marketers, anybody who’s listening out there that you don’t build a company to sell it, let me say this, you don’t build a company to flip it.
And here’s what I mean by that, if you build a company with the idea that you’re just going to flip it, then you likely will not build a very strong foundation. And I think in, and I get to say this after two decades of being an entrepreneur is if you build something that solves a problem for people and you are so good at it and people and when I say solve a problem for people, they need to pay you for that problem to solve that problem. And if they do that, whether you’re doing online marketing campaigns forum, whether you’re running social media, whether you’re selling this mug, whether you’re building software once you’ve proved that and you have a repeatable process with a good culture. The good culture means a lot of different things depending on what that industry is and what the personality of the leader is not good or bad.
But if you have that Thomas, I believe someone comes and wants to buy you of course, like if you have like a cool thing and I see it, you have a cold podcast, what you do, I’m gonna listen to it and then somebody’s gonna want to buy, incorporate that into something bigger or something like that. So I just wanted to say that because I think sometimes business owners and entrepreneurs chase a flip. And what happens is you can’t see this because I have a sweatshirt on this morning, it’s a little chilly here and happen today, but you can’t see it. But I got like 50 scars on my back from learning these lessons, that there will be things that can happen. One of my board members of Worldwide Anger, which is the fishing company, which later became title Fish said to me, he was an original guy from America online. He was like really earlier than I was, he did a company called vertical scope, which was, I think Microsoft invested 100 million and they went public, really successful guy and he said to me, Brandon, you know, it wasn’t, you have a good idea, it was one of the things that led me one of multiple things that led me to buy the company back.
But he said you have a great idea like this model works just the market crashed of which you have no control and if you buy something to flip and you get caught in a market or this covid craziness or whatever it is, right – this is repeated through history – it’s unrecoverable because you have no strong foundation. So I just throw that warning shot across the bow to anybody and I’m sure Thomas somebody will write in say I did it that guy Brandon you had on, you know I did it awesome man. It’s hard to repeat, and that’s a hard model to bet on when you’ve got your whole life and your whole net worth on the line. So thank you for letting me say that because I just think it’s important for people to hear. No, I 100% agree. And it made me think of like causes produce effects. So if the cause that you’ve provided is like amazing business, which has real value, then the effect will be that someone will want to buy it.
Whereas if you’re just trying to sell to the next person to higher than what you bought it for, then that’s kind of high risk. Is that a good summary of what you said? Yeah, I’m not saying that you can’t do it right. But I just think the risk if that’s if that’s what you’re doing and I think that’s I think that’s a different type of entrepreneur. It’s not good or bad, it’s just very transactional. I tend to be an entrepreneur 10. I am an entrepreneur who wants to solve problems for people and while that the money is I do like money and I think there’s this whole dialogue going on that people who make money is bad and you know, you think about these mindsets of there’s this guilt to make money. I think I think making money is great. I think you should make as much money as you can. But the reason that I wanted to make money and I still want to make money has nothing to do with the physical things.
In fact, I tried to get rid of things. When we bought our house in Half Moon Bay, we didn’t have any pictures on the wall for like three years. My wife was going crazy, but I was like, I just don’t want any more stuff. Like I don’t need the stuff. I don’t want stuff. It’s a burden to have to monitor and maintain and do all this stuff. What I really wanted the money for and still do to this day is to buy my time and own my own time and decide what I want to do at that time because I have the means, the money is just a means to do that, but I think I think the transactional part you can make a lot of money but it doesn’t bring me at least the satisfaction of having someone write and say, oh my God, Brandon, you’ve changed my life, you know, your, your newsletter that I get every month, gives me these ideas and it inspires me and here’s what it led me to build. That’s really what I get a lot of satisfaction from now.
If they pay me for that, because they solve some problem for them, then that’s awesome because we can’t do it for free. But I just think that it’s just really high risk and like I said, it’s I think more entrepreneurs tend to be creators, if that’s the right word, for people who you know, really want to solve problems for people somewhat covers what my first or my opening would be regarding the process of selling a company and that is preparation to sell. So I’m sure there’re tons of things which you would need to do in order to prepare before just I’m just going to go out and sell my business now. And part of that is what you already alluded to, but what would be your best advice around the best prep someone can do before even going through the process of selling their business. So, you know, I will tell you that I purposely decided five years prior to selling it and it was almost to the – it was about I made it a little bit before that timeline.
It was 4.5 years. I had no buyers necessarily. I mean, we all have these targets, right? We build these companies like, oh, Microsoft, a bias for Amazon or bias Netflix gonna buy us or whatever that is. But I built a business plan, a very purposeful business plan, to get my business in order. And I’ll go out on a limb and say that most companies who are under 50 million even actually post 50 million, but in revenue are somewhat a mess from a corporate structure because you’re running so fast when you’re building these and you know, I’m talking about entrepreneurs who really started these companies and then go through there, there’s just, I mean, you know this, there’s just things that get missed, there’s accounting, there’s documents, there’s agreements, all of these things. You absolutely have to have an order what I learned to do now. And it’s in my closet which you can’t see right now but is next to me is I build very large binders that have tabs with and you could do this electronically as well.
But still in this today, a lot of people like paper is every document license agreement. If you build software and you’ve used snippets of code in your open source, you need to have all the licenses documented when we went through this for a software company that I was a part of. I had 300 plus license agreements that we had to put together based on open source software that had different rules because if you buy it, the owner, the new owner, wants to know all that. So I think the first thing is decide that, hey, I’m in a place in my entrepreneur journey that I want to sell this and put together a business plan of what that means and including targeted potential buyers and don’t just pick the big ones because in order to sell your company a certain amount of money, especially in public, big public company, it has to go through a board approval.
So it’s not this, you know what we hear in the headlines of TechCrunch and if your techie or you read whatever other uh, the Guardian, whatever these publications are out there that published, somebody got bought. It’s not simple. It has to go through an entire process. You have to have a sponsor within the company who is an advocate for you, you have to understand that advocates position within that organisation to sell it. And then ultimately it will go to a CEO. If you’re dealing directly with the other CEO, that’s great. If it’s a small, non-public business, then you probably don’t have an issue necessarily with the board. But even a CEO of a decent sized business going to go to their bored with it and then the board’s going to ask 50 questions, so start to understand this and start to understand who those people are and start to market to them because you can market to them and start to drive awareness about your business and have a strategy that brings you to light within them and you may do this three years out, which is actually what I did because I picked some companies that I thought were going to do a roll up or looked to do a roll up and we’re going to need a roll up.
So, and I purposely not every day but regularly would make sure that the people that people within that organisation saw what we were doing. So you’ve got to build this strategy and then start to get all of your paperwork, all of your documents, all of your agreements, ah all of your processes, they’re going to want to know your sales process, they’re going to, if you have any component of digital, they’re going to want to know all your stats, they’re gonna wanna know bounce rates, they’re gonna want to know if you’re a subscription business, what your turn is, they’re gonna know, want to know what your AARP who is, they’re going to know what your customer acquisition costs are, They’re going to know what your margins are on a contribution basis? They’re gonna want to know your infrastructure that you’re on. Are you on an amazon cloud, are you on a Microsoft cloud? Are you on google cloud? where are you, how is that hosted? What is the software license that drives all that if you have a product, do you have a warehouse?
If you have a warehouse or in office? What is your least? I got caught on the same company that I sold. What, which wasn’t as wasn’t a windfall, was really just a saved candidly, but the lease actually said that we couldn’t turn over the lease without the landlord’s approval. So now what you have is a landlord who could actually kill your deal. And that’s crazy. I thought it was crazy. Now I’m not beating up on the landlord. I understand from the landlord’s perspective that they want to check the new owners credit and 100 other things because it puts them at risk. What I’m saying is, is that you have to go through every single one of these contracts. I had an agreement. Another example is I had an agreement with a advertising network that guaranteed us a certain CPM that I negotiated. And it also said that it was non-transferable without approval.
So now I have to go manage that and get them to sign off, which we did, but all of these little things, you just gotta start to make a list and start to inventory and this this goes down. You may have employee agreements, you may have an employee handbook, you have an employee handbook, you need to understand the laws in the UK, they’re different than the US. What if UK company is building, buying a US or vice versa. You’ve got to understand how all these things transfer understand where you are in your taxes because if there’s tax liability, they’re gonna want to know that you’ve got to get start to get your financials in order. If you’re using QuickBooks, that’s fine. But ah in my experience, when you run fast, you don’t always categorise everything because you’re just running fast. You don’t have account numbers for every single item that you’re doing. If your services business, you need to make sure that you have government quote unquote wherever whatever country you’re in approved time accounting processes that become a liability for that company.
If they’re buying you, in my case, it was all online and really dealt around all the contracts that we had with advertisers, software, All of our tackle, you’re gonna have to have all your tax returns, all of them every single tax returns. So when you start prepping this is the stuff you haven’t want to have together and here’s why because when someone and this is the lesson that I learned which if somebody came to buy any of our businesses which they’re not for sale and I’m not looking to sell any, but if they did, I literally have a binder in there that I can plop down and say, here you go and you want to have that because speed and momentum in these deals when you are selling a company matter because your sponsor could, I don’t, I don’t know, have a catastrophic event, decide that they don’t like their boss and quit and now you’re at zero in these places.
You could literally be at zero in the sales process. Um, and you, when you have velocity in a deal, you want to, you don’t want to say, oh well thank you Thomas. Really thank you. I know you’re interested. Hey, could you give me eight weeks to get this together? Like in eight weeks you’re gonna go figure another company out, Forget about this or you’re going to judge that the company isn’t quite up as up to par as you thought. So you want to be able to act fast. So you start getting all of this together. I would suggest any business do this within a few years, you know, every five years, go back and say, hey, we need to get all this organised or have a really smart person working for you that’s organised and can do this along the way for you and then if you’re targeting someone, great, but be prepared, you know, because of that velocity. I think that’s a really important point because something happens with your sponsor or the market or something like that and you missed that opportunity.
I mean, I know I have a lot of colleagues who have had, you know, bad stories of, oh, well then this happened or you know, an earthquake happened or I mean, you know, you laugh at that stuff, but it has an effect. So when you have somebody who wants to pay you money for your company, you want to be, be ready. So, so have that plan. And selling your company will be extremely time consuming and distracting to your business. So if someone wants to come and by your company, make sure that you get a signed term sheet fast if you do not have a signed term sheet or value, it’s all talk and you will disrupt your business and potentially hurt your business because of the time it takes, it’s pretty much a full-time job to sell your company. You know, there’re lawyers involved, there’s these purchase agreements, there’s negotiations because likely they will want you to come on for some period of time for transition, which means that you now have to negotiate an employment contract and you need to make sure that employment contracts right?
And your employees if they don’t transfer, how is that going to work? And how are you going to have to negotiate for them? So I know that was a fire hose of stuff, but you’ve brought back memories of good times, all worth it when you see that money wired into your bank account, which is a pretty satisfying feeling, but it’s a bittersweet moment to be candid, but it is, it shows your hard work, but you can be sad about it, so be careful before you sell your company too, because as soon as you sell your company the next day, you’re, you’re not like the important person anymore and entrepreneurs have egos. anybody who’s like, oh well, I’m just entrepreneurs don’t do yes, we do. You know how hard this is. You know, I mean, people say no along the journey, you know what people say? That’s not possible. It’s not probable. you’re wasting your time. Like if you don’t have some level of resilience and ego, you’ll be crushed on day one.
Well actually I was, this is not what I said beforehand, but I was going to say to you if this is an episode where I’m just sitting and listening, I’m absolutely fine with that because I can admit to it being especially with your description of everything, I can admit to it being an area of almost ignorance for me. So I’m more than happy to just sit and listen to your experience. So thank you for your answer so far, Sorry for going on. I just comes out of me just naturally from all these memories you invoked when we started talking. Well I’m hoping at the end of the episode is not going to be like some emotional roller coaster for you. You’re not going to be wiped out from talking about this. But you touched upon a couple of things which is the next question which I was going to ask, which is finding a buyer. So how did that go for you And what would you recommend someone do if general advice? If they were to want to find a buyer? I’m gonna go back to what I said and probably the listeners aren’t going to like this. but I didn’t find the buyer, I targeted buyers over the years but the buyer eventually just came because I had built such a strong business and moat around our business in the region.
We were, you know, as a media company, we in the fishing space, sportfishing, we owned a very specific region. And my goal was to entrench ourselves that no competitor could come in without spending an enormous amount of money which would be a by versus build decision for somebody, whoever that was. And that was strategically done. when I bought the company back, it was called worldwide angler and covered the entire United States and seven international destinations including the UK. And Martin, actually a good friend from the UK, Martin James who had – he still may have – a radio show on the BBC. But I wiped all that out Thomas and went back and was very focused. So find your buyer by being so good that some bigger company has to buy you if they want that market and, and that, and that goes, that’s, that’s everything services, you know, this isn’t a product and internet site, physical product.
It’s everything you could be. I was just talking to a friend the other day – I’m just throwing this out as an example, Thomas, because I don’t want anybody to think that this doesn’t apply across the board. And I think you would agree, people will tend to say, well, that’s just a tech thing, it’s not a tech thing. My good friend’s wife is a vet and if you build the best vet practice, someone will want to buy it. In fact, that’s what happens all the time. And so just be so good at what you do and take all of your energy to do that. And I suggest a buyer will come to you, which they did for me having said that if you want to target buyers, then I would say that you should just pick up the first of all, be so good that you have a defensible thing to understand the person you’re going to cause business extremely well, meaning that you could get on the phone and say, hey, I understand that you’re doing this or it looks like your strategy is doing this and just pick up the phone and call the CEO and I know that sounds crazy, but that’s who you ultimately want to talk to anyway.
Now if it’s a big public company, then find someone who’s pretty senior or, or vet them to do that. That’s my style. There’s another style I worked for a venture capital firm that had an investment bank that sold one of the, one of the top investment banks for small to medium size, mid-tier enterprise software companies and sold them. So you can get an investment banker or a business broker. There’s a difference in my mind between an investment banker sells businesses and a business broker. A business broker tends to be um, just a little bit different style and maybe different focus, but you can hire them and what they will require is a monthly retainer and some portion of the proceeds. And this can be worth it. Absolutely worth it because they can get you more money because that’s what they do for a profession.
It’s very much like a real estate agent, you can sell your house yourself. Um, or you can pay the percentage and have a professional, who knows how to position your house and how whatever they do. Stage it, they do all this stuff. Um, tell you what to do to earn you more money. So those are, I think three options really that um, you could do to sell your business but do not be scared to pick up the phone and call. Having said that, if you are going to do that, you should get an advisor and understand the valuation of your company and understand what it’s worth. You can come up with this stuff yourself, you can build comparables as you can go to public companies. I use Yahoo finance, you can see how much revenue they have, you can see what they trade at from a sales multiple perspective and then build them yourself. And I highly recommend that if you are going to do that, that you do that. This is the type of stuff that an investment banker will do for you so that they can say, well, here’s why this company is worth that and they build all these camps and I used to be the nerd who has an MBA. But those are some options of how to you know, actually sell the business. If you’re gonna if you, once you’ve decided that that’s the route you’re going to take, thank you for that. If let’s say you pick one of those three and let’s say you get a potential buyer for your business, what does the negotiation look like and what would you share regarding your experience in in that particular topic? Well, I tend to be a straightforward, not waste time guy. So at the end of the day, depending on your values and what’s important to you? It likely comes down to price. So I want to have a price discussion up front because if we are significantly off on price, ah I’m gonna walk.
And the reason is because I’m going to in order to go through this process, I’m going to be taking time away from growing my business. So you know, and some people don’t like what I just said. they don’t like it because they want to get to know you Thomas and they want to do that. But isn’t that all just getting to the price anyway and trying to understand where you’re right left limit is and trying to understand where your head is. Let’s just I tend to just say, let’s just be honest about what we’re doing here. I mean it’s a transaction at the end of the day, so I want to get and that’s why I had suggested that you get a term sheet because that term sheets going to spell out their price now, they’re gonna say 10 things to you. Well, we really need this to come up with a price and this, that and the other. Well, I’m not sure about that because if you know my revenue, you know my profitability probably know where I sit in the market or this company, whoever’s doing it sits in the market, there’s comparables out there that we know what the price ranges.
So are you going to be at the bottom of that price range? Are you gonna be at the top of that price range or in the middle? And are you okay with that? So beep beep for that? Also be prepared for this. People who, this is blinding flash of the obvious. But we’re saying because I think some entrepreneurs don’t realise what happened because they get, uh, they see the, what they believe is a pot of gold at the end of the rainbow is you get these inbound calls that say, hey Thomas, I’m interested in your business. And what they’re really interested in is finding out about your business because you’re a potential competitor and they want all your metrics. And then they say, oh man, sorry. So, uh, I’m gonna get that really quickly and I’m gonna, and getting that that quickly is knowing the questions, who are you, where do you sit in the organisation and what is your process to get this? To get our company acquired by you show me every step and tell me all the important people that are involved in your process that we need to convince.
And then you’ll know if they’re serious because if they can’t answer that question there, just doing whatever they may be doing it, just get a good check box on their quarterly reviews. Say that they reached out to X amount of companies VCS do this all the time. PC Associates, that’s what they get measured on how many people that I know that are sat there. So be careful for mistaking a potential sale for somebody just checking off the box in their thing or trying to find out about your business. Well, it’s something I didn’t have on my list. I am aware that that type of scenario exists where they pretend that they’re interested in your business only to get the information. So thanks for adding that regarding the valuation, presumably it’s a you’re getting it valued by a professional external valuer. What’s the process around that? And the time frame? And how important is that? What you say? I think it’s important to do.
And actually in the United States at least it might be true in the UK from a sec perspective, security exchange commission and comparable in the UK if you have investors, you’re required to get evaluation and there’re companies out there now that will manage your you’re cap table and all of these things for you. But I think it’s really important to have from a third party perspective so that you have validation and you have backup to why you believe your company is worth that. The process actually isn’t terribly hard other than the pain that you’ll feel when you have to put a credit card and pay them for it. Which, you know, can be costly. You know, it can cost anywhere from $2000 to $50,000 depending on how big your company and how complex it is. But you can run some of these numbers yourself, as I indicated by building the comparables yourself by just looking at public companies and doing that.
They’re just going to do that much more extensively. They’re going to have databases that they pull private transactions that you may not necessarily have access to. So I encourage everybody to do that. But beat be serious that you are going to sell your company because you are going to, it is going to cost you money to do that. It’s simple, but it’s expensive. Yes, it can be expensive. These, these services out there now that will manage your cap table one. I actually used, they will do it for you on a yearly basis actually because the investors need that for there to report back to their, to their limited partners if you have a VC firm or something like that. So you know, it might only cost you two or $3000 depending on the size, but you know, it’s a cost and it’s worth it though because now it’s a third party, not you. Well, I think it’s worth this Thomas and you’re like, well, I think it’s not. And now where are you? So when did the lawyers come in? Oh, man. Well, uh, I would bring, you do not want to make a mistake and there’s a lot of bad, sad to say bad.
They’re really sad stories of entrepreneurs. I would bring my attorney in early. I would bring my turn and turn. Ian when I’ve had a few conversations, they’ve indicated the interest, I would be communicating with my lawyer that this is coming and I get my lawyer involved in the term sheet at that point, which is a for listeners out there, don’t know or memorandum of understanding that basically says we’re not committing, but we are saying that this is the price. If you meet all of the requirements that we’re going to go through our diligence process, I would get my lawyer involved there because there can be some tricky terms that you don’t want to get stuck with. So once you, once you have serious interest, I hate to waste money on lawyers. Not that they’re a waste, but that they come in early and you’ve spend a bunch of money too early.
But once you have a good understanding that this is going to be a serious deal and you’re negotiating your terms, you want your lawyer involved, have you got anything to add about the process of signing contracts? You mean when they buy you? Yeah. And also kind of anything to look out for. That’s someone that has never done it before, might not know. Yeah, you want you want to really understand your earn out if that is. If it’s all cash. God bless. I managed to negotiate all cash and they actually told me they didn’t even want me around. I suggested that they might want me around because of the transition, but they didn’t. So I was okay, man, it’s yours. But if you haven’t turned out, you want to understand that and you if they do want you, which many companies will want you for a transition. You want your lawyer to negotiate, help negotiate your employment contract and you want an employment contract. That would be a got ship for anybody listening out there because if they’re like, oh well no you don’t need a employment contract then likely they can fire you at will.
And now if you had an earn out they just erase that and you don’t want that. So you if they want you to come on board, you want an employment agreement or contract whatever you want, whatever the right wording is, wherever you’re listening. This whatever country you want that in place because they could, I’m not saying that everybody does this, but there are evil people out there that architect these things that appears that you’re getting so much money because you have this urn out process and then they just fire you and they can’t get it. So you want your lawyer involved in all of that legalese that spelled out in the multiple pages to make sure that you get what you’re promised. This next one might be No, I don’t know whether it really addresses your expertise because I think there’s lots of things I could talk to you about. It’s a simple one, is what I’m trying to say. But the bank account side of things, how do you go from having almost full control of your business, bank account to essentially giving it to someone else?
What does that look like? Well, that processes is actually really simple. From a transaction standpoint. It’s simply some paperwork that says that so about your business and they are now entitled to be the signature person and the whoever is entitled to make changes to this account and effectively own it emotionally. Well, that’s a different discussion. This is actually my last question. So we’ve got spoilers there a little bit regarding, how did it feel emotionally. Have you got anything before we moved to that question on the actual funds transfer? How long did it take you to get to get money? When did it happen? How did it feel? So I put, it took an instant to happen via a wire. Um, but what I did, so, and what I would suggest I paid for an escrow process service because a lot of times the acquiring party wants to get control of the assets before they necessarily pay you the money, but you don’t want to give them the assets until you’ve got the money.
So you can put the money in escrow and that’s a third party who will hold that money and be the traffic cop for lack of a better word and says, here’s exactly what Brandon promised you. and they released the money, not, not the other company it does cost. I forget how much I paid Thomas I might have paid. It was maybe one or 2% of the total. And that added up to a lot of money, but it was worth it to me, not because I didn’t trust them, but because I understood that once I transferred these things, especially my domain, like that was in my case, if you own the domain, you like. You have my business and you have hundreds of thousands of people instantly coming here to that domain addresses what we had hundreds of thousands a month. So you know, to me, I was just so leery, I’d worked so hard and it was really painful for me to pay the escrow.
But it was worth it. And you know, I’m not saying I’m recommending that if you have a transaction where that is the case that something like that you use an escrow account. I’m not saying that you can’t do it without it, I would have saved money, but I do remember where I was when it happened and I had fulfilled the last east, which the very last piece I let go was the domain name control. Like I didn’t even care about the bank account Thomas lee, I’ll go get more, you know, if I had the domain I could make more money. That was simple. but once you had that, so it was the last thing I let it go that morning and they’re like, okay, the money’s coming. and I said, so it’s a wire and it was a wire which is generally pretty instant. You can get it done the same day they were prepared for it. I kept hitting return, enter return on my keyboard. I was like it’s not there and I like it’s coming. I said, well you’re not getting off the phone until I see this in my bank account because I literally just gave control to that company and you released it, I want to see that money.
And I kept in return. And I remember, I don’t want to say it was a small panic but there was a lot of anxiety around that. So if you have that expected, you know, some people may go into a common, that’s fine. But for me I had worked so hard and as an entrepreneur to have a moment where you get an exit, which is like this badge of honour, so to speak in many ways and not externally for me, but if you think about my journey here, it was, you know, it was vindication like I told you. So you know, I bought that thing back. People said that it wasn’t going to work, I should just move on or do whatever and you know that transaction changed my entire life forever. You know, I mean I was in student debt. I don’t want to suggest that my wife and I weren’t suffering, we weren’t suffering you know, we lived in a little small house in Maryland and we loved our life and it was great, but we did have aspirations and my dream was always to move to California and you know that’s a northern California and Silicon Valley and that’s a really hard dream because houses here are really expensive.
Ridiculously expensive, quite candidly. But you know my dream was to live on the water and be near the ocean and to be in Silicon Valley and that was going to take a minimum of seven figures just to buy your house, much less anything else. So for me it was um, you know, it was, it was a moment of victory. Well congratulations then. Oh thanks. It was anticlimactic though because then you’re sad the next day. Well that was the follow up. So that was the last question. How did it feel emotionally? So I can imagine it being complete opposites in the sense that you get a feeling of accomplishment, but then what do you do the next day? So again, that’s a follow up. What did you do the next day after you sold your business? well first I realised as, as you know, as a CEO and founder, you always have this attention on you, right? Even the people that work for you, you’re the centre of attention, you’re that person. In my case, I had hundreds of thousands of people who looked as me at this, looked at me as this really cool fishermen who started this effectively a blog in the beginning that turned into a social network in the commerce site.
And the next day you’re like, you know, one minute you can reach hundreds of thousands of people with a push of a button and they’ll open your email or open your post and you don’t necessarily lose that. But the shine certainly comes off of it and you’re not that person. But candidly the next day I was already looking for health, we sold the company on Wednesday and I bought this house on Friday. I mean, any time, no, because that was my goal. Like I had, you know, the goal was to get an exit so that we could get money to pay off all of our debt candidly and buy a house in California and get to California and from a kid growing up on the east coast of the United States of America who was a Maryland kid, California is a really long way away to try to get there not just from 3000 miles, but from just the economics of doing it. So I wasted no time.
We bought the house, my wife didn’t even see the house. She when she drove here from, she’s originally from California from the southern California, but when she drove here when we drove across the country and she pulled in this driveway, she had never seen the house. But she always said that you know after you’ve been together someone for 24 years, she’s like you’re way more picky than I am. So I know you’re gonna be fine. Yeah. Is there anything that you think I should have asked you about the process of selling your business? I don’t think so, Thomas. I think you’ve covered – I mean you and I we could dive down into all the nitty gritty paperwork and things like that. I think we covered most of it. I think I just end with saying make sure that you get an attorney to help you and not any attorney like an attorney who specialises don’t feel like you have to use your same attorney that you’ve used along the way. And I think that’s an important a really important point to make because you’ll feel that you need to use that same attorney. What you need is an expert who represents a seller in a company transaction.
That’s what you need. You don’t need a general corporate attorney. Your general corporate attorney will want to do this job for you because it will mean a payday for them. But they are not the right person in general. I’m sure there’re attorneys will be like I can do it, Brandon, okay. But that’s like saying do you want your dentist to perform heart surgery because they have been to medical school or do you want the knee surgeon who replaces your ACL to replace a valve in your heart? No – like yes, they’re both doctors and they both probably generally know a lot of common foundation stuff about cells and how the body works. But they have expertise and you know you go to a specialist when that happens. I just end on that because I there’s a lot of sad stories like I said and I wouldn’t want any entrepreneur to wind up in a bad situation. Well, thank you so much for all the value.
I’ve loved this episode so I really appreciate all the information. Brandon White, where is the best place for people to find you?
The best place is my website. You just go to brandoncwhite.com. And I’m gonna put together a cheat sheet for your listeners if that’s okay, they can go to Brandoncwhite.com/thomasgreen all lowercase, and we’ll put together a due diligence and due diligence checklist that they can use it to start to prepare, if that’s okay?
Sounds brilliant. Thank you very much. Again. I’ve really enjoyed it.
Yeah. Thank you so much, Thomas. It’s been awesome.