How to Punch Above Your Weight Class With Acquirers
“Peter Carlin, owner of Logicearth, shares his experience selling his business and vetting buyers,” shares Sam Thompson a Minneapolis business broker and the president of M&A firm Transitions In Business. “One excellent suggestion is just how well he positioned his company as something much more significant then what it really was by investing in his website. He also shares wisdom on negotiating an earn out, retaining creative people and what to look for in a Letter of Intent (LOI)”.
Peter Carlin started Logicearth to improve how companies teach their employees online. They built e-learning courses that were almost as good as being there in person. They caught the attention of a marketing agency called The Creative Engagement Group (TCEG), which had clients that needed online courses.
It was around this time that Carlin and his partner Paul McKay were finding it frustrating to break into larger accounts – many of which TCEG already had. They decided to explore a partnership that quickly evolved into an acquisition offer from TCEG.
This episode has several critical lessons for aspiring value builders:
Punch above your weight class: Despite having just two dozen employees, Logicearth ranked ahead of giants ten times their size on a Google search. They hired a digital marketing professional full time and invested heavily in a website that made them appear much more significant than they were. All of which got the attention of acquirers looking to invest in online corporate education and searching for the most prominent players in the industry.
Vet your acquirers: Over the years, Carlin had received multiple acquisition offers, but most had some sort of catch. In one case, an acquirer simply offered Carlin and McKay a job; in another, the acquirer offered shares in their company, but Carlin and McKay were not entirely comfortable with how those shares would be valued. Carlin and McKay agreed to an earn-out with TCEG but not before negotiating every last detail right down to how their P&L would be calculated as a division of TCEG.
This episode features several additional pearls of wisdom, including:
- How to negotiate your earn-out
- How to weed out unscrupulous acquirers
- How to retain creative people
- The one thing most entrepreneurs forget when negotiating a Letter of Intent.