“Stephen V. Smith owned WordSouth, a marketing communication agency. He eventually sold to a strategic buyer. He was not getting the price he wanted until he engaged with a seasoned M&A advisor that showed him ways to increase his value,” states Sam Thompson a Minneapolis business broker and the president of Transitions In Business. “This story offers excellent tips on selling your business.”
Stephen V. Smith built WordSouth, a marketing communication agency to 30 employees before a rare condition landed him in the Intensive Care Unit of his local hospital for seven weeks. Close to death, Smith gathered his team and began the heart-wrenching process of delegating his business’s critical pieces to trusted employees. Little did he know at the time, that decision would be an essential element of building a sellable company.
Smith went on to recover and sold WordSouth in June of 2020. Smith’s story is one of perseverance, humility with a healthy dose of savvy, including recommendations to:
- Document Your Processes: Smith always struggled with delegating, but when he ended up in the hospital, he was forced to confront his reluctance. When healthy, Smith could probably do many things better than his employees, but being stuck in the hospital, he needed to get others to do the work.
- Find a Strategic Acquirer: Smith was able to find a strategic acquirer based in Oregon called Pioneer Utility Resources. They were also involved in the marketing services industry, but did not have a presence in the south, a geographic market they were keen to access.
- Model the Synergies: Smith was not satisfied with the first offer he received, so he holed up in a conference room with his accountant for five hours while they modeled out the future of his business. They calculated the value of the synergies Pioneer would enjoy. The resulting spreadsheet allowed Smith to increase the value of his company by as much as 50%.
There’s lots more to take away from this interview, including:
- The biggest mistake most owners make when documenting their processes.
- How to train a Chief Operating Officer.
- The one person you need on your team if you’re going to go through a sale.
- One surprising question every seller should ask an acquirer.
- How to tell your employees you’re thinking of selling.
- Smith’s biggest regret.