“Carrie and Dave Kerpen owned Likeable Media for 15 years and decided to sell,” shares Sam Thompson a Minneapolis business broker and the president of the business brokerage firm Transitions In Business. “They received 6 offers. One of the offers was much more attractive then the other 5. As it turns out the buyers intent was to get them off the market and then adjust the price during the process. Fortunately, Likeable Media did not get too far into due diligence before they knew what was going on. They eventually sold to a firm they really liked.”
Carrie and Dave Kerpen started Likeable Media, a social media agency, in 2006.
The business grew to more than 50 employees when the couple met for their annual partner’s retreat. The Kerpens realized their business had blossomed into a big success which they estimated was close to 90% of their net worth.
The Kerpens decided to sell and quickly received a 100% cash offer of 6.5 times EBITDA, which seemed too good to be true given that marketing services businesses almost always involve an earn-out.
Turns out it was.
After the Kerpens signed a Letter of Intent (LOI), the acquirer changed the terms of the deal offering just 60% upfront. The Kerpens realized they had fallen victim to a bait and switch and decided to walk away.
Lucky they did, as soon after, the Kerpens accepted an offer of around 8.5 times EBITDA.
In this episode, you’ll discover:
- How to productize a service.
- The power of naming and trademarking your offerings.
- How to leverage interns to get your business off the ground for pennies on the dollar.
- How to stop billing by the hour.
- The difference between a small business owner vs. an entrepreneur.
- How to ensure you control the outcome of your earn-out.