The $26 Million Dollar Man
“Josh Delaney, founder of FAB CBD, a CBD e-tailer was successful in rapidly building his business and then drawing unsolicited interest from buyers. He understood supply chain management and digital marketing and saw his firm hit $11M in revenue in three years,” shares Sam Thompson a Minneapolis business broker and the president of M&A firm Transitions In Business. “This interview sheds light on why a business owner would sell even though he was making great money.”
Josh Delaney started FAB CBD, a CBD e-tailer, in 2017. Delaney’s Mom was his first customer, but his sales quickly went beyond family members. By 2020, through a combination of savvy marketing and good fortune, FAB CBD had risen to more than $10 million in annual sales. In early 2021, Delaney caught the attention of High Tide, a Calgary-based cannabis company that offered him $13 million in cash plus $8 million High Tide shares in return for 80% of FAB CBD (an implied valuation of $25.8 million).
In this episode, you’ll discover:
- How Delaney used affiliate marketing to double his revenue each year leading up to his exit.
- A breakdown of the two types of affiliate contracts and why Delaney prefers one over the other.
- The definition of “optionality” and why you want it.
- Why getting “too romantic” about your company can undermine your negotiating leverage.
- The one thing you absolutely must ensure if you’re going to take any of your sale proceeds in stock of the acquiring company.
- What “EBITDA arbitrage” is and how to use it in your negotiation to sell.
- What a put vs. call option is and how to use it to drive a fair deal for yourself.