Most people do their best to keep a clear line of demarcation between their personal and professional lives. Performance reviews, Zoom meetings and TPS reports go in one basket. Dating, recreational alcohol consumption, and jokes that are funny go in the other. The duality of these two lives can become so stark that we fall into the trap of believing that we must – and should – cultivate specific skills and personas for each. For the next 10 minutes of your life I would like to completely collapse that boundary to explore why succeeding at dating and succeeding at selling your business, respectively, demand a remarkably similar set of skills. Before we start, however, I’d like to share two true stories with you:
In 1972 a 13-year-old boy named Paul Hewson met a 12-year-old girl named Alison Stewart at Mount Temple Comprehensive School in Clontarf, Dublin. Hewson was a grade ahead of Stewart and by all accounts was smitten with her almost immediately. The two developed a strong friendship that evolved into a romance a few years later while Hewson was starting a band with a few of his high school friends. Soon after, Hewson broached the topic of marriage. Stewart who was receptive but insisted that Hewson’s band needed to be successful enough to support a family. Hewson adopted the nickname “Bono” and his band, U2, went on to be one of the greatest musical acts of all time. Alison Stewart – now Alison Hewson – was satisfied and accepted Bono’s proposal. The two have been married for over 40 years.
In 2015, forty-three years after Bono met his wife, a scrap metal dealer purchased a load of junk metal for just over US$10,000. One day the scrap dealer was examining his haul and discovered a tiny, ornate egg. The egg looked expensive, so the scrap dealer set about figuring out what it was. He called several buyers and dealers – people he thought might be able to help him – but no one would assist in identifying the origin of the egg. The scrap dealer grew increasingly frustrated until one night he Googled “egg” along with a name engraved on the little thing’s side. To his surprise, the tiny object turned out to be the third Imperial egg made by Faberge for the Russian royal family in 1887. The scrap metal dealer quickly jumped on a plane, flew to London to have the egg appraised, and confirmed that his life was forever changed. The egg was worth over US$30,000,000.
What do these two stories have in common? You shouldn’t plan your life around either.
Both Bono and the scrap dealer are extraordinary outliers – one in love and one in business. Now, it’s not really news that Bono is an outlier. After all, he is extraordinarily wealthy, famous, and talented. But he also happens to represent less than 2% of all marriages in the western world that are between people who were high school sweethearts. It goes without saying that the scrap dealer is an incredible outlier as a businessman. His return on investment of 3,000x is something of legend. While it certainly took some degree of awareness to spot and identify the egg, finding a 19th-century artistic masterpiece in a junk pile is roughly as likely as being struck by a bolt of lightning while being eaten by a shark.
The vast majority of real-life success stories – both in love and business – play out much differently. We must work for our wins. The global online dating market is valued at US$12.37 billion in 2021, and is expected to be worth US$28.36 by 2027, precisely because most of us do not meet the love of our lives before we are able to watch R-rated movies without our parents. Similarly, we have investment advisors, business coaches, accountants, estate attorneys, and an entire cottage industry of motivational speakers because it takes an entire lifetime of hard work and determination to make anywhere near US$30,000,000.
Until fairly recently, there was an incredible surge in both the deal flow and the multiples associated with ecommerce companies exiting to eager and hungry aggregators. Unless you have been living under a rock, you know that we have transitioned to a new era of ecommerce M&A. While acquisitions are still happening, some of the stories that came out of ecommerce exits in 2020 and 2021 seem about as realistic as finding a priceless cultural heirloom at the bottom of a pile of twisted metal.
But have no fear! Just because selling your ecommerce business is harder in 2022, doesn’t mean that it’s impossible. If you’re over 13, you’ve already missed your chance to follow Bono’s love story, just as you might have missed out on the ecommerce exit boom of 2021. But the skills and strategies for finding love and selling your company in the real world are remarkably similar and are well within reach… if you take the right approach.
Preparation
The first thing any dating coach or matchmaker tells a client is that they need to value themselves first if they expect to be attractive to a potential mate. This is not the same as being fake. In fact, quite the contrary. What those experts are describing is embracing and accentuating the best parts of the real you to create authentic attraction in a mate. This means taking care of “you” first before seeking someone else by developing hobbies and experiences that make good stories, having a job you enjoy, and generally taking care of yourself. This also means taking care of basics like wearing clean clothes that fit, getting a haircut, and making sure both you and your apartment smell good.
The exact same advice is true when it comes to selling your business. In both love and business, first impressions are critically important. No one on the planet knows your business better than you do, and it is incumbent upon you to be able to clearly convey the value that you have built. Everything you do in preparing to sell your company should be with the intention of showing your business in the most favourable (and authentic) light possible. Your financials need to be clean and prepared by a professional using accrual-based accounting. Your supplier and vendor relationships should be shored up. Your business’ teaser and pitch deck should be pristine and ready to distribute to potential buyers.
At this stage, it can be helpful to work with an experienced M&A advisor who specialises in your industry to help you go even deeper with your preparation. In today’s market, Buyers want to see profitability and growth. Even if you’re not ready to sell today, you have the opportunity to adjust your business to maximise both of those factors for when that day comes. It is also very important to be able to visualise your company’s data in a way that tells your story in a crisp, clear way. For example, at Nextoria we build extensive dashboards for our clients. This allows Buyers to drill down into complicated data based on ASINs, markets, categories, etc. so that they can quickly see the financial health of a client’s company in a professional and organised manner.
Proximity
Being available is important when you’re looking to find an ideal match. Whether it’s finding your soulmate or finding a Buyer for your perfect exit, getting out in the world and meeting people is the single best way to get what you want in either facet of life. Brokers and M&A advisors can help in the same way that online dating or matchmakers do by introducing you and your company to a lot of qualified buyers in a relatively short amount of time.
There is a positive correlation between the amount of time spent together and attraction between people. This is a principle that dating coaches and matchmakers refer to as the “Proximity Effect”. Proximity isn’t just about geography. Rather, it refers to a functional distance, or how often people encounter each other, whether that be in person or online. Human beings seek familiarity and tend to be more attracted to those people we find familiar.
The Proximity Effect directly translates to selling your business. Dr. Robert Zajonc posited that the more exposure a person has to a stimulus, the more likely we are to view that stimulus positively. A good advisor can help expose you to Potential Buyers a year or more before you are prepared to sell your business. Conversations with aggregators, family offices and strategic buyers provide you the opportunity to get informative feedback about your company. Those conversations also allow important players in the ecommerce ecosystem to become more familiar with you and your business over time. This is a very good thing.
Familiarity breeds trust and that trust leads to more willing and motivated buyers. Selling your business usually requires extensive negotiations. The more a buyer trusts that you and your agents are negotiating in good faith, the less defensive they typically will be when you make demands during the negotiation.
It is also very important that you trust them.
The more exposure you have to Buyers, the more you will be able to tell who is trustworthy and who you should avoid. It’s quite likely that you will do at least one of the following when you sell your business: 1) accept Buyer stock as part of the compensation for your company; 2) engage in an earnout arrangement with the Buyer for several years after a sale; or 3) remain with your company for a transition period. All of these arrangements are opportunities for you to have a very, very bad time if you consummate a deal with an unscrupulous Buyer. However, if you make yourself available, use the Proximity Effect to your advantage, and surround yourself with a good team of advisors, you can help ensure that you exit smoothly.
Finding Your Perfect Match
Anyone who has spent more than 5 minutes on an online dating site knows that once you have done the preparation and put yourself out there, the next challenge is not finding a perfect match, but figuring out who you should be talking to in the first place. Modern dating can sometimes feel like we are a pool of electrons all moving in seperate directions, pulled and pushed by our jobs, families, and a litany of other factors, occasionally bumping into each other. You will find this is also true when you start looking for Potential Buyers.
There are an ocean of Buyers out there – family offices, private equity funds, aggregators, other ecommerce companies, and strategic buyers – all looking for different things at different times. Unless you are working in that environment every day for a significant period of time, it is almost impossible to know who all these Buyers are, much less what each is looking for. One of the major value ads an advisor brings to the table during this process is the ability to begin narrowing your pool of options and focusing on Buyers who could be an ideal match.
As you move into this phase of selling your business, it is quite important to know what you want and to be open about it.
Anna Swoboda, a professional Matchmaker and founder of Heartmatch, suggests that clients create a list of the things that he or she values, enjoys, and wants in a future relationship. The client is then encouraged to build an online dating profile that specifically screens for those attributes. For example, if you have three golden retrievers that are the center of your world, it’s important to be clear that you want to end up with a fellow dog lover.
Being clear about what is important to you is also an extremely important exercise when you’re selling your business. You are going to have a lot of conversations with a lot of smart people during the exit process. There are important issues that are going to come up. You need to know where you stand on those issues before you are asked directly. Specifically, you need to have a clear idea of how long you would be willing to stay with your company after a sale. You need to think about the criteria you’re looking for in a buyer such as knowledge of your industry, previous M&A track record, and the financial ability to close. And while some people find it uncomfortable to address directly, you need to have an idea of what price you want for your company.
Being open about what you want isn’t just about filtering out Buyers who are bad fits. Openness also attracts good Buyers. In the dating world, research has found that couples who end up getting married tend to be quite similar, particularly when it comes to attributes like age, social class, education, perspectives, and attitudes. This is known as the “matching hypothesis”, which refers to the theory that humans trust and are attracted to others who validate their own thoughts and desires.
The matching hypothesis directly applies to selling your business. This process is a two-way affair. You should be interviewing Potential Buyers as much as they are interviewing you to ensure you are on the same page. When what you authentically want meshes well with what a good Buyer is looking for, it builds a strong foundation of trust for a deal to occur.
Remember, the humans you are talking to on the other end of these transactions are people too. They have their own investment criteria, marching orders, and bosses or investors to appease. A typical Buyer in this space looks at thousands of deals a year. The more honest and forthright you are about what you want, and the clearer you can communicate the value of your company, the better your conversations will be with Buyers.
Being Intentional
It makes sense that there is so much overlap between selling your business and finding a romantic partner when you think about it. They both involve putting something you love and deeply value out into the world – whether that be yourself or the company that you have created. They both involve strong emotions like ambition, passion, apprehension, trust, faith, and hope. They also represent two sets of decisions that could dramatically change your life, for better or worse.
The Roman philosopher Seneca is famous for saying, “luck is what happens when preparation meets opportunity.” A few men and women around the world will continue to find true love in middle school, Faberge eggs in scrap heaps, and 20x multiples on exits from FBA companies. I hope you, dear reader, are one of those people. For the rest of us, the key to succeeding at most things is being intentional, having a plan and diligently executing it until an ideal opportunity comes along. If you’d like help creating that plan, carrying out an intentional exit process, and meeting hundreds of interested Buyers our team at Nextoria can help!
Finding a date is up to you.
