Latest / The SmallBizChat with Melinda Emerson / How to Have a Successful Exit with Maggie Lord

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How to Have a Successful Exit with Maggie Lord · The SmallBizChat with Melinda Emerson

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  3, 2, 1, 0, ignition.
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  Lift off.
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  Ending small business failure.
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  Welcome to the small biz chat podcast with the number 1 small business expert, Melinda
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  Emerson.
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  Melinda's goal is to end small business failure, and she'll give you the information
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  you need succeed and live the life you dream of.
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  Now here's your host, the small Biz chat lady herself, Melinda Emerson.
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  Have you subscribed to the small bizchett podcast?
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  Well, it's time every Wednesday we offer listeners bite sized actionable tips to start
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  and grow a successful small business.
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  And just 20 minutes or so a week you can get a ton of insight and resources to propel your
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  business forward.
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  Be sure to subscribe to the small beachhead podcast today.
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  Welcome back everybody to the small biz chat podcast.
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  I'm Melinda Emerson, your host, As now, it's time for me to introduce my guest, Maggie Lord.
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  Maggie is an early pioneer in the online digital wedding media space.
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  As the founder and CEO of rustic Wedding Sheet, Maggie led her company for 12 years before it
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  was bought by David's bridal in 2020.
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  Maggie is also the author of 6 books.
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  Today, Maggie has become a sought after strategic advisor for female founded brands
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  allowing her to focus on sharing her knowledge and expertise with other like minded
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  entrepreneurs.
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  Maggie and her entrepreneurs have been featured in Forbes, the New York Times, Business
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  Insider, success magazine, and so much more.
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  For more information, you can go to maggielord.com.
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  Hi, Maggie.
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  It's so nice to have you on the small fish chat podcast.
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  Hi.
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  Thank you for having me.
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  Well, you know, you gotta tell me your backstory.
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  How did you become an entrepreneur?
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  Yeah.
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  I started a business at 26.
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  I was finishing grad school.
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  I was currently engaged to my now husband.
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  I was very excited about it But if you go back to 2007, 2008, there was no Pinterest.
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  There was no Instagram.
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  There was not a really great way to communicate your vision to your vendors.
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  There was a few other wedding blogs at the time, but it was really kind of more of a
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  personal blog space.
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  And I started to really find great content, and I worked with photographers to feature all of
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  their beautiful weddings.
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  And we literally had a readership before I had, a plan for the company.
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  And fast forward a couple of years after that, we were able to be very early on in the process
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  with Pinterest and Instagram, and that led to that next boom for us where we were able to
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  amass millions of monthly readers.
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  I was very excited over those years to be able to license our name to product.
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  And like you said, write books, you know, and really kinda stand out in the wedding world,
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  which led me to the point where I had then gotten married and had 3 kids through the
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  process And even though I loved being an entrepreneur and loved rustic wedding chic, I
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  felt it was, like, the kid who doesn't go to college and lives in your basement.
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  Like, it was time It was time for the business to go to its next level.
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  I had been a solo entrepreneur for all those years with contractors and very junior staff
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  and you know, was really ready for the company to move to its next phase, and it was acquired
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  by David's bridal in 2020.
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  Wow.
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  And you were actually buller with that because David Bridal bought your company and then Laura
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  Davis Bridal got into trouble right after they did it.
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  So I hope to check.
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  You got all your money upfront.
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  Alright.
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  So let's talk about the key components of a solid exit strategy, right, because everything
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  I know, I've I actually interestingly enough starting my business when I was twenty six
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  years old.
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  So I'm celebrating 25 years this year.
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  So what I wanna talk to you about is how early do you have to kind of develop your strategy if
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  one day you want to sell your business?
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  Cause I'm assuming it's not a 1 year, 2 year kind of thing.
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  Is it?
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  No.
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  I you know, a lot of the female founders and brands that I work with now, whether I'm
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  consulting or doing business coaching or helping them with their that plan is we're
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  really crafting something earlier on in their journey than they ever think.
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  Because I always say what happens is when you get to the point of aspiration, or you have to
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  sell for financial reasons, or you've got burnout.
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  And I always say a tired entrepreneur is not an attractive acquisition.
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  So start your roadmap about a possible exit strategy or multiple exit strategies.
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  Right?
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  Cause if you're building your business.
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  And if you're in go mode right now, you might not know where the company is gonna lead you
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  over the next few years.
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  So you might have a couple of different exit strategies in your back pocket, but it's never
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  too early to think about while you're building it.
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  Who could potentially be interested in you one day?
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  I think that is brilliant advice.
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  So What stage of the business cycle do you suggest people start planning?
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  Is it, like, 3 years in, 5 years in after they kinda survive the 5 year?
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  It thing?
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  Like, what, you know, what how when do you think it's the right time?
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  Yep.
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  I think there's usually a sweet spot, and it's It's different for everybody, every business,
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  and every entrepreneur.
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  But I will say that if you try to exit too early, It's usually not as successful.
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  And if you try to exit, and like I said, when it's you've you've got to the point where you
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  need to exit, you're not as attractive and you usually don't get such a sweet deal out of it.
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  So if you're kind of in those middle years of your I'm not tired of this passion yet.
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  I still have a lot of fuel.
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  Right?
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  I'm the company's doing well financially for whatever, you know, sector you're in.
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  And I wake up every day still feeling happy to go to work.
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  Those are the years where you're the most attractive to buyer because what they wanna
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  know is when they acquire your company, you might go with it to to that next company, and
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  they wanna make sure you still have passion if you're leading the brand for them.
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  You know, you wanna get to the point where you don't wanna be in that that space, which I've
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  counseled customers and clients like this where they actually have gotten to be so successful
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  that the pool of buyers that can buy them now is so small.
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  So it's better to be in that middle stage where you have a lot of interesting parties that
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  could potentially acquire you and you're kind of, a stand out among your competition.
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  I love it.
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  I love it.
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  Now what about the financial preparation side of it?
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  It's like, okay.
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  If I'm 5 to 7 years in, maybe you start time to start thinking about it.
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  But what do I gotta have in place financially in terms of paperwork for, you know, to go
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  through the due diligence process with a potential buyer.
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  Yep.
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  That's what I was gonna say.
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  You know, I learned a lot through my acquisition.
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  And, you know, because I was a solo entrepreneur and because I, you know, really
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  ran the company by myself, I didn't have, like, data rooms set up for people to view.
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  Right?
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  Like, we just weren't at that level of the company.
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  So what you wanna do is save yourself time and frustration so that when either someone comes
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  to you and wants to look at an acquisition, you're not scrambling to find all those pieces
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  for them.
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  So if you go into due diligence, you know, they're gonna need to see the financials for
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  the companies.
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  They're gonna wanna look at the, you know, past maybe 3 to 5 years of tax returns, right,
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  definitely, if you have a, an accountant or CPA that you work with, make sure that they know
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  that you're gonna head into an acquisition phase because that would allow them to pull
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  what they need.
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  But besides the financials, you know, it's really important to have things like a company
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  1 sheet that highlights all your best features you know, it's something that you can easily
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  circulate.
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  It allows for you to share and brag about your social following or your customer base or
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  whatever it is that really showcases why you stand out.
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  And then on top of that, you know, if you even if you're a small business, it's important to
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  have some sort of brand Bible that, you know, I used to say, since I led the company on my own,
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  if I got hit by a bus, no one would even know how to update something in the company, right,
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  So it's important to build some of those pieces and have that available.
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  So when that attractive acquisition, you know, partner comes to the table, you have what you
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  need to get that conversation rolling quickly.
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  Now the speaking of buyers, like, how do you identify good people that might be a potential
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  know, did you call David's bridal's 800 number and talk to the president?
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  I mean, like, how did you get to the point where, you were able to kinda recognize who you
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  should be looking at as a buyer.
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  Yeah.
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  Well, I think what happens with a lot of people I've spoken to is they look at someone who is
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  either a direct competitor and they think, oh, they'll wanna absorb us.
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  And sometimes that happens.
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  But, you know, I think you really have to get creative.
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  And I tell all my clients, no matter what phase we're in, that you really should have an
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  ongoing running list of potential buyers at some point.
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  Right?
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  Just keep that living, breathing document going, add to it, you know, as you interesting
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  companies come across your screen, I actually did email the CEO of David's bridle and talked
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  about how Rustick Wedding Sheet was gonna go on the public market, but I had a handful of ideal
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  partners that I wanted to talk to before.
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  I had gone down the knot with a lot of other media companies that were interested in
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  acquiring us, but I knew the secret sauce in the way that you need to communicate to someone
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  who's interested in purchasing you is what can you do to expand their customer life cycle?
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  Right?
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  So rustic wedding, she obviously got in front of the bride at 12 to 14 months before her
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  wedding.
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  David's bridal, you know, really engages when she's ready purchase, which is usually around 9
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  months.
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  So we were extending the life of being able to communicate with the customer.
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  So it's those creative ways that you can look at, who you could be working with, who could
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  potentially acquire you, and how that is going to help them be able to either reach more,
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  customers, be able to extend their sales funnel, whatever it is, you know, but I'm a
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  firm believer in that it usually, the person who's perfect to purchase you is not the one
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  that automatically just comes up as the first thing in your brain.
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  I love it.
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  I love it.
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  And when we come right back, we're gonna talk more with Maggie Lord about what you need to
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  know.
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  One day, if you wanna sell your business.
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  Watching a small business chat podcast.
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  Stay with us.
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  Hi.
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  I'm Melinda Emerson, the small business league.
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  And I wanna welcome you to smallbizladyacademy.com, your go to resource
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  for women entrepreneurs.
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  Hi, everybody.
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  Welcome back to the small bizchett podcast.
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  I'm Melinda Emerson small biz lady, your host.
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  And I'm talking with Maggie Lord about what you need to know if you wanna have a successful
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  exit from your business.
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  Alright, Maggie.
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  I gotta ask you.
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  So how do I get fair value for my business?
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  Because it seems like valuation is in the eye of the vote.
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  So talk to me about, you know, how you were able to negotiate that.
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  Yeah.
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  So when you're really looking at your company, you know, I think a lot of times people come to
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  the table and just think straight numbers.
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  And if they're in if they have some sort of sales, it's gonna be, oh, it's 5x 10x, 3x,
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  whatever it is.
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  I say scrap that completely because it's about getting creative because there are things to
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  you and your company that are of value that you can't put a dollar amount on, such as your
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  social footprint.
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  Is that massive?
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  Right?
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  How does that translate to dollars for you?
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  So when trying to come up with evaluation, yes, there are some things that you can look at.
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  You know, the revenue that the company is making all of those sort of things.
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  But I would say, look at a full 360 scope of the brand and put a dollar value on those
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  things that you the person who's gonna acquire you can't automatically easily get.
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  So, again, if it's like the social footprint that you have, that's gonna allow them to scale
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  your brand so much better and easier And so I would say it's not just about a straight
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  numbers game.
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  It's about looking at the entire company and seeing where your company has value.
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  I love that.
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  And then tell me how important is confidentiality when you're, like, first
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  starting the sales process and when you're close to, like, actually closing the sales
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  process.
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  Like, how does that How how can you kind of keep your potential buyers from outing you to
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  even your staff or or other potential customers?
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  Yeah.
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  You know, I think it's kind of like dating.
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  We're in the beginning.
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  It's all roses and everything's fantastic and beautiful.
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  And as you get, you know, through the process longer and longer and longer, it starts to get
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  sometimes can be frustrating, and sometimes it doesn't end with an actual act you know,
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  acquisition.
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  And so you would wanna make sure that all the information that you've shared has been kept,
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  you know, perfectly confidential.
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  And so, you know, normally, after maybe just 1 or 2 very light conversations, you would enter,
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  you know, into some sort of NDNDA, which really allows you to say, everything we share from a,
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  you know, a legal standpoint is gonna stay between us because if it doesn't end in an
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  acquisition, you're going out again to new businesses and you don't want anything shared
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  about, you know, staff or people who you work with that you're gonna share that information.
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  You know, so those are things that you can mutually agree upon, but you always have to
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  look out for yourself because it doesn't always end in that perfect acquisition marriage.
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  And then how long does the process take?
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  Like, how long did it take you from the time Davis Brino acted like they were interested to
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  a point where somebody handed you a check.
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  Like, how long did that take?
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  So my it's a little unique because it was 2020.
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  We I met the David's team in New York in March of 2020, a week, 1 week before the world shut
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  down.
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  We had terms in a deal, and everything was pretty much wrapped up.
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  And I went over to the executive team at Davis in July of that year.
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  It was publicly announced in October.
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  So I have worked with clients where they are in a due diligence and they have a letter of
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  intent from a company.
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  Sometimes a month, 3 months, 6 months, it doesn't all have to be, like, really drawn out.
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  So you can say to yourself, you can obviously say to anybody you're speaking with, I'd like
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  this to be, like, let's fast track it.
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  I'd like this to be, you know, something that moves quickly so that we can move on with
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  business.
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  You know, so I would say anywhere the normal time that, of course, with legal things that
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  come into it take the longest.
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  So I'd say you're looking anywhere from 3, 6, to 9 months to actually getting something done.
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  Now that's really interesting.
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  You are the shortest person I have ever talked to that has sold a business.
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  Everybody else I know is, like, it could take 14 to 24 months.
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  So that's really interesting that your process in the middle of the pandemic still move
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  forward so quickly.
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  I guess, because people had time with their hands so they could focus on it.
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  I don't know.
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  But, that's really fascinating.
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  So my last question for you is this simply.
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  What is the best business advice someone gave you during this whole process of exit, you
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  know, exiting your business?
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  Yeah.
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  The best business advice I ever got ever was that passion can be a profit.
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  Right?
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  You could turn a passion into a profit.
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  During this process, it really was don't cash that check-in your brain before it's done.
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  I had been told many times that you can get down to the wire and the acquisition doesn't go
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  through.
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  And, of course, that would be devastating.
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  So someone said to me, don't cash that check mentally until everything is signed sealed and
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  it's over and done.
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  Excellent.
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  Excellent.
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  Excellent.
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  Well, I really appreciate this information.
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  You have absolutely no idea how timely it is for me, and we'll talk offline about that.
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  Thanks for listening to the small biz chat podcast with Emerson.
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  Subscribe to this podcast wherever you listen to podcasts and join us next Wednesday for more
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  fantastic information and interviews.
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  You can find more sources and small business success strategies by visiting Melinda's
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  website succeed as your own boss.com.
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  Thanks again for listening, and we'll see you next week.