Exiting Tips from One of the Top 40 Under 40

Wind Mobile founder Anthony Lacavera has started 12 businesses, six of which he has exited. His exits have ranged in value from the $6 million he got for one of his recent start-ups to $1.3 billion when he sold Wind Mobile. He did it by following two key tips. 

  1. Understand what kind of company you are running

Lacavera has owned hyper-growth unicorns and lifestyle businesses and urges entrepreneurs to be clear about their long-term prospects. Lacavera started a business supplying hotels with internet access and understood the company would be a good cash generator, but would never sell for a mint. He ran the business for almost two decades and used the cash it generated to fund various other ventures. Recently, he finally sold the business, which was generating $1.5 million in pre-tax profit, for $8 million—a relatively modest 5 times earnings, which was fine by Lacavera, because it had served its purpose of funding other companies along the way.

  1. The role of CEO and owner are not the same

Lacavera encourages entrepreneurs to separate the role of CEO and business owner. Even though they may be the same person, they have different functions and, at some point, your business may be better served by separating the two roles. Entrepreneurs who are comfortable handing the reins to a professional manager may do better in the long run than those who need to control everything.

Lacavera had great success, which is visible in the fact that he has won just about every business award there is, including 2010 CEO of the Year, Top 40 Under 40, Deloitte Technology Fast 50, and Canada’s Fastest Growing Company. One of the top secrets to Lacavera’s success — knowing when to bring in a CEO to replace himself in any of his ventures.

If you’d like to discuss and strategize on your exit plans, as far out as they may be, please contact Frank Mancieri, (401) 651-1585, frank@gtGrowth.com.

Dec – 12 The Enduring Family Business: Sustaining the Value and the Legacy

Upcoming Event
Bryant University ~ Bello Center
Tuesday, December 12, 2018 – 7:30-9:30 AM
Early Bird Price: $45,  other pricing for RI CPE credits, RI Attorney CLE credits, and Students

REGISTER HERE

The Enduring Family Business: Sustaining the Value and the Legacy

There is no more impactful way to sustain the value and legacy of a company than to position the right family members for leadership and ownership succession.  Unfortunately, statistically speaking, only 1/3 of family businesses successfully continue even through a 2nd generation.  For a multitude of reasons, sustaining value and continuing the legacy of the family business continues to be a challenge and arguably may get even tougher. In this panel discussion, you will hear from next generation family members about how they successfully grew the value and continued the legacy of their family’s business along with their insights and best practices to safeguard the business value, and prepare the next generation for a successful transition.

At The Business Value Forum on December 12th, moderator David Karofsky, will facilitate a conversation addressing how to sustain the value of a family enterprise – for the near and long terms.

Please join The Business Value Forum on May 8th for a hot breakfast, and the conversation with seasoned experts who will share their personal experiences and insights into the real impact of women on business value creation.

Register Online

 

Our Moderator:

Mr. David Karofsky

David Karofsky is a Senior Consultant with The Family Business Consulting Group, which has worked with thousands of family businesses over the past two decades, including some of the most successful and influential business families around the world, helping them to build the foundations for value creation and sustainability.

Our Panelists:

Mr. Judd Rottenberg
Principal, Long’s Jewelers

As a Principal at Long’s Jewelers, Judd Rottenberg is the third generation jeweler.  Long’s is a family-owned and operated full-service New England Jeweler with multiple stores, rooted in its 1878 founding by Massachusetts native Thomas Long.  Over the past 140 years, Long’s has become a cornerstone of the region’s luxury jewelry and timepiece market.

Mr. Andrew Salmon
Director of Network Development, Salmon Health and Retirement

In 2006, Andrew Salmon joined Salmon Health and Retirement, a broad service multi facility senior living and health organization in 2006, coming from an administrator position for a healthcare corporation.

The Biggest Mistake Owners Make When Selling

One of the biggest mistake owners make in selling their company is being lured into a proprietary deal.

The Definition of a Proprietary Deal

Acquirers land a proprietary deal (or “prop deal”) when they convince owners to sell their businesses without creating a competitive marketplace. Acquirers running a proprietary deal know they don’t have any competition and tend to make weaker offers with more punitive terms because they know nobody else is bidding.

Many founders become the target of a proprietary deal without even knowing they have been duped. First, someone senior from the acquiring company approaches the founder, complimenting them on their business. The acquirer suggests lunch, and then high-level financials are exchanged. Soon, the owner starts going down a path that is difficult to come back from.

As the parties in a proprietary deal get to know one another, founders often share information with the acquirer that puts them in a compromised negotiation position. The interactions are set up as friendly exchanges between two industry leaders, but many founders reveal key facts in these discussions that end up being used against them when negotiations turn serious. Business owners also become more emotionally committed to selling the more resources they invest in the process and the more time they spend thinking—perhaps dreaming—of what it would mean to sell their business.

How to Avoid Getting Taken In By a Proprietary Deal

Savvy sellers avoid the proprietary deal by creating a competitive process for their company. Take for example Dan Martell, the founder of Clarity.fm, among other companies. When Martell decided to sell Clarity, he knew the likely buyer was one of five New York-based companies. Instead of negotiating with one, he invited all five to an event he hosted in New York. The five CEOs, all of whom knew one another, saw a room full of their competitors and realized that if Clarity went on the market, they would have to out-bid the other buyers in that room.

Hosting the event was Martell’s way of communicating to all the potential buyers that a proprietary deal was off the table and that if they wanted to buy Clarity, they would have to compete for it.

It’s flattering to receive a call from an executive at a company you respect. Just know that if you accept their invitation of lunch, you run the risk of becoming the latest casualty of the proprietary deal.  If you’d like to get serious about planning and preparing for a future sale of your business, please contact Frank Mancieri, frank@GTgrowth.com, 401-651-1585.