In 2005, Rory Fatt founded Royalty Rewards, a marketing platform for small businesses, and in 2022 successfully sold his business, which generated $85 million in sales. Reflecting today on the question of what he would have done differently in the process of selling the business, Rory said: “I’d say not starting (this process) early enough. When you start the business you should be thinking of exiting” When you start a business, you have to think about getting out of it.” This thought is not obvious to everyone.
Often entrepreneurs are so mesmerized by a market opportunity that they rush to develop it and ignore the “little things” like a partnership agreement or shape the entire operating process for years to suit themselves. If they are focused, hard-working and, of course, lucky, they become owners of a large fortune. The nuance is that the vast majority of it is on paper, because the liquidity of assets is close to zero. If the unexpected happens — a serious illness of the founder, shareholder conflict, competitors’ intrigues, a security raid, a revolution, a pandemic or a war - the solid business will collapse like a house of cards.
Even if there is no force majeure, but the founder decides to sell the business, tired of ploughing 24/7/365 for decades. But it turns out there are no willing buyers in its current form. Or the “sell as is” option means a tangible discount to the value. Why? Confusing legal structure, unresolved disputes with former partners, handling the company’s money as if it were a personal wallet, a strange system of financial accounting that is far from international, etc. Buying such a business, you can not just “turn on and go." At first, you have to clean up the Avgiye stables, for which you either have to be a hero or pay Hercules to clean it up.
Being able to sell your company quickly for a high price at any appropriate moment is an additional degree of freedom. That’s why a wise founder starts thinking about the selling process even when the company isn’t there yet.
Yours sincerely,
-Alexander
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