My First Million – Shaan’s Masterclass: How To Sell A Business For Millions

Intro

In this episode of “My First Million,” Shaan shares his experience and lessons learned from selling his first company for millions. He discusses the importance of managing your psychology during the sales process, identifying potential buyers, and using effective communication strategies to sell your company.

Main Takeaways

Lessons from Selling a Company

• Building a sensational product is not the only way to sell a company; it takes more than that.
• Great companies are bought, not sold, but most companies are sold, not bought.
• When starting a company, believe it will work and be big, and have the passion to do it more than anything else.
• Check in with yourself to see if you still believe in the company and want to continue with it.
• Consider selling if you receive a great offer, no longer believe in the business, or no longer want to run the business.

Strategies for Selling a Company

• Manage your psychology during the sales process to be good at negotiation and get people across the line.
• Be careful about discussing a potential sale with your team, as it can affect their behavior and create uncertainty.
• Create a communication table with different timelines for co-founders, investors, and employees.
• Identify potential buyers, including unicorns, dying dinosaurs, adjacent companies, and talent farms.
• Find a deal duel, someone who has experience with mergers and acquisitions, to guide you through the process.

Effective Communication Strategies

• Use the Dennis system to sell your company, which involves identifying potential champions and company routers to nurture relationships.
• Use words that demonstrate strength without pushing too far when communicating with potential buyers.
• Understand the potential reasons why a company might buy your company, such as catching up to a competitor, owning a monopoly, or acquiring unique talent.
• Build relationships over time to avoid approaching potential buyers as strangers.
• Tap into emotions and desires to engage with potential buyers, and offer a solution to their problems.

Negotiation and Closing the Deal

• Find out which company has the most buy-in currently and identify any fires that need putting out.
• Talk to founders who have been acquired by the same company before to gain insights on the process and decision-makers.
• Create a one-pager explaining the strategic benefits, technical assets, and talent of your startup to make it easy for potential buyers to understand.
• Find multiple partners to negotiate with simultaneously and use leverage from one offer to get a better deal from another.
• Sprint to close the deal and celebrate once it’s done.

Summary

Selling a Company Successfully

Selling a company involves more than just building a great product. It requires belief in the business, managing your psychology during the sales process, and effectively communicating with potential buyers. When considering selling, evaluate if you still believe in the business, want to run it, or have received a great offer. It’s essential to identify potential buyers, build relationships, and understand their motivations for acquiring a company. Utilize negotiation strategies, leverage multiple offers, and close the deal efficiently.

Effective Communication Strategies

When communicating with potential buyers, use words that convey strength without being pushy. Understand their pain points and present your company as the solution to their problems. Build relationships over time, tap into emotions and desires, and offer a persuasive argument on how the acquisition will benefit the buyer’s company. Make it easy for potential buyers to understand your team, technical assets, and strategy. Find the company with the most buy-in and address any fires that need putting out. Provide clear information and financials to potential buyers.

Negotiation and Closing the Deal

Negotiation is crucial in selling a company. Talk to founders who have been acquired by the same company before to gain insights and understand the decision-makers. Create a one-pager that highlights the strategic benefits, technical assets, and talent of your startup. Find multiple partners to negotiate with simultaneously and leverage offers to get better deals. Sprint to close the deal, as deal momentum is essential. Avoid getting emotionally attached to one potential buyer and celebrate the successful acquisition once the stress has subsided.

Conclusion

Selling a company for millions requires careful consideration, effective communication, and negotiation skills. By following the strategies shared in this episode, entrepreneurs can increase their chances of successfully selling their business. Remember to manage your psychology, build relationships with potential buyers, and leverage multiple offers. Celebrate the successful acquisition and continue learning from the experience.