The way I see it, there are two types of entrepreneurs.
First, there are legacy entrepreneurs. Legacy entrepreneurs generally build a single business, work it and become wildly successful selling products or providing services. These entrepreneurs are generally the managers of the world’s steady-state enterprises, those with less volatility and stable cash flows.
The second group of business-owners is a bit more impetuous. They’re the typical egotistical and maniacal managers with a keen eye on “the next big thing.” In short, the latter of the two groups are often referred to as the serial entrepreneurs. Truly successful serial entrepreneurs are a rare bread—difficult to find and doubly difficult to catch.
For some business owners, it’s not the destination, but the journey that matters.
Most serial entrepreneurs treat life as a game with goals and milestones. They’re never satisfied with the present or the status quo. They are, in effect, masters of seeking the destination, but when they find it they move onto the next illusive pot-o-gold at the end of the proverbial rainbow.
Because the serial business start-up junkie acts differently from the run-of-the-mill business professional, they need to be understood to be fully serviced on a consulting basis. Nowhere is such an entrepreneur in need of expert consulting than in the realm of selling his/her company.
Here are a few pointers for the serial entrepreneur that is ready to sell and move on to the next adventure.
Understand Value and How to Exploit Timing
Unlike the business owner who is attached to the business, the serial entrepreneur is generally focused on utility and profit-maximization. That’s not to say that they don’t add external social value or don’t care for anything besides profits, but the serial entrepreneur is generally less emotionally involved in the business.
For him/her the business is a spreadsheet, a valuation, a digit or a number. And when it comes to “making the numbers” in the serial game, emphasis is going to be all about timing and understanding how value can truly be extracted.
Most entrepreneurs understand less about valuing their company and are generally always wildly over-optimistic on valuations. In addition, most private placement and/or private equity investment firms are looking for great cash flows from the companies they bring in, especially in years of most recent vintage. That means back-loading your sales channels, pushing hard in the last few years and being ready with valuations, marketing memorandums and relationships so when your company peaks, you can effectively pounce.
Many claim timing is luck, but a proper perception would include timing in the realm of proper planning. If you’re prepared when the timing is right, then you can generally maximize your value at exit. The mantra of Thomas Jefferson is striking in this case, “I am a great believer in luck, and I find the harder I work, the more I have of it.”