Dan Martell - March 02, 2020


How to Sell Your Business (First Call)


Episode Stats


Length

10 minutes

Words per minute

203.28659

Word count

2,136

Sentence count

128

Harmful content

Hate speech

1

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, Dan Martell walks you through how to run your first acquisition potential conversation with a potential acquirer and how to make sure you're on the same page as the acquirer in terms of what they're looking for in a company.

Transcript

Transcript generated with Whisper (turbo).
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
00:00:00.000 Hey there, Dan Martell here, serial entrepreneur,
00:00:01.680 investor, and creator of SaaS Academy.
00:00:03.440 In this video, I'm going to share with you
00:00:05.640 how to conduct your first call from a potential acquirer.
00:00:09.200 So if you've ever had somebody reach out,
00:00:10.800 maybe be interested in collaborating, partnering,
00:00:14.280 but you really know it's an acquisition potential
00:00:16.400 conversation, I'm going to share with you guys
00:00:18.240 how to run that first call in this video.
00:00:20.320 And be sure to stay at the end where I'm
00:00:21.520 going to tell you how to get access to my fundraising
00:00:23.680 like a pro.
00:00:24.800 You may not want to sell, but instead,
00:00:26.440 use this opportunity to raise a bunch of capital
00:00:29.080 As those SoundCloud rappers say, you've got to go get that bag.
00:00:32.460 I'm going to teach you how to do that.
00:00:33.740 So be sure to stay at the end where I'm going to tell you
00:00:35.080 that, and let's get this started.
00:00:50.080 So when I was building my company, Flowtown,
00:00:52.660 we had a bunch of companies reach out.
00:00:54.620 They wanted to talk, et cetera.
00:00:56.500 And for me, it was interesting finding out
00:00:58.420 that people just like, it's their job,
00:01:00.300 like corporate development in a big company
00:01:02.380 to actually go find potential acquirers.
00:01:04.420 So at first I was super excited and I wanted to get on the call
00:01:07.760 and I remember my first call ever,
00:01:09.180 it was with somebody from Google and it was crazy.
00:01:12.800 I remember now, and I'm gonna teach you guys
00:01:14.480 how not to do this, the amount of information I gave them
00:01:17.800 and research and the way we thought about the market
00:01:19.860 and how our code worked and all these different things
00:01:22.440 that I should have never shared.
00:01:23.900 So if you're worried on your next call
00:01:26.340 of potentially giving up too much
00:01:27.820 showing too much interest, et cetera.
00:01:29.280 I'm gonna walk you through specifically
00:01:30.580 how not to do that.
00:01:31.940 Just recently, I had one of my coaching clients,
00:01:34.340 AD from Converzio, have the same opportunity, okay?
00:01:38.180 Now I can talk about public
00:01:39.520 because they actually got acquired by Campaign Monitor,
00:01:42.100 but what I'm gonna teach you today
00:01:43.560 is the framework that I coach my clients to use
00:01:46.200 on those first calls,
00:01:48.320 that AD used to create not only interest and demand
00:01:51.760 in running a process,
00:01:53.280 because exit timelines is something that I teach
00:01:55.260 as part of the ACES growth engine,
00:01:56.980 the perfect exit, it's kind of the outcome
00:01:59.620 that I think every software entrepreneur wants to create,
00:02:02.120 we need to do the first call right.
00:02:04.380 So I'm going to walk you through the five steps
00:02:06.420 to make sure that you absolutely crush it.
00:02:08.720 One, fit, price, and motivation.
00:02:11.320 Those are the three things that I'm trying to assess.
00:02:14.140 If I'm getting on a call with a potential acquirer,
00:02:16.760 in that conversation, I'm trying to maneuver my way
00:02:20.900 to discover those three things.
00:02:22.440 Number one, is this company even a fit from a culture,
00:02:26.880 from a values point of view,
00:02:28.460 from maybe they're just not even looking to buy a company,
00:02:32.740 they're just kind of kicking tires
00:02:34.500 or they're doing market research.
00:02:35.960 So number one is just fit.
00:02:37.540 The second thing is I wanna make sure
00:02:39.120 that if there is potential for something
00:02:42.500 that their valuation or the way they think about our company,
00:02:46.180 the price, and that's a tough one to get to,
00:02:48.740 we're on the same page because there's nothing worse,
00:02:51.440 more demoralizing, wasting of time
00:02:54.300 than going, talking to a potential acquirer,
00:02:57.440 going through the process, due diligence.
00:02:59.420 I've seen companies get all the way to three months
00:03:02.080 showing them their numbers, having them talk to customers
00:03:04.420 to find out that the price they were at
00:03:06.600 was dramatically lower than where you wanted to be, okay?
00:03:10.180 So we wanna essentially suss out
00:03:12.320 the potential for the deal size.
00:03:15.100 Like what kind of number?
00:03:15.940 If we were to partner, what kind of investment
00:03:18.880 are you guys looking to make in our organization
00:03:21.580 for us to collaborate?
00:03:23.000 That's a really nice way of saying,
00:03:24.460 what are you willing to pay us to buy us?
00:03:25.840 OK, so you can use that.
00:03:26.960 And then the third is motivation.
00:03:28.600 It's are these people truly motivated,
00:03:32.020 or are they just trying to do some research in the market?
00:03:35.040 So those are the, like, right off the bat,
00:03:36.920 the foundation for the call is fit from a values point of view.
00:03:40.800 Price is the deal size in line with what we're thinking.
00:03:43.920 And three, because then you can dismiss it.
00:03:45.500 And three is motivation.
00:03:46.440 Are they really looking to make a purchase decision,
00:03:49.060 or are they wasting your time?
00:03:50.320 Number two, get them talking.
00:03:52.440 So my rule, think about it as the 20-80 rule.
00:03:56.760 80% of the conversation should be them talking to you.
00:04:00.660 Where a lot of founders make the mistake
00:04:02.440 on a first conversation with a potential acquirer
00:04:04.940 is they want to give the information that would hopefully
00:04:10.020 get that company interested in buying.
00:04:12.420 Here's the way I think about it.
00:04:13.700 In any sales conversation, if you're
00:04:15.740 a professional sales individual, you
00:04:18.300 are speaking 20% of the time, and 80%
00:04:21.860 is the potential prospect, OK?
00:04:24.160 We're asking questions.
00:04:25.460 We're prompting.
00:04:26.400 We're saying things like, hey, I'm just curious.
00:04:29.300 What's happened in the market for you guys
00:04:31.020 to decide to reach out?
00:04:32.920 Have those questions ready to go to just get them talking.
00:04:36.820 Because what you're trying to do is you're
00:04:38.320 trying to reverse the process.
00:04:39.900 Instead of them trying to discover everything
00:04:42.080 about your company, you're trying
00:04:43.800 to discover everything about their company, OK?
00:04:46.420 So just you know if you're doing this right,
00:04:48.660 if they're talking more than you're talking.
00:04:50.440 If you're talking the most, stop yourself.
00:04:53.320 Breathe.
00:04:53.940 Slow down.
00:04:55.360 Hit them with a question.
00:04:56.500 They answer.
00:04:57.360 Great question.
00:04:58.020 Acknowledge it.
00:04:58.740 Hit them with another one.
00:04:59.660 And just keep that process going.
00:05:01.380 Number three, prepare talk tracks.
00:05:04.300 So here's what I know is if this is a true potential acquisition,
00:05:09.040 they're going to ask you questions about price, team
00:05:13.180 size, product strategy, all these different things.
00:05:16.180 Just assume that they're going to ask you these questions
00:05:19.120 and write those questions down.
00:05:20.860 When I went through the process exiting Flowtown,
00:05:23.680 I then did it again with Clarity.
00:05:25.400 I then did it again with other companies I've invested in.
00:05:28.420 I've had nine companies that I coached this year alone
00:05:31.440 exit their companies.
00:05:33.720 And what I teach them is to prepare those talk tracks
00:05:37.660 so that when the question comes up, you're not blindsided,
00:05:40.460 that you've already prepared your answer.
00:05:42.560 That is enough to give them some confidence and insights,
00:05:46.840 but it's not giving away the firm.
00:05:49.000 So just be sure that you prepare your talk tracks
00:05:52.960 and make sure that they don't give away too much insight.
00:05:56.820 Because you don't know.
00:05:57.620 They might be hanging up the call with you
00:06:00.060 and going and talking with your competitor
00:06:01.680 because they're about ready to write a check to invest in them
00:06:04.480 and they wanted to do some research.
00:06:05.800 You do not know where your information you're giving to them
00:06:08.700 is going to end up.
00:06:09.680 So you need to prepare those questions and talk tracks.
00:06:12.900 Number four, role play.
00:06:14.660 So I actually have a video on this on role playing
00:06:16.800 that you guys can go check out, I'll link it up below.
00:06:18.760 But one of the things that I'm a big fan of
00:06:21.180 is especially with like meaningful conversations,
00:06:23.620 a potential acquirer, a key hire, fundraising,
00:06:26.460 is you want to role play the scenario
00:06:28.800 so that you can get used to, because you never know,
00:06:32.680 maybe the other person is just gonna hit you
00:06:34.340 from the left side with a weird question
00:06:35.780 and then you're just like, whoa, whoa, whoa, what's going on?
00:06:38.520 And you might inadvertently disclose stuff
00:06:40.660 that you shouldn't disclose.
00:06:41.760 Like, we only have 60 days of runway left.
00:06:44.740 If you're telling a, just so you know, 0.61
00:06:46.080 if you tell that to a potential choir,
00:06:47.500 they will just drag their feet and call you back in six weeks,
00:06:50.520 just so you know.
00:06:51.120 So like, you want to role play.
00:06:53.160 So if you have a co-founder, you have somebody
00:06:55.200 that's helping you on the M&A side, a partner,
00:06:57.880 have them ask the tough questions that you prepared
00:07:00.720 and role play and have some fun with it.
00:07:02.540 So that way when the, it's kind of like practice
00:07:05.260 before the big game, right?
00:07:07.000 You would never assume that somebody would go into a competition or the Super Bowl and not practice off the field.
00:07:13.880 And then when they're on field, they're just executing the play.
00:07:16.100 That's what you want to do from a role-playing point of view so that you're prepared, you feel at ease, you're comfortable, and you don't make a mistake.
00:07:24.780 Number five, stick to the time.
00:07:27.040 So one thing I believe, and this is true for fundraising or an exit conversation, et cetera, is you don't want to seem needy, okay?
00:07:35.280 One of the biggest ways that you can seem needy
00:07:38.440 is that if we've allocated an hour for the conversation,
00:07:41.420 or 30 minutes, and you as the founder
00:07:44.100 are totally cool going long, here's what I would do instead.
00:07:47.980 It's you don't want to cut people off,
00:07:49.520 but you can just say at the beginning of the conversation,
00:07:51.220 it's like, hey, I noticed that we got 30 minutes in the calendar
00:07:53.600 to go through this.
00:07:55.260 Appreciate the time.
00:07:55.840 I just want to let you know I do have a hard stop
00:07:57.380 because I have another conversation similar to this.
00:07:59.760 That's what I like to say, similar to this with somebody
00:08:02.840 else.
00:08:03.280 And they're like, oh, yeah, no, perfect, great.
00:08:04.860 Thanks for the time, et cetera.
00:08:06.660 If you're going near, and you might even
00:08:08.620 say like towards the end of the call, if it's 60 minutes,
00:08:11.140 you might say like, hey, I know we only have 15 minutes left.
00:08:13.620 So you want to set the constraint around the call
00:08:16.380 so that you can let them know it's like, hey,
00:08:18.000 I don't need this call.
00:08:19.500 We're building the business.
00:08:20.820 We're not interested in selling.
00:08:22.660 If you want to buy us and partner with us
00:08:25.360 so that we can do more together, great.
00:08:27.360 But this is not my priority right now.
00:08:28.860 My priority is building the company.
00:08:30.340 You need to protect your time so you don't come off as neat.
00:08:34.460 I've just seen too often, you know,
00:08:36.460 a 30-minute conversation turns into four hours,
00:08:38.700 and the founder's like, oh my god,
00:08:40.240 it was such a great conversation.
00:08:41.320 We talked for four hours.
00:08:42.200 It's amazing.
00:08:42.760 They're totally going to buy our company.
00:08:44.080 And I know in my head, they just did all the insights.
00:08:47.400 They got all the information.
00:08:48.760 And literally, they're saying, well, you know what?
00:08:50.600 We should just build this ourselves.
00:08:51.780 We don't need to buy it, right?
00:08:52.860 Because you gave them everything.
00:08:54.780 You gave them the milk, and they didn't have to buy the cow,
00:08:57.280 OK?
00:08:57.880 So make sure that you stick to the time in your conversation.
00:09:01.480 So real quick recap on how to conduct your first call
00:09:04.460 with a potential acquirer.
00:09:05.460 Number one, you want to assess the fit, price,
00:09:08.380 and motivation of the potential buyer.
00:09:10.620 Number two, you wanna get them talking.
00:09:12.440 Number three, you wanna prepare your talk tracks.
00:09:14.980 Number four, role play before the call.
00:09:17.560 Five, stick to the time.
00:09:20.280 If you do those things,
00:09:21.520 you will become a world-class negotiator
00:09:24.360 and be like one of my other nine clients
00:09:26.340 that exited their companies this year,
00:09:28.860 like 80 to campaign moderate.
00:09:31.160 These are life-changing moments.
00:09:33.140 And if you can just slow down and let the process go,
00:09:36.620 it could mean multi-million dollar difference
00:09:39.080 in that specific outcome.
00:09:40.700 So as I mentioned at the beginning of the call,
00:09:42.320 I want to share with you guys my Fundraising Like a Pro
00:09:45.540 Framework.
00:09:46.440 I break fundraising and capital raising
00:09:48.400 into three distinct phases.
00:09:50.740 For example, the pre-marketing phase.
00:09:52.680 You probably didn't even never heard of that.
00:09:54.900 Go download.
00:09:55.640 Click the link below to download and get access
00:09:57.400 to that specific training.
00:09:58.680 And I'm going to break down how do you identify the acquirers.
00:10:01.100 Reach out to them.
00:10:01.940 Get introductions.
00:10:03.080 Have those conversations.
00:10:04.160 It's all covered below in the fundraising like a pro training.
00:10:07.320 Click the link to watch that.
00:10:08.900 If you like this video, I would ask you to smash that like
00:10:11.920 button.
00:10:12.420 Be sure that you're subscribed.
00:10:13.320 Some people watching this are not subscribed to the channel.
00:10:16.400 And leave a comment and let me know what you like the best
00:10:19.200 from this video.
00:10:20.680 I appreciate for being here.
00:10:21.800 As per usual, I want to challenge you
00:10:23.180 to live a bigger life and a bigger business.
00:10:25.460 And I'll see you next Monday.
00:10:26.540 Just like, get that bag.
00:10:28.220 I'm like, what?
00:10:29.140 Bag.
00:10:29.520 Oh, money bag.