Michael Frankel, Founder and Managing Partner of Trajectory Capital
When times are good, big companies tend to ignore their smaller business units, as they operate smoothly on their own. It is only when the economy gets tough that these little businesses get more attention, and often seen as off-strategy or a distraction. That's when the company's leaders decide it's time to sell them, which is not ideal, as the business is no longer in their prime, making it harder to sell.
In this episode of M&A Science podcast, Michael Frankel, Founder and Managing Partner of Trajectory Capital, joins us to share his best practices of selling a small business unit.
00:00 Intro
03:35 The decision to sell a business
05:01 Reasons to sell the business
06:43 Steps in selling a small business unit
09:59 Finding buyers
11:53 Avoid using bankers
13:30 Pitching the deal
14:50 Avoiding non-serious buyers
16:42 Important factors other than price
23:01 Real life example
27:54 Valuation gap
30:29 Evaluating the business
34:45 Hardest part of selling a small business unit
37:03 Advice for first time buyers
41:48 Proactively approaching a seller
47:25 Earnouts on small deals
48:44 Craziest Thing in M&A
This episode is sponsored by FirmRoom, the fastest virtual data room used to get deals done. Leave the pay-per-page world behind by going to https://firmroom.com/