Case Study #64: Turning Down Shark Tank Money

Turning Down Shark Tank MoneyIn 2013 Kate Field was living in Washington, D.C. working for a nonprofit when she discovered kombucha. Five years later she was pitching a home kit kombucha company on Shark Tank and two years after that she sold the company she bootstrapped, The Kombucha Shop, for just under $2M. Her sale of the business during the pandemic and her refusal to take on Shark Tank money are only two of the interesting twists in this fascinating story.

The Home Brew Niche

When Kate discovered kombucha it had not gotten popular or scaled yet so bottles were often $4 a pop. Friends tipped her off to brewing her own at home, which only involves the cost of tea, sugar, water, and the bacteria starter, called a scobie (think of the “starter” in a sourdough loaf), and often you can get a scobie free from a friend. Once she had gotten set up she offered to help out a friend who had asked about it, but the friend had already “bought a kit online.” 

Intrigued, Kate searched online and found some hippy-marketed kits, but nothing with the clean and trendy branding that her own millennial segment would be drawn to. There was an opening!

With $800 she bought glass jars, sugar, tea, PH strips, and a logo courtesy of a student designer and made 20 kits. She launched a Squarespace website just before Christmas and sold out those 20 kits just on word-of-mouth marketing. She took the profits and washed, rinsed, repeated. Before too long she had a business on her hands.

Shark Tank Calls

That regular word-of-mouth marketing is what Kate and her team stuck with and the company started to see hockey-stick growth, with $800k in sales in 2016, and $1.2M in 2017. Shark Tank came calling in 2018 and after three months of preparation and a lot of nervousness, she pitched.

Inc. ranked it as the second-best pitch of that season, and she consistently got praise from Mark Cuban during the pitch, but ended up doing a full-valuation deal with Sara Blakely and Barbara Corcoran. That deal valued the company at $3.5M, almost triple her trailing 12 months revenue at that time, but all the advice she had going in was to go high as the Sharks would inevitably try to take bites out of whatever number she came up with.

As it turns out, the deal didn’t end up being a fit (over 50% of the deals that “close” on the show never make it to the finish line) for various reasons, and all the parties were okay with not moving forward, but the entire diligence process only pushed Kate towards selling, as she was starting to feel that solopreneur burnout.

One Week From Closing

Getting on Shark Tank will get you a fair amount of interest when you take your business to market, and Kate met with 5-6 buyers before settling on a buyer who had grown some businesses in the past, wanted to give Kate a board seat, and give her an earnout over seven years that could lead to $2.7M in total earnings, but he only wanted to give her $1.5M upfront. She got along well with the buyer and despite some reservations about the earnout timeline, she decided to move forward.

One week before closing, on March 13th, 2020, she got a call from the buyer. He told her that there was going to be a global pandemic that would shut down supply chains for years and that he just couldn’t go through with the deal. Though she understood conditions were unprecedented, Kate was distraught and her husband suggested that they take a bike ride out to clear her mind.

But instead of clearing her mind, Kate got into a serious bike accident. Yet this only made her even more eager to sell: life is short, your health can be tenuous. 

Her broker got on the phone to people who were hoping the deal wouldn’t happen so they would have a chance and as she was going into surgery she gave a verbal okay for an LOI with one of those buyers. He had his own reservations about the international state of affairs (it was March 2020, keep in mind!) and so he shaved some of the value off Kate’s desired price of $2M to mitigate his risk: they ended up agreeing at $1.85M.


There are so many wonderful lessons from this first-time entrepreneur pulling off a 7-figure exit in the middle of a global pandemic, but we’ll focus on three:

  1. Build a better mousetrap. Kate didn’t hit on a world-changing idea. It was simple, and in fact, there were already players in the space. They just weren’t marketing to people like Kate, and she jumped on that opportunity.
  2. So what if you “don’t know.” Kate didn’t know how to build a business, she just went for it. She did a test run, sold out, then just iterated from there. So many businesses would never have been built if the owner had let “I don’t know how to do that” stop them.
  3. Turn down money sometimes. While it’s definitely easy to get star-struck by the idea of working with Sharks, there’s no point in taking money if you don’t need the money. Venture money always comes with strings, and sometimes those strings pull you right out of your own company.

We helped shepherd many transactions during the pandemic and have continued to do so as the panic from that time period has subsided. We’d love to work with you. Give us a call.

Case Study #63: A 10X Missed Opportunity

Case Study #62: A 10X Missed Opportunity

Courtesy of SAM_4973 on Flickr (

Rand Fishkin started an SEO blog in 2003.  His work became so popular that he was asked to speak and consult and before too long he realized there was a business to be had and by 2006 Moz was up and running.  He then went on a venture-backed journey that led to some great highs for his team, but many missed opportunities and mistakes as well.  Rand’s book Lost and Founder captures much of what went right and wrong during his Moz journey.

Mom & Son Founders

Rand dropped out of college to help his mother with the digital size of her marketing business.  Despite helping their customers, they managed to get into sizable debt which only got taken care of as Moz, a totally separate venture, took off.  

To deliver important SEO data to its customers, Moz had created internal software.  As Rand made his way around the speaking circuit people kept asking about it and he decided to make it available to the public for a recurring monthly fee: $39.99.  After six months that revenue stream alone was worth the same amount to the company as the consulting.  The Moz team realized the future was in software and pivoted accordingly.

That’s also when VCs came calling and one particular group funded Moz to build a new version of the software that would reintroduce some key data that used to be publicly available for free from Google, but which the search engine had removed for various reasons.

While the new software launched in October 2008, around when Bear Stearns blew up, before too long the new version of Moz was doing very well, leading to 100% growth year on year for several years.

More Money

Rand went on to pitch 150 firms, almost all of whom said no, but one invested $18M, which ended up being a mistake, Rand claims.

This is due in part to the mystique around venture capital, in part driven by the Shark Tank phenomenon.  Rand asserts that 99% of companies should not take VC money.  His own large VC cash infusion led Moz to take their eyes off the SEO ball and chase down other shiny objects.  From 2012-2014 as they spent this cash infusion their market share of the SEO software market was ceded to their competitors.  Instead of the 60-70% of the market they had in 2012, seven years later, they had around 14%.

A 5X Offer

Still, at the time, Moz was an attractive proposition for a company looking to make a strategic acquisition, and Hubspot was just such a company.  They offered Moz 5X their revenue, which at the time was a $25M cash and stock offer.

However, Rand was confident in Moz’s growth curve and countered with 4X what he projected next year’s revenue to be, $40M.  Hubspot refused and a few years later, they went public.  Rand estimates that the $25M could then easily have been worth $200M, to say nothing of what he and his team could have learned working with a brand like Hubspot for a few years after the first exit.

The Gift of Humility

Rand has recently left Moz and has gone on to found SparkToro, which is aiming to be a search engine for audience intelligence, helping businesses find the best places for them to be in front of their clients. Apart from collecting the lessons of the journey in the book we mentioned above, he says his biggest gift from this missed opportunity was the gift of humility, something he thinks all founders need a good dose of, whether they want it or not!


Rand didn’t lose his shirt and did eventually profitably exit the company he founded, but his story offers so many lessons.  Let’s focus on three:

  1. Don’t disdain an opportunity to exit.  Casper infamously turned down a $900M acquisition offer from Target because it wasn’t a $1B offer.  While Rand was optimistic about the future, he missed an opportunity to take money off the table right away and let some of it ride with a company that was on its way to going public. 
  2. Don’t glorify VC.  As Rand says, most businesses don’t need venture capital.  Look at ways you can bootstrap or internally fund your growth.
  3. Don’t lose focus on your core competency.  The large cash infusion Moz got distracted them from what made them a profitable business in the first place, SEO.  Beware of shiny object syndrome.

Worried you’ll miss a good offer when it comes your way?  That’s what a solid business advisor is there to help you navigate. Put one of us on your team.

Case Study #62: Exiting Near the Top

Case Study #61: Exiting Near the TopAnna Maste didn’t originally set out to build a business.  Her mom had already created some travel guides for the RV community that were selling well when a discussion between the two of them led to Anna pitching the idea of using that customer base to build a website.  Anna then spent a lot of her maternity leave (with free babysitting from mom) using her computer engineering background to create a basic website that allowed people who wanted to allow RVs to spend the night free on their property to advertise (and allowed those looking for free stays to connect with hosts).  Boondockers Welcome was born.  At first more of a monetized hobby than a business, the website took 7 years to grow to $100k in Annual Recurring Revenue (ARR) but thanks to an offer that made her reconsider everything, two years later Anna and her mom built the business up to $500k in ARR, leading to a healthy mid-seven figure exit.

What Changed?

Anna and her mom had been happy as 50/50 partners (despite the challenges that can exist in family businesses).  But at some point Anna’s mom wanted to enjoy her retirement a bit more, not just in less time spent on the business, but in a possible liquidity event that would allow her to splurge a bit more on some trips.

Anna used a broker to take the business to market informally and found an offer with a respectable 3.9X multiple on her ARR.  But at a conference where she shared the idea of an exit with some people, she found support and encouragement to build a bit more and get a bigger exit.  The big changes she made when she came back from the conference included:

  • Hiring a replacement for her mom, dealing with one of the issues that her mom had a challenge with
  • Taking a salary for herself, potentially improving valuation
  • Overcoming imposter syndrome, in which she told herself that she was an employee-type and “didn’t know how to manage people”
  • Raising prices, while grandfathering in all current customers, as long as they kept renewing
  • Hiring a customer service person from the membership (she got over 200 applicants for that role!)
  • Adding a weekly newsletter that highlighted new hosts 

The loyal following they already had kept spreading the word and unsurprisingly, the business grew.

The Exit

The pandemic crippled many businesses, but not those catering to RVs.  Many people started to realize there were alternative ways to live, and not having a permanent residence was one of them.  While Anna maintains that the “lifespan” of an active RVer is roughly two years (after which they feel like they’ve “seen everything” and are ready to be off the road), there was a massive influx of people willing to try it, and the host community of former RVers only grew exponentially from these new inputs.

Anna looked at the remarkable growth over the two year period, powered by a pandemic but also by smart changes she and her mother made.  Two concerns plagued her:

  1. What if this is peak RV?  The last thing Anna wanted to be was the last person in the casino, not knowing to cash out when the getting was good.
  2. This is my Mom’s nest egg.  Her mom had now pledged nine years of her time and treasure into this business and was getting on in years.  It would be a good time to reward her investment.

The buyer who ended up acquiring Anna’s business was Harvest Hosts, which partnered with wineries to bring in extra income and awareness among the TRV community.  Anna was promised that her brand would stay separate but would be part of a community of brands that Harvest Hosts used to promote RV hospitality and partnerships.  She got her exit, only having to stay on as a consultant for six months.


Three lessons to take away from this story:

  • Your side hustle can become a real business.  Often the missing ingredients are what Anna experienced: limiting beliefs, intentionality, and paying real salaries. 
  • Manage family with care.  While she had a decent offer originally, and even considered buying out her mom, she realized that it wouldn’t go down too well if she had a massive exit a few years after paying her mom a fraction of that price.  Manage family relationships in business with care.
  • Know when to get out.  While RVs and #vanlife are still very much a thing, Anna didn’t try to keep riding a rising tide: she put in the work and got out with a major upgrade from a previous offer only a couple years before.

Are you looking at getting out of your business in a two year window?  Follow Anna’s lead and start planning now.  We can help.

Case Study #61: Turning Tragedy Into Triumph

Feed CompanyThe top two reasons that business owners start moving towards a sale are:

  1. An unsolicited offer
  2. A major health issue

The second reason is what confronted Sandy Hansen Wolff in 2003 when her husband was diagnosed with leukemia.  He owned a business called AgVenture Feed and Seed that sold to regional dairy and beef farms.  It had great customers and solid employees, but had already begun to suffer from the health problems which took him away from his business before the diagnosis.

A Perfect Storm

The fear turned into a reality when Sandy’s husband passed away, leaving her as a 30 year-old widow in charge of a company with $1M in annual revenue but no documented systems or procedures, in a field that is male-dominated and which she had no expertise or experience in.

Additionally, the business had recently taken on debt to buy out a partner, which included a $500,000 loan (secured against Sandy’s home) as well as a 7-year payout.

Not only were there no policies and procedures written down, but employees didn’t even know what the margins were, or what they should be in comparison to the marketplace.

Sandy realized that her hope of restoring the business and getting it ready to sell in a few months, which was what her husband’s advice had been, was not reasonable.  She was going to have to get in with both feet.

Making Changes

From the pressure of the debt and with a desire to do something different in a fairly traditional industry, Sandy started moving in the direction of the “gig economy” long before that was a phrase anyone knew.  Instead of keeping functions and processes and staff in-house, wherever she could, she subbed out work to contractors.  A lot of skeptics scoffed at her, particularly because of her lack of expertise, but not only did the move stabilize finances for the company, it began to be imitated by other players in the business.

She slowly grew the business to a high of $8M in 2018, founding another business along the way, New Heritage Feed Co.  It was a chicken feed business that was using the infrastructure and relationships of the existing parent company to grow and thrive.

A Sale?

But, even as she got more and more excited and engaged in New Heritage, Sandy found herself slowing down with AgVenture, and taking a cue from books she’s read before about running businesses, she knew it might indicate it was time to sell.  She’d long since gone beyond rescuing the business to creating something that provided an ongoing and serious livelihood for her and her team.

There were also some discouraging changes in the marketplace.  Many farms were becoming corporate and some of the smaller farmers who didn’t sell out just sold up and left their farms.

She had had some discussions before with one of the feed manufacturers but the discussions had always ended with, “we don’t buy our retail partners.”  They were singing a different tune when Sandy called this time, in part because New Heritage was selling its own products that were starting to cut into the orders of this manufacturer.

Getting Serious

A first meeting led to a second in which an NDA was signed and they started to move towards a sale.  Sandy had seen that other similar businesses tended to get 4-5X EBITDA and along with this expectation she set out three conditions of the sale:

  • She wanted her employees treated well
  • She wanted the process to be amiable
  • She didn’t want to know the plans for the business after she left

Unfortunately, the first offer was unacceptable, with one of the members of the buying team clearly designated to play “bad cop” in the negotiation process.  It was refused but the second offer was also unacceptable, with an even more insulting offer for New Heritage, which was not part of the original deal, it being a separate entity.  

Sandy thought that at such a price she could just continue to run the business herself and walked.

Five minutes later, as she was driving away from the buyer’s corporate headquarters, their broker called, insisting that they wanted to do a deal.  Sandy pointed out that she had too, but the lowball tactics and manipulation had to go.

The buyer realized that their tactics were not working and came to something that everyone was agreeable to, which included an all cash upfront deal for Sandy, along with a 1% bonus on all gross sales for all customers that stayed with the new owners.

The best part, when Sandy signed the papers she was free to go: no earnout, no transition period, in part because she did what her late husband had not done: empowered her staff with processes and procedures so that they could run the company without her.

Lessons Learned

Sandy has an inspiring story, and offers some worthwhile takeaways:

  • Don’t be afraid to innovate, even in a traditional industry — by seeing the savings that could accrue with subcontractors Sandy took a risk that ended up paying off.  What cost-cutting measures might make sense for you that you’ve never considered?
  • Document, document, document — even though she took over a $1M business, it was one that couldn’t be sold.  By taking the time to create procedures, she created a company that could be sold.
  • Stand your ground — Sandy remembered a key rule of negotiation: always be willing to walk away.  This led the buyer to realize she was not going to be fooled by lowball tactics and brought the deal to a happy conclusion for everyone.

Have you had a health scare that has made you uncertain about your business?  We’ve worked with many similar situations before and would love to help.  Give us a call.

Case Study #60: Converting the Sale of One Business into Two

Case Study #59: Converting the Sale of One Business into TwoThings were looking bright for Calvin Johnson and his single-source office supply business Lykki in early 2020.  While he provided traditional office supplies, the fastest growing part of his business was in office coffee: he had even started roasting his own beans to keep up with demand (and maximize profits).  At the end of 2019 he signed a contract with 50 banks, which meant buying a bunch of equipment to put into those banks.  Then March 2020 happened.  This is the story of how Calvin salvaged his 23 years of hard work and pulled off a sale in one of the most challenging times for businesses like his.

Why Choose Lykki

Small businesses often don’t realize that buying office supplies from one vendor, kitchen supplies from another, and coffee from yet another one isn’t just a poor use of time, isn’t just more labor for the accounting department, it’s often more expensive.  Lykki was able to save its customers time and money and make accounting’s job simple.  

This was something they also believed as a company, as “creating happier workplaces” was a part of their mission.  While they had started in the office supply business first, they naturally grew into helping their customers with everything else they might need, from water, to coffee, to food.

A Tale of Two Businesses

Even though Lykki made ordering simple and seamless for their customers, the two divisions of the company couldn’t have been more different.

The office supplies business represented 20-30% of their topline revenue, yielded a steady margin in the high 20s, and offered 30,000 SKUs using just-in-time logistics, meaning, no inventory.

The rapidly growing food and kitchen supplies business represented 70-80% of their topline revenue.  This required a warehouse for food that needed to be tracked towards expiry and, as we mentioned already, even featured their own coffee roasting, allowing them to take advantage of integration and make even greater margins.  On this side of the business blended margins were in the 40s.

What Changed

Calvin had his 50th birthday and reflected on where he was in his life and felt that it was time for a new chapter in his life, but having consulted with friends and mentors, the $7-8M in topline that Lykki was doing wasn’t going to attract the big national players that could give him a valuation he wanted.  He would need to drive it to $10-20M to do that.

While he obviously pushed his team to grab some of that necessary growth via sales, he also tried the acquisition route and found that people weren’t interested in selling.  Turns out that a lot of small office coffee business suppliers were running nice little lifestyle businesses and weren’t interested in giving those up, thank you very much.  So, at least for the moment, acquiring his way to that revenue wasn’t going to happen either.

Prepare For a Sale

So, while he let his team push growth and accepted that the market wasn’t ripe for a roll-up, he got to work doing what he needed to for a future sale:

  • He found an M&A team to help him with preparing for the sale, and he placed particular value on his M&A accountant and lawyer, both of whom had experience with deals of this size
  • He built out his data room for future due diligence
  • He explored the benefits of a share sale vs an asset sale

Pandemic Pain

As many other business owners did in March 2020, Calvin felt like he was in a bad dream.  Customers told him that they were closing offices and might revisit that decision “in January.”  Sales dropped by 85%.  As for that coffee deal he had just signed with the bank, the business model for office coffee always implied free usage of the equipment, assuming a certain minimum order.  But with no in-office workers, many businesses simply told him he could “pick up his machines.”  He did.

While the Canadian government helped Calvin and his employees survive most of 2020, via 70% subsidies of his rent and 75% subsidies of his employees’ pay, when January 2021 rolled around those programs started to expire and many customers were not coming back.  He realized his options included bankruptcy or selling.  He looked at bankruptcy and saw that it could be expensive and complicated too, so he just decided to throw himself into a sale, realizing that it would be smart to split the company in two.

Through his network he found out that a certain company had a war chest and was making acquisitions in his space and he gave them a call.  The potential buyer was willing to hear him out.  Calvin reasoned that at some point the numbers would come back (he was roughly at 50% of his former level of business) so rather than look at the growth curve pre-pandemic, he simply looked at the historical numbers from 2018 and 2019, reasoning that at some point at least those levels would return.  The buyer agreed and accepted the price Calvin offered with no counter.

The office supplies business was harder to move, but Calvin did manage to land a deal that was 50% upfront and a 50% earnout (an earnout he is currently in the middle of).  In both sales the buyers wanted an asset sale instead of a share sale, which left Calvin to figure out different tax-advantaged ways to get the money out of the company.  But that’s the sort of problem he was happy to have.


You can’t help but admire Calvin, who managed to pull off not just one, but two sales, when he could just have easily had none and faced bankruptcy.  Three key lessons:

  • Follow your customers’ lead — the office coffee market exploded during Calvin’s time and he leaned into that trend, growing his company’s revenue and market share.
  • (Have your broker) pick up the phone — while the narrative of “the business will come back” was a bet on Calvin’s part, it was a bet the buyer was willing to take as well; if you stand behind a narrative a buyer may have confidence in it as well.
  • Don’t lose heart at the finish line — we always say that buying and selling a business is a process, and you need to trust that process.  Calvin didn’t give up when confronted with devastating numbers, and his perseverance paid off.

Are you considering buying or selling a distressed business?  We can help!  Give us a call.

Case Study #59: Still Working for the New Owners

New OwnersAnthony Fracchia was born into a restaurant business and started working at the age of 10.  He wasn’t allergic to working with family and years later when he was in the working world he decided to get involved with what was then primarily a health insurance brokerage with his father.  He eventually bought his father out, worked hard on building the company’s revenue, and a few years after that, sold the business, Altrius Benefit Consultants, for 8X EBITDA.  The funny thing?  Both he and his dad are still working there to this day!  They love the team and business they built.

The Model

Many might be familiar with the regular individual insurance agent who gets paid straight commissions set by a carrier.  An agency is a way to accelerate the work of an agent by adding more team members.  But a general agency is one step above even that, as they negotiate their own commissions based on the volume they do, and hence can, in a sense, wholesale those rates by offering training and support and keeping the difference.  At the time of sale Altrius had 300 agents in this revenue channel in one state alone, apart from the regular residual income that accrues from premium payments across policies.

The Buyout

Anthony loved working with his dad but after more than a decade of working together they realized they weren’t aligned in their business goals.  Anthony was in his 30s and wanted to grow aggressively, and his father was in his 70s and wasn’t at all interested in that aggressive growth.  Anthony and his father had always kept their own personal books of business outside of the agency’s valuation and those personal books accounted for 70% of the revenue of the business at the time.  Anthony bought his father’s share of the remaining 30% of revenue for 2X topline revenue.  Dad continued to work on the business and Anthony hired a business coach and went for it. 

The results spoke for themselves.  In the four years after buying the business from his father Anthony increased:

  • Gross revenue by 85%
  • Gross profit by 100%
  • EBITDA by 600%

The Sale

Years before, when he still co-owned the agency with his father, some state legislation was proposed that could have decreased the agency’s earnings by 40-60%.  Father and son realized that their business wasn’t diversified enough and added Medicare and other employee benefits to their overall portfolio, but that concern about a changing regulatory environment was still there, and only became exacerbated with the passage of the Affordable Care Act.  The regulation in the industry wore on Anthony.

He had also seen the acquisition market in insurance agencies heat up from 3-4X at the time he bought out his father to 8-10X some years later.  When he started to get some cold calls inquiring about his business he thought it was time to think about some general principles for a sale.  He came up with four non-negotiables:

  • He wanted to keep the brand intact
  • He wanted the ability to stay on indefinitely
  • He wanted his staff to be safe to stay on indefinitely
  • He wanted a multiple of EBITDA between 7-10X

Part of how he came up with these points was one particular tire kicker who had taken him down the road for a couple months.  Anthony was naive and, excited that someone wanted to buy his business, thought he was just “having a conversation” but in reality he was giving away a lot of information.  At some point before handing over some revenue numbers he realized the acquirer just wanted to buy his book of business and planned to zap his brand and fire his whole team.  Needless to say Anthony broke off the conversation right away and came up with the four points listed above.

Because he stayed focused on those points when the right acquirer came along and said, “No problem” to those four points he knew he was on a good path.  He ended up getting 8X EBITDA, 80% upfront and 20% on a three year earnout.  The 80% was 90% cash and 10% in unrestricted stock in the acquirer.  The earnout was all stock, delivered in annual tranches over three years.  The acquirer was originally listed on the OTCBB but has since transitioned to NASDAQ.


As always, there are lots of lessons here but we will focus on four:

  • Have a buyout agreement when you have a business partnership!  This will ensure that any future separations will be clearly delineated.
  • Be clear on what it is you want out of a sale.  Taking the time to write down what you want can serve as a north star for every meeting you take.
  • Realize it’s very rarely “just a conversation” when someone is interested in buying a business.  Hiring a broker takes a lot of these time-consuming calls off your plate and puts them on ours, where they belong.
  • Hire a business coach.  No one achieves success in business alone.  Be humble enough to ask for help and smart enough to take the advice when it’s offered.

Are you anxious to supercharge the value of your current business so you can sell it in a few years?  We’d love to help you put those plans in place.  Give us a call.

Case Study #58: 3 Years to 30 Million

Fab CBDIt was 2017 when Josh got a call from a fellow Milwaukee business owner about CBD.  Josh was already in the supplements space so he already understood how to build and market products to customers online.  He just needed to take a crash course in CBD.  Six weeks later he launched Fab CBD and three years later he sold his business for 10 figures in cash and stock.  Here’s a brief look at his story.


Have you ever done a search for “best mattress” or “best grill” and come across what looks to be a blog or a personal website?  Chances are those sites are being paid a commission for any sales (or even traffic) they send to the companies whose products they are creating content about.  Some of these affiliates work on a one-time basis, or “Cost per acquisition” and they normally demand 50-100% of the first order as a commission.  They receive nothing afterwards.  Josh and his Fab CBD team preferred for everyone to have some long-term skin in the game and hence would give 20-25% of the first order, but then 15-20% lifetime on the backend.  That meant that even after customers had entered the company funnel and were now responding to the marketing and tactics paid for by Josh and his team, the original affiliate was still being rewarded.  

On the strength of his affiliate marketing and organic SEO alone, Fab CBD kept doubling in revenue.  It ended 2018 on 2.5M, 2019 on 5.5M, and 2020 on 11.5M.  

Wait, What’s CBD?

If you are unfamiliar with the product, it comes from cannabidiol, which is one of 113 cannabinoids in cannabis plants.  It was discovered in 1940, but has most recently been used to help treat anxiety, depression, PTSD, and insomnia.  It’s non-psychoactive, meaning you get the benefit of the plant, without a high (or the munchies).

The oil itself has to be mixed with flavoring, hemp extract, and MCT oil, which acts as a carrier for the compound.  In 2017 when Josh started the business a kilo of the oil cost $16k.  That same oil now costs $2k.  But because of strong demand, most of the big players in the industry have not dropped their prices, which means there’s been a world of margin that opened up from when the company first started buying the oil.

“I’m Not Romantic About CBD”

From the start Josh wasn’t romantic about CBD.  He didn’t go to sleep or wake up thinking about the product.  It was just something helpful that he was delivering to consumers while also building a big business.  That meant that when he was at a certain level, he knew he would be objective about selling the company.

In 2020 he knew he had hit the numbers he wanted and with a goal of getting 6-8X EBITDA he went to various companies in the industry looking for a deal.  Given that some of the bigger players were doing $5M EBITDA on $30M in revenue and Josh had the same EBITDA on $11.5M in revenue, he was an attractive target, and unsurprisingly he had seven LOIs on a deadline day he had set.

Cash and Stock

Josh ended up taking $13M in cash and another $8M in stock which he is currently holding (his acquirer is listed on NASDAQ) and is optimistic it might double.  But in a sense he doesn’t care, because he sees it as a bet that he’s involved with: he’s still working with the acquirer and is helping to make sure that stock price grows, underwritten by a strong ecommerce pedigree.

When he reflected on why he waited for a certain number before cashing out, Josh was clear that he wasn’t interested in something like $5M or $6M when he was already pulling down $1M/$2M a year.  He wanted a very large payout.  And it turns out he got what he wanted.


If Josh could have changed one thing, he said he would have gone to his broker with at least some idea of the structure of the deal he wanted.  He’s said he’s heard of sellers who go to their brokers with vague ideas for a sale outcome, and then complain when they end up with a yellow Camry instead of the black Mercedes they envisioned.  “Get your deal on paper, talk to lawyers, then bring it to your broker, then you’re all on the same page about the outcome you want.”

Other lessons Josh shared:

  • Affiliates can get you instant credibility and instant customers.  Depending on how you structure your commissions with them, they can take your growth to the moon (or not).
  • Be clear on your why for selling.  Josh wasn’t just looking for a quick buck.  This was not his first rodeo and given his trajectory and the margins he had built, he wanted to get paid for where the company was going (to the moon!) and was happy to move on to the next thing.
  • Avoid being romantic about your business.  Some sellers sleep/breathe/eat their businesses.  That’s great!  That’s often part of the success.  But realize too that can make you totally emotional when it comes to a transaction and that’s a liability.  Consider the value of emotional distance from your business.
  • When taking stock as part of the transaction, look to see how easy/safe it is to liquidate.  That has to be part of your calculus when considering how much you are willing to take.  

Do you want an unromantic look at your business to see if it’s in shape to sell?  We’ve got you covered.  Give us a call.

Case Study #57: Built to Sell from the Start

Built to Sell from the StartIn the early days of starting his company, Olympic Restoration, Kevin Waldron went to a seminar in which Michael Gerber was speaking and heard Michael say that if a business owner had to be there every day to open and close the business, that wasn’t a business: it was a job.  Right then and there he resolved to build a business the right way so that one day he could sell it, if he wanted to.

Kevin started out in the flood/fire/disaster restoration business working as an employee.  His boss was a real jerk to his staff and didn’t pay his taxes to the government.  Kevin got out of there as quickly as he could, using the reasoning that has launched probably millions of businesses: “If that jerk can do it, I can definitely do it better.”

Professional from the Start

The first step in creating a business to sell was not naming the company after himself.  He knew that could affect valuation in the future.  He also knew that the reputation of most companies in his industry: a mom and pop operation with a couple vans in which the owner usually answered the phones.  Instead, he hired someone to answer the phones early on to give the appearance of professionalism and people noticed.

Industry Changes

Kevin started in the industry in 1988 and ended up selling his business in 2005 so he saw a lot of changes happen.  But the key one was in service.  In the beginning the insurance agencies who hired him simply wanted their customers taken care of.  “We’re sending over Kevin and his team and they are going to take care of you.”  Let’s be honest, as consumers, after sending all those insurance payments over the years, we want to get taken care of.  But the property and casualty industry was the last sector to adopt the cutthroat tactics of the health insurance industry, i.e. doing “surveys” and then telling companies like Kevin’s that they were going to pay $XX.yy for a given type of service, no more, no less.  Oh, and while you’re at it, you’re going to start doing the work (making site visits, taking photos, etc.) that we used to pay adjusters to do.  No, we’re not going to pay you extra for that.

These changes squeezed his margins, for sure, but it wasn’t bad enough to push him out of the business.  He kept growing his team and his business.

An Unsolicited Offer

Many business owners first start thinking about selling their business when they get an offer out of the blue.  In this particular case, since Kevin had always been planning to sell the business, this wasn’t a trigger for him.  He asked his business coach for advice and he was told, “Tell them you have no intention of selling, and if they are okay with that, you can go as far as they would like.”

That’s exactly what Kevin did and at the end of the process he said, “Thanks but no thanks” and things stayed cordial between all parties.  At the time Olympic was doing $6-8M in annual revenue and the offer was 4X EBITDA on 75% upfront and 25% earnout.

Now, It’s Time

But all business owners who successfully sell can tell you at some point you know it’s time to go.  Sometimes there’s a dramatic event or aha moment.  Other times you just wake up one day and realize you don’t want to fight the insurance companies anymore and want to do something else.  That happened to Kevin one day and that fatigue probably led to his biggest regret in this process: instead of taking the business to market he simply called the company who he had gone through the process with years ago and leveraged that cordial relationship.  They were 7-10 days to an LOI, and then closed in 45 days.  The changes from the original offer from the past was no earnout as Kevin wanted to be gone immediately and because he was now doing $24M in annual revenue, his payout was much stronger.


We always tell business owners that if you build to sell, it’ll be so much easier if and when you ever do that.  All businesses either close or sell.  There are no other options.  Some other lessons from Olympic Restoration:

  • Be thoughtful about your name.  While there’s definitely family pride in having your last name on the business, it can make things more challenging if it doesn’t end up being a family business and you want to sell.
  • Keep on good terms with potential acquirers.  While Kevin knew he didn’t want to sell at the time of the first approach, he kept such a cordial relationship that he was basically able to call his shot when he was ready to sell.
  • Go to market.  Kevin has said that if he had to do things all over again, he would have definitely gone to market with his business.  It may have ended up with the same buyer anyway, but on even better terms than he ended up getting.

Is your business built to sell?  If so, is it time to talk about selling?  If not, we would love to give you some advice on how to get ready for a sale some day.  Give us a call.

Case Study #56: Three Years from Start to Sale

Case Study #56: Three Years from Start to SaleAndy Cabasso was a law student looking for jobs with law firms and thought that most of the legal websites he found were absolutely terrible.  He reached out to a friend with a web design background and JurisPage was formed, building websites and helping with marketing and SEO.  He ended up finishing his degree and became a licensed lawyer, but not long after that he sold JurisPage for a seven figure sum.


Early on Andy and his partner decided they were not interested in one-off work.  They would only create a website for a company if they committed to doing some kind of recurring work with them, whether that was SEO optimization, paid search, or other marketing.

They also wanted to focus exclusively on the legal field.  

These two decisions shaped the entire growth trajectory of the company.  They turned down lucrative work early on, when it was the hardest to do so, because it was either from non-legal clients or from people who “only wanted a website.”  This also meant that they were able to put an assembly line system in place in which various members of a team could simply guide clients through a repeatable process every time.

As he built SOPs that documented every step of the process he found it was really important to check with his team on a weekly basis to go over checklists in the process.  Instead of just handing an SOP to his team and expecting them to just refer to that all the time, he took the time to make sure that the SOP was working and updated it as needed.

Abundance Mindset

Andy noticed that some other firms worked off a fear mindset: they “owned” the websites that they created for companies so that if the business ever wanted to leave they had to pay a large fee to “buy” their website from the website designers.

Instead, Andy chose to lead with results.  He made sure the contract stipulated that the client owned the website and if they ever left they could take it with them.  His thinking was as long as JurisPage was delivering results, why would a client want to leave?


Andy did start to get acquisition calls a couple years into the business.  He would ask the caller what the investment criteria they had was and would often tell them to check back in six months or more.  Truth be told, he wasn’t really looking to sell.

That was also the case when a conversation started with Uptime Legal, which was a referral partner of theirs.  Uptime offered managed services for legal services and was very much a complementary business.  At a conference Uptime threw out the idea of an acquisition and Andy’s response was, “Do you have a compelling offer?”

Uptime came back with the synergies and cross-selling the combined company could offer as well as the fact that they were older and more established and could grow the company faster.

Andy refused their first offer and instead of countering, he simply offered some other possibilities for how they could work together.  He was able to do this because he wasn’t looking to sell in the first place, so unless he was really happy with the offer, he wasn’t interested in selling.

The Lawyer Hires a Lawyer

Despite being licensed as a lawyer, Andy begged off from working on his own deal.  Not only was he not an M&A specialist, he knew that he was too emotionally close to the deal and couldn’t be counted on to be objective.  

He ended up with a sale he was happy with and stayed on with the new company for some time to help them hit some targets they had agreed to.  His payouts came first at closing and then after he had completed the agreed-to term at the new company.


Andy managed to do well in the legal field, though not in the way he had originally planned when he was in law school.  Lessons to take from his story:

  • Recurring revenue matters.  Not only is it cash flow you can count on every month, it’s revenue that buyers really like to see.
  • Focus on a niche.  Despite living off their savings in their early days, JurisPage didn’t jump at every customer opportunity.  They built a niche based on their expertise and owned it.
  • Be clear on what you want.  Andy didn’t counter the first offer because he wasn’t the one who initiated the sales process.  That was smart negotiating on his part.  That led to the buyer taking him more seriously and competing against themselves for the second offer.
  • Don’t DIY a business sale.  Despite being a lawyer running a business catering to lawyers, Andy was smart enough to hire a professional when it was time for a sale.  
  • Think abundantly.  Rather than keep customers’ websites hostage and build a customer base he was afraid of losing, Andy focused on delivering best-in-class service and let the customer decide for themselves.

Do you need some names of lawyers to help you with a sale or purchase of a business?  We’ve got some great names to share with you.  Give us a call.

Case Study #55: Stats That Pay

Stats That PayCary Moretti never planned on starting a sports stats business.  He was working in IT and had helped a couple of his clients which were semi-pro hockey teams get a website up and running when they asked for help with keeping track of stats.  That “yes” turned into deals with other teams, then the league of those teams, then other leagues.  By the time he sold League Stat to industry leader Hockey Tech fifteen years later, he had 27 employees.

The Business Model

What’s fascinating is that Moretti started his business in the 1990s, before the Internet was what it has become in our lives and certainly before sports teams considered 24/7 fan access to real-time stats something worth investing in.  

Since the business started with one-off clients, Cary wasn’t actually sure about pricing.  He essentially guessed and scraped by, but as his first league deal came in, he realized he had to change how he priced.  He created two different services under the New Sport Media brand: League Stat, which provided software that allowed teams and leagues to enter in the relevant data and display it to anyone who wanted access, and Professional Services, which answered the “but we also want the software to do this” demands of individual teams.  Even though SaaS was in its very early days, Moretti knew he couldn’t add features to a core software offering just because one or more users wanted it.  

The pricing for each league was bespoke and varied based on, among other factors:

  • Touch points offered
  • Number of visitors
  • Number of teams tracked
  • Amount of data stored

The Right Fit

Moretti confesses that it took him four years to realize that certain calls he would get were people asking if he was open to an acquisition.  When that finally clicked, he zoned in on what really mattered to him: someone who was going to significantly grow what he had built.  That acquirer needed to have a lot of money to scale the business and to give it the attention it deserved.  

The eventual acquirer, Hockey Tech, gave him a starting offer of 1X annual topline revenue.  Cary traded deal points with them and worked up from that number, but eventually what resulted was a delayed sale: Cary would stay with the new company for a minimum of twelve months, would be on a contract with conditions that made him almost impossible to fire, and even had some equity in the new firm.  He simply needed to make sure the transition happened well and that the new business had what it needed as it grew and expanded.  After the twelve months passed, the deal would officially close and the cash would hit his account.


Cary and his minority partner sold League Stat, but New Sports Media had to keep going, and the partner took over day-to-day there while Cary finished up his time at Hockey Tech.  As he looks back at all that happened, he has three major takeaways for business owners:

  1. Find a mentor.  There were so many times that Cary really had no idea what to do, and as a result, almost went bankrupt twice, despite having a service that customers enjoyed and wanted.  The right advice would have made a big difference for how the company grew and eventually got acquired.
  2. Ask yourself what you want.  While the money was nice, Cary was really motivated by seeing the possibility of watching his “baby” grow into something more than he could provide with his experience and capital.  That shaped the match with the acquirer.
  3. Tell the customer what they want.  By staying strict about what was the coreline offering of League Stat, but also creating the Professional Services arm of New Sports Media, Cary simultaneously stayed focused on a winning formula while saying “yes” to opportunity.  This can be more easily done with the right kind of partner, which Cary had.

Whether you are looking to buy or sell a business, it’s important to be clear on what it is you want out of the opportunity.  Money matters, but it can’t be the only reason.  Call us to share your thoughts; we’d love to chat with you.