Lecture Notes: Business Sale and Ownership Retention

Key Concepts

• Partial Sale of Ownership:
  • Sold 60% of the company's shares.
  • Rolled forward 40%, maintaining partial ownership.

Valuation Details

• Company Valuation:
  • Pre-money valuation: $29 million.
  • Post-money valuation: $44 million.
  • Ownership worth approximately $15 million.

Transaction Dynamics

• Cash-Out vs. Roll Forward:
  • Received cash for 60% of the ownership.
  • Rolled 40% of ownership to stay involved with the company.

Decision Reflections

• Considerations of Control and Influence:
  • Expressed regret for rolling 40% instead of selling more.
  • Felt a loss of control after selling a portion.
  • It was uncommon in the industry for founders to fully cash out.

Entrepreneurial Insights

• Founder Role in Business:
  • Founders are often seen as inextricably linked to the business.
  • Buyers may require founders to maintain some involvement post-sale.

Personal Reflections

• Emotion and Logic in Decisions:
  • The speaker's therapist reminded them of industry norms.
  • Reflects on personal and business integration, affecting sale dynamics.

Industry Practices

• Buyer Security Concerns:
  • Buyers prefer founders to roll a portion of their ownership to ensure business stability and continuity.

Lessons Learned

• Regret Over Partial Sale:
  • Wishes to have sold a larger percentage for more immediate financial benefit.
  • Recognizes personal attachment to the company and its impact on decision-making.