Ep 566 From "Unsellable" to $112M, a Bootstrapped Sale to Intertek

Clean Energy Associates acted as the eyes and ears on the ground in China for solar and battery storage buyers, inspecting factories to make sure the products they ordered were built correctly before they shipped.  In 2016, a banker sat down with founder Andy Klump in Shanghai and asked him three questions. How would he triple his business in a short period of time? Who was on his executive team? Did any single customer account for more than 20% of revenue? Andy had no investment plan and no leadership team beyond one salesperson, and one client made up 40 to 50% of his sales. The banker's verdict was that the company wasn't sellable and there was nothing he could do to help.  Six years later, Intertek Group acquired Clean Energy Associates for $112 million, and the banker who had delivered that verdict ran the sale. In between, Andy survived six straight months of losses, heard from an executive coach that his team saw him as a micromanager, and went through five hires to find the right head of sales.

Zac Smith was a mechanical engineer who wanted more flexibility and upside than a corporate career could offer. He bought an existing CertaPro Painters franchise in North Carolina with three employees and under $1 million in revenue. He put down about 10% in cash and financed the rest with an SBA loan and a small seller note, backed by a personal guarantee.  Three years later, the company was on track for $3 million in revenue and $600,000 in profit. Smith sold it for $1.5 million, all cash at closing.

Adam Spector co-founded LiftIgniter in 2014, which used machine learning to personalize websites the way YouTube does. Growth stalled, and with no way to prove the company was causing the results customers saw, it could never charge what the work was worth. The board brought in a new CEO to sell, and when Adam argued to keep building he was outvoted two to one. It sold in 2018, mostly for its engineers, and he left soon after.  Like a lot of owners, he wanted to stay in the game. Keeping a hand in, backing people doing interesting work, staying near the part of the job he really enjoyed. For Adam that meant putting money into other people's startups. More than a decade in, that portfolio shows seven to eight times on paper. In cash, it is roughly break even.

Heath Adams bootstrapped TCM into a company with two revenue lines: hacking into companies' systems to expose vulnerabilities, and selling courses and certifications that trained others to do the same work. He owned every share, raised no outside capital, and never relied on outbound sales. Every lead came through a YouTube channel that grew to more than a million subscribers.  A competitor then raised $50 million and began matching TCM on price and quality. On the advice of a friend who had sold his own company, Heath started answering the acquisition emails he had been deleting for years. One became a letter of intent for more money than he had ever seen. Half of it was an earnout, so he turned it down, hired a sell side firm, and put the company in front of 300 buyers. Four wrote letters of intent. The one he signed was worth more than double what he had turned down. In this week's episode of Built to Sell Radio, you discover how to  Turn the acquisition emails you've been ignoring into free valuations and a rehearsal for diligence  Tell the difference between the money in an offer and the promise attached to it  Pass on the highest offer and pick the buyer instead  Build a walk away number backwards from the life you want to fund rather than a multiple of earnings  Hold diligence at arm's length so it does not paralyze the company you are selling 

Broadly speaking, there are two ways to build a company. Some entrepreneurs swing for the fences, spending decades building one big business. Others play for singles, building a series of smaller companies they can sell and repeat.  Stuart Faught has made a career of the second approach.  He has started and sold 20 software businesses, making him the number-one seller on Acquire.com. His model is deliberately small: build a simple tool for a niche of local businesses, grow it to $50K to $100K in annual recurring revenue, sell it for four to five times that, and move on to the next one. 

Garren Hilow bootstrapped Abveris, an antibody discovery business doing $12 million in revenue, and sold it in 2021 for $150 million up front with another $40 million available in an earnout. His team came within one percent of the revenue target. The acquirer said they had missed it, refused to share the accounting behind that conclusion, and dared him to sue.  Rob Walling sold Drip with 40 percent of his purchase price tied to an earnout and collected all but a fraction of it.  In this episode of Built to Sell Radio, John Warrillow puts the two founders side by side to work out what actually separated the two outcomes, and you discover how to negotiate an earnout you have a chance of collecting.  You'll learn:  Why a revenue-based earnout hands the acquirer the calculator, including the right to change how your revenue is recognized partway through the year  Walling's ranking of earnout milestones from worst to best, and the one type he tells founders to refuse outright  Why taking more cash at close makes an acquirer less likely to fight you over the back end  What a private equity buyer admitted over dinner about how often his firm plans to replace the founder  The reporting clause Hilow left out of his agreement, and what its absence cost him  How old Slack messages and a verbal instruction to work from home became grounds for a termination with cause  Why an acquirer who intends to fold your company into theirs should not be offering an earnout at all 

Dane Pan and his wife built Monet Brands to $1.3 million in revenue with two employees, selling a $24.99 skincare tool that cost them $6.10.  When they took the company to market in 2025, nine buyers cleared the proof-of-funds screen and four of them wrote an LOI. The best offer came in close to four times SDE with a holdback attached. Dane countered for all cash at close, watched two of his four offers disappear, and signed at 3.6

One of the fastest growing groups of acquirers is the self funded searcher. A searcher is not a competitor nor a private equity group. A searcher is usually one person, often recently out of an MBA program, who puts ten to twenty percent down from personal savings, borrows the rest from a bank, often asks the owner to finance part of the purchase price, and signs a personal guarantee for the debt.  Owners find searchers appealing for good reasons. They may pay your asking price, and they promise to look after your employees rather than fold them into someone else's operation.

In 2016, Janessa White and her business partner started Simply Eloped, a marketplace that planned elopements and small weddings for couples in 35 cities across the United States. They also decided, before they had a single customer, which company they wanted to sell it to. The Knot Worldwide, the largest wedding platform in the world.  Over the next seven years, White told The Knot exactly that, met with their corporate development team every quarter for four years, and shared her revenue and margins with them along the way. When she finally emailed to say she was ready, the letter of intent arrived within a week.

There are four types of financial buyers who might make an offer on your business, and more often than any other type, the one approaching you is an independent sponsor. It is an unhelpful label for a group that raises the money for a deal only after the seller has signed an LOI, which is also when the seller's leverage is at its lowest.  Travis Jamison runs Capital Pad, where investors fund independent sponsor deals. He sees dozens of them for every one he approves. Independent sponsors are now behind roughly 28% of lower middle market acquisitions, which is more than traditional private equity does.