Mark Ferrier founded the marketing agency TRAFFIKGROUP and grew it to over $2M in EBITDA before agreeing to be acquired by the private equity group Onex in an eight-figure exit.
Mark decided to sell when a friend revealed that most founders end up wishing they had sold 50% sooner for 25% less.
This episode is packed with wisdom for service-based businesses, including how to:
Drive employee engagement with a “Holy Crap” fund.
Buy out minority partners.
Distinguish between agreement vs. alignment.
Deal with imposter syndrome.
Know when it’s time to sell.
Avoid being “Hollywooded” by a deal structure.
Evaluate the risks of rolling equity.
Avoid an earn out.
Evaluate an offer from a private equity group.
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More About Mark Ferrier
Mark Ferrier has had the opportunity to initiate seven different companies, exiting three in multiple forms and experiencing failure with one.
Over his 25-year career in growing businesses and building brands, many of the enterprises he has been involved with have earned recognition on the Growth 100 List and the Profit Hot 50 start-up lists.
He exited his last business, Traffikgroup.com, in 2015 to an Onex company and subsequently led their global growth strategy with the brand and marketing organization globally, increasing revenue from $20M USD to $75M USD before his departure in 2019.
Mark’s business philosophies are anchored in the belief that value creation is not solely financial. It must also be demonstrable in the growth of human capital and the communities in which businesses operate, both physically and virtually.
In 2021, he founded Kurious Inc. and &Capital, with a straightforward mission to assist companies in growth based on his experiences and strategies around growth, serving as an entrepreneur, creator, business builder, and investor.
Definitions
Earn-out: This is a financing arrangement for the purchase of a business, where the seller must meet certain performance goals before receiving the full purchase price. It reduces the buyer’s risk and aligns the interests of both parties post-acquisition.
Turn: M&A professionals use this term to describe an additional multiple of earnings. For example, imagine you’re originally offered four times EBITDA for your business, and your M&A professional got the acquirer to raise their offer to five times EBITDA. The M&A professional would refer to their win as getting you an “extra turn.”
Put Option: Imagine you’ve been acquired and agree to roll equity into in the new business, and you want a way out in case things don’t go as planned. A “put option” is like a safety promise that lets you sell your part of the business back for an agreed-upon price.
Here’s how it works:
When you invest, you can make a deal that includes a put option.
This option lets you sell your shares back to the business or another investor for a price you both agree on beforehand.
This deal gives you peace of mind. If the business doesn’t do well, you have a way to get some of your money back.
In short, a put option in private businesses is like a safety net for your investment. It’s a deal made just in case you need a planned exit.
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