How to sell your company and not let the door hit you on the way out

For many entrepreneurs, the motivation to log long hours, take incredible risks and work for peanuts is, simply, the exit sign—the prospect of selling out and cashing in. One of the most common questions I was asked while building my company was, "What is your selling price?" It didn't matter what stage the company was at, what it was worth or what its potential was. I thought there'd be a day when I'd get an unsolicited envelope in the mail, freeing me from the stress and financial pressures of running a company. On top of that, I'd get to name the price. What a deal.

Nothing could be further from reality. Exits happen because acquirers open windows of opportunity. Like a real house, windows open from the inside. The notion that founders can force an exit is a bit like thinking they could walk up to a house, open a window and sit down with the owners without recourse. In most cases, exit windows come about because of the circumstances of the acquirer, not just the seller.

Display your wares. Make sure your activities are visible. Potential acquirers need to know what you are up to. Maintain a presence at trade shows. Get mentioned in industry publications. Make your company successes known.

It's not always about your company. The dynamics that place an acquirer in a position to buy a company are just as complex as those that position a company for a sale. Acquisitions require access to cash, strategy discussions from top management, internal champions to push the issue and, ultimately, a team that will absorb the incoming company. Those things don't always line up, so assuming a company will buy you just because it is big and powerful is like assuming grizzly bears are always hungry (they hibernate, too).

As you get bigger, your options shrink. It is somewhat counterintuitive, but as company valuations increase, exit options decrease. Not only do companies get too expensive to buy, but if they've made an amazing run, it's likely because they've navigated a new frontier that doesn't have a lot of competitors (i.e., potential acquirers) to begin with.

Companies like Facebook, for instance, have evolved from dozens of acquisition offers early on to just a few suitors in recent years. Now, realistically, an IPO is the only cash-out option. This is certainly not a bad thing, but founders need to realize the farther they go down the path, the fewer people they will see on it, and adjust their exit expectations accordingly.

Once founders realize storybook endings are rare, they can focus on strategies to make real exits occur. By making sure potential suitors are tracking your progress, understanding their internal dynamics and ability to acquire and continually benchmarking your expectations with growth, you will be ready when the window opens.

The feminine technique

In a commencement address at an all-women’s liberal arts school, Facebook COO Sheryl Sandberg urged graduates to think of what they would do if they weren't afraid, and then go do it. "Writing this book is what I would do if I weren't afraid," Sandberg writes in Lean In: Women, Work, and the Will to Lead. The book is a feminist manifesto for the 21st Century and a field guide for professional ambition. She explodes the myth of "having it all" (you can't; nobody can), explains why "Will you be my mentor?" is a mood-killer question, and gives women the tools to occupy the same boardroom seats and salary band as their male counterparts (Knopf 2013, $15.92; chapters, indigo.ca). 

One key practice is to develop a consistent hiring process that sets forth your hiring criteria, rather than basing hiring decisions on gut feel or instinct. Many entrepreneurs hire people who they have a good "feeling" about, but it often results in poor hires because the candidate may not be the best suited for the role. It's also important to provide a written employment offer letter. Many small companies make verbal offers and this results in "he said/she said" misunderstandings and increased costs. A common mistake is small businesses hiring before they're ready; they feel they need help, but haven't developed job descriptions, established appropriate pay rates, and don't have time to train and mentor new staff.

Small business owners need to understand their unique needs and develop an HR strategy that is specific to their business requirements. Don't try to use a one-size-fits-all solution. It's also important to understand the legal requirements and have a working understanding of the Employment Standards Act. And the best advice is perhaps the simplest: ask for help. A little advice from an HR professional can go a long way and really pay off in the long term. Reference checking is an important part of the hiring process that is too often overlooked. Checking two to three employment references is critical. Always ask if the former employer would hire the person back.

 The first advice I offer small business owners is to ensure employees under¬stand the business model, the competitive advantage, and service expectations for clients. They should also gain an understanding of basic people practices such as job clarity and perfor-mance expectations, then manage and recognize staff so they can retain skilled talent. Communication about how the business is doing and what may be changing, then encouraging input, is crucial. The biggest mistake small business owners make is to focus on elements they are most comfortable with such as financial management, customers or products and services, and ignoring solid employee practices-when it's the people who power their business success.

Mexico has long been seen as a land of plenty for B.S.'s mining companies.For anyone looking to expand their business here, learning the importance of manana and siesta is a good place to start.

The Greeting

TITLES Showing respect is key in Mexican culture and courtesy titles such as Senor (Mr.) and Senora (Ms.) should always be used when addressing business partners. First names are generally reserved for family and close friends-you shouldn't use them un-less invited to do so. SHAKE ON IT Hand-shakes are common and should be done upon arrival and departure, regardless of gender, age or seniority.

LOOK AWAY Avoid making lengthy, direct eye contact when engaged in conversation with business associates. Mexicans often avoid eye contact as a sign of respect.

The Meeting

RELAX Time is flexible in Mexico, so punctuality and timekeeping are less closely observed than in B.C. Manana is a commonly used term, literally meaning "tomorrow," and it is often used as a way of saying "later." When hearing it, you should expect things to be done at some point in the future, without a definitive deadline in mind. GIFTS Bringing a gift is not necessary, but you may want to bring something small to an initial meeting. Ensure that it is not an extremely valuable gift-something inexpensive will still be appreciated greatly.

The Meal

A.M. MEETING Business meetings are rarely conducted over dinner, as the evening is often reserved for family. Some are scheduled over breakfast, but the most popular time to meet is over lunch from 11 a.m. until noon.

BOTTOMS UP Drinking over lunch is common, so enjoy an alcoholic beverage if you feel inclined-beer and tequila are obvious choices. DINING Shared dishes are not common practice when eating out, instead everyone will order for him or herself. Be pre-pared for a heavy meal, as meats, refried beans and avocados are common, while leafy greens are rarely served-even at lunch.

Social Customs

LANGUAGE While many Mexicans speak excellent English, it's a good idea to learn some introductory Spanish before meeting with business associates. Simple phrases like Como estd? (How are you?) and Mucho gusto (Nice to meet you) go a long way.

SHUT-EYE Partaking in a midday siesta (nap) is a time-honored tradition in Mexico, so avoid scheduling a meeting directly after lunch as many business people use this as an opportunity to relax.

BETWEEN THE LINES

Mexicans rarely give a solid "no" answer, preferring to respond subtly, opting instead for "maybe" or "we'll see." Picking up on these indirect answers can save you-and your potential business partners-a lot of embarrassment and confusion.

For most of the 20th century, any list of America's wealthiest families would include quite a few publishers generally considered to be in the "news business": the Hearsts, the Pulitzers, the Sulzbergers, the Grahams, the Chandlers, the Coxes, the Knights, the Ridders, the Luces, the Bancrofts -- a tribute to the fabulous business model that once delivered the country its news. While many of those families remain wealthy today, their historic core businesses are in steep decline (or worse), and their position at the top of the wealth builders has long since been eclipsed by people with other names: Gates, Page and Brin and Schmidt, Zuckerberg, Bezos, Case, and Jobs -- builders of digital platforms that, while not specifically targeted at the "news business," have nonetheless severely disrupted it.

On the national level the owners of the big legacy news businesses have fought fiercely against the disrupters, often with the effect of a frustrated ocean swimmer flailing against a fierce rip current. But with each digital click upward in Moore's law (processing power) and Metcalfe's law (network power) the tide of technological disruption has only risen, washing many of the legacy swimmers further out to sea, or at least diminishing their financial prowess. Perhaps it is another law, Amara's, that best describes the results. That law states, "We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run."

To document the transformation of the news business, we created an oral history project, from which this article is excerpted. We gathered the personal recollections of a broad but select group of principals who faced the choices, made the decisions, placed the bets, and now have the benefit of hindsight as to how it could, or couldn't, have played out differently.