Ricardo Pellafone, founder of compliance training company Broadcat, got an inkling during the pandemic that it might be time to step away from his company.
“The stress of the pandemic and the stress of being responsible for the team was weighing very heavily,” Pellafone said. Although Broadcat’s business continued to perform, the emotional burden of protecting the company and its employees through economic turmoil took a toll. He knew that once the pandemic subsided and the economy stabilized, he wanted to let go of Broadcat. But he didn’t just want out; he wanted to exit well and leave the company well prepared for the future.
Despite having a relatively small company and being intimately tied up in the operations that ensured its survival, Pellafone managed to sell sooner than he expected and walk away pleased with the outcome.
How did he do it? Here are five lessons Pellafone learned that contributed to his happy, healthy exit from a small business.
- Ask: “Would I buy this company?”
Pellafone knew he had to think like a buyer, not an owner, to make his small company market ready. So he conducted a thought experiment and asked himself, “Would I buy this company if I were looking to acquire something right now? If not, what would stop me?”
The answer was immediately obvious. Pellafone realized that, going into the pandemic, the company’s sales process was almost totally reliant on him. If he were an outside buyer, would he want to acquire a company whose only salesman was about to leave? Pellafone determined that the sales process would have to be standardized and shifted onto the shoulders of other employees.
Because he had framed the idea of a sale through the buyer’s eyes, he now had an actionable plan that would enhance Broadcat’s appeal, rather than a vague list of ideas.
- Prepare the business to run without you.
Other than the sales process, Pellafone felt confident that the rest of Broadcat could keep running if he stepped away.
Broadcat had established its product as a quality offering in the industry. The company had settled into a workable, lucrative model for their subscription service and had a great fiscal year in 2019 as a result. They had a working template for internal operations that was stored within their project management software for anyone to use. Even the responsibilities of product creation had moved away from Pellafone and onto other employees.
Getting the sales process off of his plate would be a big lift, but Pellafone knew that once he did, the company would be much better equipped to transition to new leadership.
- Hire the right people.
Pellafone made a careful search for just the right candidates to assume the sales aspect of the business. He knew he couldn’t throw just anyone into the role and expect success. Working with trusted sales recruiters, in the final quarter of 2020 he brought on a new owner for the sales function, as well as a sales consultant to help accelerate the transition.
Pellafone initially assumed it would take six months until he could fully hand off the role. But they had the new sales process up and running within 60 days, and soon Pellafone didn’t have much to do in the sales department anymore. He credits this success to his extreme diligence in hiring the perfect candidate for the job.
- Know when it’s time to say goodbye.
By the end of 2020, Pellafone’s role at Broadcat had shrunk to attending meetings and reviewing company reports. He knew the business was about to enter its next phase of growth, and when it did, he would go from “founder” to “CEO.” In a way, he already had—he’d handed off daily operations to other employees.
But meetings and spreadsheets didn’t excite Pellafone. He now saw Broadcat as “a company that I could see someone else running, but I didn’t think I was that person anymore.”
Around Christmas of 2020, Pellafone began to seriously consider initiating the sales process, even though he hadn’t expected to reach that moment so quickly.
- Find trustworthy advisors who believe in you.
The stakes were high as Pellafone considered his advisory team for taking the company to market. The shape of his financial future was riding on the quality of the sale he would make—and he had heard horror stories from owners where predatory advisers and buyers turned the outcome into a nightmare. Finding trustworthy individuals would be crucial.
Complicating matters, much of the best content and information he found online was targeted to businesses much larger than Broadcat. Pellafone didn’t want to spend another five years growing Broadcat just to sell it, but he felt discouraged about finding advisers who would work with him at the company’s current size.
“We really felt like we were flying blind and needed help,” Pellafone said.
So, he turned to someone he knew with experience and whose wisdom and judgment he trusted. That person referred Pellafone to Trelus. Trelus gave Pellafone the objective guidance he was looking for along with an easier way to find trusted information and win-win advisors who were right for his situation.
Armed with knowledge and the right advisers, Pellafone ultimately sold Broadcat at a valuation they were pleased with and transitioned out of the business. Looking back, he says Trelus made a challenging process easier in a way that “far exceeded expectations.” It left the company stronger and ready for its next phase of growth under fresh, excited leadership.
If you hope for a similar ending to your sales story, Trelus can help. Our online tools will help you think through what you really want from a sale and how to get there. We’ll also connect you with a network of advisors who have been vetted for trustworthiness and professionalism.
Best of all, Trelus is sales-agnostic, meaning we aren’t invested in your decision to sell. If you use the Trelus tools and decide you’re not ready to walk away, we count that a “win” just as much as a successful sale—so you’ll never be pressured into any decisions you aren’t ready for.
Contact Trelus today to learn more.