When Steve Marks and I opened the doors of our business, Main Street Gourmet (originally Main Street Muffins) in 1987, we were backed by friends and family who believed in us.
Their early investments got us going until we sold to venture capital in 1996. We, along with a minority owner, bought the business back in 2004. Then we sold to private equity in 2011, and recently sold again to new private equity partners.
The first time we sold our business, we did so to take some risk out of our lives and create some diversity in our net worth. We had everything tied up in the business. We were growing and profitable, and the timing felt right.
The second time was after we had honed a new business strategy and spent years perfecting the infrastructure for future growth. We were happy to bring on partners and an influx of capital to grow while reducing our personal risk. We knew we would be giving up potential rewards in the future, but we could sleep easier knowing we didn’t have all of our eggs in one basket.
This last time was a group decision based on market timing (multiples for businesses are currently very high), and one of us was ready to move on to other ventures.
When we first sold, we did most of it on our own with assistance from our attorneys — though it helped that the firm we sold to also had a partner on our board of advisers whom we trusted. The process was brutal. So the second time around, we used an investment banker.
For the second sale, the investment team proactively marketed our business and created a process for us to choose potential buyers. We did a dog-and-pony show for about five suitors and eventually narrowed it down to one. The letter of intent served as a road map for the process, leading to the final steps, which included due diligence and more negotiations.
This last time we sold, we initially thought we’d hire an investment banker. However, our current investors had deal expertise, so we allowed them to bring some prospective buyers to the table first. The equity firms they connected us with turned out to be what we were looking for, so we skipped the banker and made a deal with one of them.
During the selling process, we focused on what was best for the organization in the long run rather than what was best for us individually. Bringing in new partners each time gave us valuable perspective from people whose careers had been spent buying and selling businesses. Our choice to remain in the business meant taking the time to find partners who would create a 1+1=3 scenario, helping us learn new ideas and practices from them along the way.
Selling a business is a stressful process, but it’s one that can ultimately benefit everyone involved. By focusing on the journey and learning from our new partners, while investing in the business, the rewards took care of themselves.
Harvey Nelson is co-founder of Main Street Gourmet
