Over the course of 14 years, Alan Homewood’s weekend project grew into to a multimillion-dollar enterprise, 2Checkout.com. In 2017, a private equity firm acquired majority ownership to combine the e-commerce solution with another company.
“It started out in my garage; I just saw a need and I followed it. I knew that if I didn’t follow it, I would regret it the rest of my life,” Homewood says. “But from there, things started to take off, and I didn’t know what I was doing. I made pretty much every mistake it’s possible to make. If there’s a checklist of the mistakes an entrepreneur can make, I made about all of them.”
Although 2Checkout was a technology company, focusing on online payment processing, the founder and former CEO learned that the key — and what drove the acquisition value — was the company’s leadership.
Over time, Homewood brought in other people. He went outside the company as often as possible. He networked, joined organizations like Entrepreneurs’ Organization and read as much as he could.
Homewood discussed the growth and sale of 2Checkout as a panelist at ASPIRE 2018. Here are some of his observations.
What stands out from the sale?
An entity came to us and wanted to buy us and offered a larger number than, honestly, I had ever thought or dreamed the company might sell for. We went through a process and evaluated what the company seemed to be worth, and it seemed to be a fair offer.
As we went along, I started asking, ‘What are they going to do that we can’t do?’ The answer I got back, in general, was, ‘Well, there was nothing they were going to do that we couldn’t do.’ So, I said, ‘Why don’t we just do it? Why don’t we be them?’
My management group was like, ‘Whoa, I can’t believe you’re doing this.’ But then we buckled up and said, ‘Yeah, that’s right. Let’s do this.’
A year later, that entity came back and offered us three times as much for the company. At that point, it was hard to say no. But I learned that sometimes it’s more important what you say no to than what you say yes to.
In hindsight, what would you do differently?
I would understand who I was getting in business with, what was driving them, what their motivations were. In the subsequent months, the entity that purchased us had an individual with a huge ego who believed they could swoop in and run a company from afar and then swoop off again. Over the course of time, we lost every good upper management person that we had, replaced with somebody who was a hired gun — and subsequently the company struggled.
I had two entities competing on the company. I would’ve looked at where they were in their process and who we’re going to be in business with. If you’re being purchased by a private equity interest, it’s very important to understand where they might be in their cycle. We were at the end of their fund, and even worse, that PE fund was on its way to renaming itself and becoming something else.
Where did you get your capital to grow 2Checkout?
I bootstrapped my business. I don’t think anyone would have given me money, honestly.
What’s your advice for other entrepreneurs?
Columbus is very open. As time went on, I started to realize how easy it was to reach out to people who have been there, done that before. It is unbelievably humbling to think how gracious so many people are. They’ll help steer you, guide you and turn you over to resources as if they had known you their whole life. So take advantage of that in Columbus.
Alan Homewood, founder and former CEO of 2Checkout.com, was an honorary chair at ASPIRE 2018. He spoke on the panel, “The Good, the Bad & the Ugly: Entrepreneurs’ M&A Roundtable,” moderated by Smart Business publisher Dustin S. Klein.