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Writer's pictureMark Hartmann

Why You Should Exit While You’re Ahead – A Cautionary Tale


A glowing blue exit sign with white letters hanging from a black wall.

Why You Should Exit While You’re Ahead – A Cautionary Tale



The best time to sell your business is when someone wants to buy it. While it can be tempting to continue to grow your business forever—particularly when things are going well—that decision has a significant downside.  


Take a look at the story of Rand Fishkin, who started his entrepreneurial journey when he joined his mother’s marketing agency as a partner:


When Fishkin realized how much his mom’s customers struggled to get Google to display their company in a search, he immersed himself in the emerging field of Search Engine Optimization (SEO). 


He began writing an SEO Moz blog, leading to an SEO consulting and software company. By 2007, Moz was generating revenue of $850,000 a year when Fishkin decided to drop consulting to become solely a software business. 


The company began to grow 100% per year, and by 2010, Moz was generating around $650,000 in revenue each month, attracting the attention of Brian Halligan, co-founder of marketing software giant HubSpot. 


HubSpot wanted to buy Moz and was offering $25 million of cash and HubSpot stock—almost five times Moz’s $5.7 million revenue in its last complete financial year. 


But Fishkin wasn’t satisfied. He believed that a fast-growing software-as-a-service (SaaS) company was worth four times future revenue and was confident Moz would hit $10 million by the end of that year. 


Fishkin counter-offered, saying he would be willing to accept $40 million. HubSpot declined. 


New Plans Ahead


Instead of selling Moz, Fishkin raised a round of venture capital and started to diversify away from SEO tools into a broader set of marketing offerings. The further Moz veered away from its core in SEO, the more money his business began to lose. 


By 2014, Moz was in full crisis mode, and Fishkin had begun suffering from a bout of depression. He decided to step down as CEO, describing his resignation as a “lot of sadness, a heap of regrets and a smattering of resentment.” 


Fishkin became a minority shareholder in a company he no longer controlled where the venture capitalists had preferred rights in a liquidity event. 


A Lesson Learned


In the ensuing years since turning down Halligan’s offer, HubSpot went public on the New York Stock Exchange and had been worth nearly 20 times as much.


Fishkin revealed that today, his liquid net worth is $800,000—much of which he was about to spend on elder care for his grandparents. The Moz stock he holds may or may not have value after the venture capitalists get their preferred return. At the same time, Fishkin estimated HubSpot’s offer of $25 million in cash and HubSpot stock would now be worth more than $100 million (based on the increased value of HubSpot’s stock). 


Fishkin’s tale is a cautionary reminder that the best time to sell your company is when someone wants to buy it—a story shared in his book Lost and Founder: A Painfully Honest Field Guide to the Startup World.


What if an offer was made for your business today? Would you be ready to sell? Would you regret if you said no?


 
Mark Hartmann - CEO of HartmannRhodes

Mark Hartmann is a three-time Inc 500|5000 CEO with a rich sales, operations, and leadership background in the insurance, financial services, and healthcare sectors. With extensive experience growing and selling his own businesses, Mark leverages his expertise to help owners grow and sell businesses valued at $1M —$25M. He’s earned a master’s degree in organizational change management from St. Elizabeth University and a graduate certificate in executive coaching from Columbia University. Mark’s professional certifications include Certified Mergers and Acquisitions Professional (CM&AP), Certified Business Intermediary (CBI), Certified Exit Planning Advisor (CEPA), and Certified Value Builder (CVB).

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