Many service company founders yearn for a product business. Some even fund the product development through the service business. This week we discuss the alternative: why not sell the service side of your business to have the cash and the freedom to invest? That’s exactly what Talia Mashiach, the founder of Eved, did.
If you run a service, my guess is you’ve dreamt of owning a product business instead.
Service businesses are such a mess – demanding clients, scope creep, and more often than not, slow growth.
Which leads many service company founders yearning for a product. They tinker with a product on the side, often sucking cash and other resources out of the service business to fund the development of a product, which can compromise the health of the service business.
But there is an alternative: why not sell the service side of your business to have the cash and the freedom to properly invest in your product idea?
That’s exactly what Talia Mashiach, the founder of Eved, did.
If you own a service business and wonder if it’s sellable, I’d encourage you to take 13 minutes and complete the Value Builder questionnaire.
About Talia Mashiach
Talia Mashiach is the CEO, founder and product architect of Eved, an event commerce company that offers the only spend-management solution for meetings and events. Eved’s web-based platform automates how large corporations request, order and pay for event services, delivering increased transparency, significant efficiencies in the billing and reconciliation processes, and improving compliance and control.
Some Highlights Of The Show
Business: Eved
4:00: “They would hire a local contractor that would create a vision… We would produce that vision.”
4:33: “I saw an opportunity if we could aggregate our buying power … create a really efficient process to order from them.”
5:37: “It was a really unique model, where large corporations were able to get … value added services.”
10:06: “When it comes to these large companies nothing gets done quickly.”
11:05: “$50,000 left … I said I really believed in what were doing… In October of 2004, the Palmer House hit first and a month later, finally, the Hilton came in after that.”
11:35: “In 2005 we went up to $4 million and in 2006 we went to $6.8 million.” @TaliaEvedCEO on scaling her business.
12:30: “My passion was around the technology and I really wanted to grow the business.”
13:29: “This really was a great lifestyle business.”
14:20: Service business vs. product business.
16:30: “Because the service business was so successful using the software, it was sold as part of the deal… They became my first customer in the [product] business.”
18:04: “The value to the new owner was the hotel contracts and the corporate contract.”
20:51: “I always built the company to sell it… I thought about how to scale it and the processes and procedures…”
21:18: “I actually almost sold it earlier in 2008, right before the huge crash. I almost had a deal done that would have included the product and the service. I was actually supposed to go and work in the company and help them develop the new technology.”
21:32: “The multiple on that deal was 4 times what I wound up getting just for the service business at the time.”
22:44: “I always thought about who my potential buyers were and then built value for them.”
23:00: Talking hiring, personal salaries and potential buyers.
23:30: “By the time I came to the point of selling I had a number of people I knew and had relationships with that I could talk to.”
23:50: “I always talked about that next step for myself. After I built the relationship I would set it up [to get them to ask if I’m selling], I always think it’s better for people to come to you.”
24:00: How to flip the conversation and have [a buyer] push for you to sell.
25:44: “I really spent a lot more time on really giving them transparency on how the business was making money and what the key assets that I had that drove those dollars.”
26:26: “I knew to try to see how serious people really were… They are interviewing you but you should be interviewing them.”
27:48: “It got down to two; one that I really knew … another company that I did qualify.”
29:25: “Ed Chan purchased Access Chicago and agreed to be a licensee for seven years.”
31:10: “In this type of service business the trend was a 4X EBITA multiple.”
31:40: The deal structure.
24:44: “We restructured the deal two years in.”
35:40: “I created the software company before I was really starting to sell and I transferred all of the IP of the software into the other company… I created a license agreement between my software and my service company before I went to market.”
39:49: “The journey of building the company is so much more exciting than the dream of selling it.”
The Value Builder System™
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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.
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