Why I Sold Ep 373

Summary Notes


In a candid discussion, Alex, the owner of acquisition.com, delves into the rationale behind his decision to sell majority stakes in three of his companies, his house, and cars, in a year marked by significant liquidation. He explores six key themes that influenced his choice: the need for legitimacy, the impact on net worth, breaking free from his fitness industry image, gaining mental space, leveraging his team, and aligning with his life vision. Despite initial reservations about losing his team and reducing his net worth post-sale, Alex concludes that focusing solely on acquisition.com would accelerate his progress towards his larger goals. He emphasizes the trade-off of equity for headspace over monetary gain and the surprising legitimacy conferred by the sale, despite a technical decrease in net worth. Alex's introspection reveals a deep passion for business and a strategic move towards prioritizing his primary venture for long-term success.

Summary Notes

Personal and Business Asset Liquidation

  • Speaker A sold a majority stake in three companies they owned.
  • Speaker A also sold personal assets, including their house and two cars.
  • The decision to sell was a significant change considering Speaker A's previous anti-sale stance.

"So last year I sold majority of three companies that I owned. I also sold my house and I sold two of my cars. So I sold everything last year."

This quote highlights the extent of Speaker A's asset liquidation, both in their business and personal life, indicating a major shift in strategy or personal goals.

Business Strategy and Growth Documentation

  • Speaker A creates content to share the journey and lessons of their business ventures.
  • The channel is not for selling coaching or courses but for documenting processes and sharing insights.
  • Speaker A owns acquisition.com, a portfolio of companies with significant annual revenue.

"I'm a business investor. I own acquisition.com. It's a portfolio of companies, does about $85 million a year. I don't have any coaching, masterminds courses, whatever."

The relevance of this quote is to establish Speaker A's credibility as a successful business investor and to clarify the purpose behind their content creation, which is to document and share knowledge rather than sell educational services.

Decision Making Themes

  • Speaker A intends to discuss six major themes that influenced their decision to sell.
  • The themes are the story of selling, keeping, money, energy/time/headspace, team/resources, and vision for life.

"So I want to hit on probably four or five major themes of the decision. One was the story of selling it. The second was the story of keeping it. The third is kind of the money story. The fourth was the energy, time and headspace story. The fifth was the team and resources story. And then finally 6th was kind of the vision for my life story."

This quote outlines the framework of Speaker A's thought process behind their decision to sell their companies, providing a structured approach to understanding the various factors that were considered.

Legitimacy and Net Worth

  • Speaker A contemplated selling to gain legitimacy and increase net worth.
  • Realized that actual net worth decreases post-sale due to taxes and transaction costs.
  • The need for legitimacy was a personal challenge, driven by insecurities despite financial success.

"One of the thoughts... needing the sale to increase net worth. The reality of it is that your after-tax net worth is actually lower than your pre-sale net worth."

This quote conveys the realization that selling assets for the purpose of increasing net worth is a misconception due to the financial implications of such transactions.

Breaking Free from Industry Identity

  • Speaker A wanted to distance themselves from the fitness and gym industry identity.
  • Selling the companies was seen as a way to rebrand and create space from the industry.

"I've been known as a fitness and gym industry guy for almost a decade... But I still had that story and I wanted to kind of break free from that, just from a branding perspective."

The quote emphasizes Speaker A's desire to redefine their professional image and move beyond the industry with which they had been long associated.

Matching Life Conditions Pre and Post-Sale

  • Speaker A considered if life conditions envisioned post-sale could be matched while still owning the companies.
  • Realized that selling was not necessary to achieve the desired lifestyle conditions.
  • Speaker A had already removed themselves from daily operations, making the companies sellable.

"If I can match the conditions in a situation where I own 100% of the company, that I don't have to have the inefficiencies of a transaction to decrease my net worth and still accomplish the same objective."

This quote reflects Speaker A's thought process on the unnecessary nature of selling to achieve their envisioned lifestyle, as they realized they could achieve the same conditions without selling.

Company Involvement and Saleability

  • Speaker A's lack of involvement in the company operations increased its saleability.
  • The absence of earnouts or seller financing indicated Speaker A's non-essential role in the companies.
  • Speaker A was bored due to their lack of involvement, questioning the need for a sale.

"Interestingly, over the last year leading into the sale, I was bored out of my mind because I was not involved in the company, which, just, by the way, is what makes it sellable."

This quote reveals that Speaker A's disengagement from the business operations was a factor in both the decision to sell and the ease with which the sale could be conducted.

Decision-Making and Risk

  • Making tough decisions involves letting go of current success for unproven opportunities.
  • Parental approval and societal acceptance can heavily influence decision-making but can be overcome.
  • Successive decisions may involve decreasing levels of risk due to accumulated experience and skills.

"And that was still, I think, to this day, the hardest decision I ever made in my whole life, because I also had, like, parental approval and stuff that I used to care about at that time in my life."

This quote reflects the personal struggle of making a decision that goes against societal and parental expectations, highlighting the emotional difficulty involved.

"But number one was that. Number two was selling my gyms. That was a super hard decision for me and starting gym launch."

The speaker outlines the second difficult decision, which involved moving from a successful business to a start-up, indicating the challenge of leaving behind a proven success.

"I would say with each of those decisions, my risk of it not working continued to decrease."

The speaker suggests that with each major decision, the perceived risk diminished due to the growing experience and skill set, showing a progression in the speaker's entrepreneurial confidence.

Emotional Attachment and Identity

  • Emotional attachment to a business can make the decision to sell more difficult.
  • The personal identity tied to a business can intensify the emotional impact of selling it.
  • Even substantial financial gain may not compensate for the emotional loss felt after selling a business.

"And candidly, it was much harder for me to sell gym launch than it was for me to sell prestige labs or Allen last year from an emotional perspective, because I think my thumbprint, my face was on the brand."

The speaker expresses that selling a business that is closely tied to their identity was emotionally challenging, highlighting the deep personal connection to their work.

"I felt the loss of the business when I did end up selling. And I didn't feel the gain of the money."

This quote captures the emotional experience of selling a business, where the loss felt overshadows the financial benefit, underscoring the non-monetary value of entrepreneurial endeavors.

Business Philosophy and Ownership

  • Belief in focusing on one active business venture at a time to ensure success.
  • Differentiating between the roles of owner and CEO is crucial for effective business management.
  • Ownership involves a more passive role compared to the active involvement of a CEO.

"I have this belief, like, you can't have more than one thing that's active."

The speaker shares their business philosophy, which includes a focus on a singular active venture to maximize effectiveness and growth potential.

"So being owner versus CEO are different. And a lot of times people think that they are owners, but are still running the decisions and are still guiding the strategy of the business."

This quote distinguishes between the roles of owner and CEO, emphasizing the importance of understanding and adhering to these roles for successful business management.

Book Promotion

  • The speaker has authored a book titled "100 million dollar offers" with high ratings on Amazon.
  • The book is presented as a valuable resource for the community and a potential means of future collaboration.

"Hey guys, real quick, if you're new to the podcast, I have a book on Amazon, it's called 100 million dollar offers that over 8005 star reviews."

The speaker promotes their book as a well-received resource, using its success as a way to engage with the podcast audience and build a relationship for potential future business partnerships.

Decision to Sell Businesses

  • The speaker grappled with the emotional aspect of selling businesses, feeling that any amount would leave a sense of sadness.
  • They had a vision of owning a conglomeration of companies, which made selling seem counterintuitive.
  • Advice from more experienced individuals who had regrets about selling their companies influenced the speaker's decision-making process.
  • Concerns about losing energy, headspace, and a core team were significant factors.
  • Despite these concerns, the speaker chose to sell based on the belief that focusing on one active business would be more beneficial in the long run.

"And I realized that no matter what the number was, I would end up being a little bit sad."

This quote reflects the emotional difficulty the speaker anticipated in parting with their businesses, regardless of the sale price.

"And so I was like, well, I already have these companies. Why would I sell them?"

The speaker questions the logic behind selling businesses that align with their future vision.

"And you're like, man, Alex, so you didn't need the money. All the people are telling you not to sell. Why did you end up doing this?"

The speaker acknowledges external advice against selling, highlighting that financial need was not a driving factor.

"I didn't think I was going to get energy and headspace back because I was like, I already don't do anything in the business."

The speaker doubted the sale would bring the anticipated benefits of increased energy and mental space.

"I knew that I was going to lose my core team, which we spent a lot of time building."

The concern about losing a valuable team was a significant factor in the decision-making process.

Post-Sale Reflections and New Ventures

  • After selling, the speaker experienced no emotional high from the financial gain but instead found fulfillment in starting a new venture, Acquisition.com.
  • The speaker's passion for business and entrepreneurship was reignited by being actively involved in the new company.
  • Acquisition.com focuses on helping other entrepreneurs scale their businesses without giving up majority stakes.
  • The speaker has a newfound appreciation for the process of building a business from scratch.
  • The decision to sell was ultimately tied to whether it aligned with the speaker's long-term vision and goals.

"I ended up selling because I believed, like the two past hardest decisions that I had, that if I had ruthless prioritization and focus on just this one active business... Netnet, I would still be better off."

The speaker rationalizes the decision to sell as a strategic move towards focusing on a singular, active business.

"The moment where I knew I made the right decision was when I started building acquisition.com."

The initiation of a new venture, Acquisition.com, confirmed for the speaker that the decision to sell was correct.

"So we do majority work for minority stakes so that other entrepreneurs can get all the same benefits of having a private equity partner who knows a lot about scaling a company without having to give majority up."

Acquisition.com's business model provides a unique value proposition for entrepreneurs looking for growth without relinquishing control.

"I just truly love business. It's the thing that's, like, my first true love."

The speaker expresses a deep passion for business, which is a driving force behind their decisions and actions.

"Does this fulfill the vision of what I want? And is it helping me accomplish the overarching thing that I want to do faster?"

The speaker's ultimate decision to sell was based on alignment with personal vision and the acceleration of overarching goals.

Decision to Sell Stake in Companies

  • The speaker decided to sell a 66% stake in their companies to focus on a new venture.
  • They believed that holding onto the majority stake would have led to using resources from the existing companies for the new ones.
  • The decision to sell was driven by the desire to make the best long-term decisions for the new company.
  • The speaker felt that if they retained ownership, the new venture would not be as big or as successful.
  • Selling allowed them to focus solely on the new venture, which they believed would be built better and faster with 100% focus.

"And I am so grateful that I made the decision to sell that 66% stake, and it was because I really want to do this next thing."

This quote highlights the speaker's gratitude for making the decision to sell, as it was motivated by a strong desire to pursue a new opportunity.

"I think that it won't be as big or as good if I still have these other companies that I own majority of, which would mean that I have, like, four companies that I'd be running, owning majority interest in."

The speaker expresses concern that managing multiple companies would hinder the growth and quality of the new venture.

Emotional Attachment and Identity

  • Selling the company Jim launch was particularly difficult due to the speaker's personal identity being tied to it.
  • The speaker compared the emotional responsibility of owning a company to that of having a child.
  • Despite the emotional challenge, the decision to sell was seen as necessary for gaining mental freedom and focus.

"And the hardest one was Jim launch, because my face was on it and I felt like my identity was tied up into it."

This quote conveys the emotional difficulty in selling a company that is closely linked to the speaker's identity.

"I would imagine that even if your child moves away to college or moves out of the house, even if you don't have any time that you're spending with the child, the child occupies a lot of your shower time, your toilet time, your in between time, your walk time, your think time."

The speaker likens the mental space occupied by a company to the constant, underlying concern a parent feels for their child, illustrating the pervasive nature of such responsibility.

Financial Considerations and Investment Strategy

  • The speaker experienced a short-term decrease in net worth due to the sale but believed the long-term outcome would be more positive.
  • They emphasized the importance of investing headspace and energy into the new venture for outsized returns.
  • Diversification was also a factor, as it reduced dependence on the governments affecting the sold businesses.

"I am investing. I know that even more than the money, what I can invest my headspace and energy into will get me outsized returns than the company alone."

The speaker values the investment of mental resources over financial ones, believing it will yield greater returns.

"It felt like I was buying my time back. And it's weird, because I was buying it with my equity, which almost means that I feel like the money was inconsequential."

This quote underscores the speaker's view that regaining time and headspace was more valuable than the financial aspect of the deal.

Perception of Success and Legitimacy

  • The speaker's net worth technically decreased after the sale, but they received more recognition and validation from their network.
  • The speaker reflects on different business philosophies, emphasizing the importance of making decisions from a position of financial stability.
  • The sale of the company was seen as a marker of legitimacy and success by others, more so than the state of the business before the sale.

"My net worth technically went down, but I had more people reach out from the woodwork, from high school and college and professors and things congratulating me on the exit, and basically giving legitimacy to what we had built as a result of the sale rather than presale."

The speaker notes the irony that despite a decrease in net worth, the sale elicited more congratulations and perceived legitimacy from others.

Prioritizing Life Goals and Making Decisions

  • The speaker emphasizes the importance of prioritizing their ultimate life goals when making decisions.
  • They believe that even a 10% decrease in effectiveness could significantly impact the success of their new venture.
  • The concept of opportunity cost was a significant factor in the decision to sell.
  • Saying no to other things was essential to focus on the primary goal.

"And if something was going to be 10% less good with what I ultimately wanted, then I needed to prioritize the thing that I ultimately wanted. And having a priority means saying no to everything else."

This quote captures the speaker's reasoning for selling their stake—prioritizing their main objective required eliminating other distractions.

Personal Motivation and Audience Engagement

  • The speaker acknowledges that they create content for personal reasons but also hopes it benefits the audience.
  • They express affection for their audience and a desire to share their experiences and decisions.

"I make this stuff for you guys. Actually, you know what? I make this stuff for me. And I hope you guys benefit from it."

The speaker admits that their primary motivation for creating content is self-driven, but they also wish for the audience to gain from it.

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