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3 Successful M&A Exit Strategies Seminar Recap

By John Sullivan

May 15, 2013

“If you’re looking to sell, have a plan, but realize it won’t go according to the plan, but have one anyway.”

That comment from serial entrepreneur Jim Freeman, who recently exited a business he created and grew, kicked off a panel discussion on Tuesday morning, “From the Trenches: Three Successful Exits.” Moderated by Bob Forbes, president and founder of Denver-based Forbes Mergers & Acquisitions, it consisted of three men who recently participated in the M&A process. Each shared his thoughts on everything from how the deals were structured, to tax implications, to incentivizing employees in order to ensure top valuation.

Freeman, who’s been involved in the sale or purchase of over 40 companies, currently holds the position of chief strategy officer of High Touch Technologies. He said he was “determined early on to start a business with my own money.” Raising capital from outside investors is one thing, but he started from scratch, then grew and ran the business for 10 years, before he got bored and decided to assemble a team to help him exit.

“If you have one buyer and one seller, you won’t get what you want,” he said. “We had about a hundred inquiries when we went to market. It’s easy to get distracted by the acquisition process, but you still have to step on the gas, steer the business and continue to operate. We also realized people would get scared and jump ship, which would cause the value to plummet, so we wrote into the deal that the buyers would retain certain employees (at management’s discretion).”

Enrique Krajmalnik also started his business, Illumen, from scratch in his basement with his father and brother. Illumen was an early telecommunications service provider in the VPN and managed service provider space. He sold it in the fourth quarter of 2012.