EPISODE 54

Selling on the Strategic Value with Mac Lackey

oday we’re talking with Mac Lackey, founder of Exit DNA, a company that helps business owners to understand the unique strategies that get results when it comes to an exit.

The Energy of a Startup

Mac says he thinks of his life in two big pieces, with the first half being all about soccer.  He says growing up, all of his goals were soccer related. He played through college and even professionally briefly.  One day, he woke up and thought there was really no future in it for him, and he wondered what he would do with the rest of his life.  One of his teammates was an engineer that needed help in marketing for his business.  Mac joined this early-stage startup of about six people and instantly fell in love with the energy of a startup.  He says he loves that you can be doing something different every day and that there’s always a lot to learn.  Eventually, Mac would convince his engineer friend to resign and start a new business with him.  They started an internet company in 1995, the early stages for that space.  Mac says the company ended in a great result, and he was an entrepreneur forever more.

A Stereotypical Exit

The first exit that Mac had was a very stereotypical one.  He says for years he and his wife grinned away, eating PB&J every day.  By 1995 the internet space got very hot and Mac’s company became an acquisition target.  Of all of his exits, he says this is the only one where someone came knocking on his door.  Their company had great clients that everyone wanted, and they ended up with three companies bidding on them.  Mac never considered an exit when he was creating the company, so he was very pleased when it resulted in an eight figure exit.  From then on, Mac was much more intentional about how he built up companies and how exits might play into their future.

Lessons From a Handful of Exits

After his sixth exit in October 2018, Mac took a break for the first time in his working career.  He took some time to think about what he had done well and the mistakes that he had made.  One thing he realized is that he never sold a company based on a financial multiple.  He had always sold based on the strategic value that he represented to a buyer.  Often his companies became how an acquirer entered a new market, whether geographically or with a new product offering.  Mac says you have to always be asking yourself who in the marketplace values what I’m doing here.

Being Proactive

Mac says he believes that as a founder, you have the opportunity to proactively reach out to prospective buyers to start a general dialogue.  One of Mac’s companies was sold to NBC sports, and it was the CEO of the division that acquired them that he had cold called two years prior.  Mac simply had wanted to meet them because they were in the same space, and he had a lot of respect for what they were doing.  The two met, hit it off, and stayed in touch.  When it came time to create a market for the business, Mac called them back up and told them they were looking to sell and wanted to give them the opportunity to take a look.  It was this relationship created years earlier that led to a smooth acquisition.  Mac says he can’t stress enough the importance of getting to know prospective buyers long before you’re looking to sell.

Selling As An Option

There’s often a trigger event that causes a company to sell, but if you can choose a time to exit, Mac recommends looking at a few things.  He says to look at the industry you’re in; what are the current trends?  Look at macroeconomics; what’s the view of the next couple of years?  Mac says one of the biggest drivers for an acquisition is when industry dynamics shift.  When you see the industry shifting, you have to be prepared to compete to survive, or you need to get out while the industry is consolidating.  Mac says there have been other times when he’s simply gotten offers that he couldn’t refuse, even though they weren’t necessarily looking to see.  Mac says he’s very tuned in to external dynamics and likes to constantly be in the market.  We should all want the option to sell, not be forced to sell.

Black Swan Events

Another pivotal moment for Mac was that you need to always consider that there can be and probably will be some unforeseen black swan event.  Mac himself has been through the dot com bubble, 9/11, the financial crisis, and coronavirus.  All of those things were non factors in business before they started, and it was one event that changed everything.  Mac says one of his favorite books is called Only The Paranoid Survive.  He recommends that everyone constantly asks themselves, if variables change overnight, what is plan B or C?  Mac says it’s just smart business to consider the what-ifs.

The 8am Test

Imagine someone calls you up and says they want to buy your company, but they need to start the process at 8am the next morning.  Most people would freak out and scramble to get things in some sort of order.  Mac says from the very beginning you should create folders and organize files.  In addition, you should take 30 minutes every week to make sure things are organized.  Mac is a fan of doing little things slowly over time rather than waiting.

Knowing What You Know Now, What Would You Tell Yourself Ten Years Ago?

Mac says he would tell himself to always be looking at your company through the lens of a prospective buyer.  He says you should always start designing your business with the option to sell.

For more information, visit exitdna.com or maclackey.com

YOUR HOST

Steve McGarry

An entrepreneur, content creator, and investor based in sunny Tampa, Florida. In 2015, while living in San Francisco, Steve sold his first fintech startup LendLayer to Max Levchin’s (founder of PayPal) consumer finance company Affirm.