SEA's James Marciano Interviews Michael Caldwell
Hello. This is James Marciano with Michael Caldwell. Mike, welcome to Strategic Exit Advisors Interview Series E’s with X’s, where we talk with entrepreneurs who have exited their businesses. We’re very glad to have us with you today.
Thanks for having me.
So let’s start off. Can you give us a little bit of history about your business?
Sure. So we created GigMasters back in the late ‘90s, back before online marketplaces were even a thing. And we wanted to create a site that helped musicians get booked for paying gigs. Then over the years the business expanded beyond just music to include all types of event entertainers, as well as other event service professionals, like photographers, bartenders, and party transportation. There were some sites that were directories, but nothing that was transactional in nature, so we were one of the first to come out of the gate in that space with transactional capabilities.
Also, from a defensive standpoint to, there was some larger players getting to the space, kind of nibbling at your heels?
Ok so when you decided to sell, did you work with an investment banker?
Yeah, we did. We worked with an M&A advisory firm to help us, you sell the business, and that was really a crucial part of the process for me.
What role do you feel like they served? How were they helpful?
Really helping with the negotiating the sale of a business -- not something I’ve ever done before, so having somebody who’s been through that process before was extremely not just helpful, but I would say essential.
When you’re in the process of selling a company it can be a distraction, often times, to CEOs. How were you able to manage the running of your business while going through the sales process? Did your advisor help with that, take some of that pressure off?
So, first and foremost, the mindset for me was it’s business as usual. I needed to be able to dedicate just as much effort as I always had in mental bandwidth in running the business, so business as usual was the rule. Yeah. Certainly, the advisor was able to do some of that heavy lifting so that I would not have to spend time reinventing the wheel and I could rely on somebody who had already been through it.
Then secondly, I just had to be mentally ready to put in the extra hours required on the due diligence, heavy lifting, and things like that. So it was definitely not an easy time. There’s no way to really make it completely painless, but you can do things that can mitigate that.
If anybody tells you it’s going to be easy or fast they’re lying to you, right?
Tell us a little bit about how you made your mind about who to sell to. I imagine there were a few options along the way.
Yes, there were definitely were. For me, I wanted to make sure that wherever GigMasters landed it was going to be in good hands. So it was very important that whoever bought it, it made strategic sense and I could understand the vision of where the acquiring company planned to take it. Of course, nothing is ever guaranteed. Nothing is ever written in stone, but I just needed to have that comfort level as a seller, and what happened to the employees was very, very important to me. So finding a buyer in the situation where we did, that provided us with some degree of assurance that, you know, the plan was to continue the GigMasters company and to keep the core team in place. That was very important to me and weighted heavily into the decision.
And what would you say surprised you most during the sales process?
I would say two things. Number one, just overall I was surprised at how much of an emotional roller coaster it would be. You kind of think going in that, you know, you’re going to get this offer and then you’re going to crack the champagne and it’s going to be a celebration from that point forward. Really, there was an emotional roller coaster that continued up and through the close.
I think closely related to that what surprised me was how many decisions and negotiations were still to come after the initial purchase price agreement.
So all those things that still needed to get negotiated out, like the scope of the reps and warrantees, the employment agreements, negotiations over purchase price adjustments. I was not aware that there would continue to be so many points that needed to be worked out and negotiated after agreeing to the basic terms.
The devil is in the details, as they say.
What would you say the most difficult part of selling your business was?
By far it was the emotional part of letting go of something that was part of your soul for so long. Letting go of that control is difficult, not knowing what’s going to come next, despite the assurances that the buyer gives you. You know that nothing is ever guaranteed, and so that feeling of letting go and of the uncertainty that would come next. It's very, very difficult.
And how long has it been since you sold the business?
It's been about six or seven months now.
Looking back, how has it been and are you still with the company that acquired you?
So in my case it’s been great, because I’ve been able to continue working at GigMasters, which is still my true passion. So it’s been in some ways the best of both worlds, where I got the exit that I had been seeking, but I'm also now still part of the entity and in many aspects things are better, because we have a larger budget, and we’re able to spend some more on marketing dollars, and just do some of the things that we couldn’t before. So knock on wood, it’s been going very well for me post-acquisition.
That’s great to hear. And if you could just one piece of advice to entrepreneurs looking to sell their business, what would it be?
First off I would say be ready for it well in advance. Get all of your documents in order. Make sure your IP is all cleaned up. Just be ready for that opportunity should it come.
Second I would say is the emotional side. Just be prepared to know that you’re never, ever going to be 100 percent sure you’re doing the right thing and just brace yourself for that and brace yourself for the roller coaster ride that’s going to come. To this day I can’t say with 100 percent certainty that it was 100 percent the right thing, but I know that in life you’ll never be 100 percent certain on anything.
It sounds like a great transaction, congratulations.
Thanks. I would say I was ready for anything post-acquisition and it’s turned out to be very positive.
Mike, I appreciate you sharing that story with Strategic Exit Advisors and wish you well with GigMasters, and whatever else you decide to do in the future.
Thanks so much, James.
What year was that that you started the business?
We started in 1997.
And when did you decide it was time to sell?
Yeah. So my partner and I, you know, we kept at it. We were at it for a long time and to be honest with you, you know, it was growing, but the growth had really slowed and it had kind of settled into really what amounted for myself and the other founder, more of a lifestyle business. I think in my nature that when things start to feel a little bit too settled, too routine, I feel compelled to shake things up. Like many of the performers on our own website, there’s always this desire to perform on a bigger stage. So we took a close look. The competitive landscape had started to heat up in our industry with some well-funded players coming into the space. And so really, for strategic reasons, we thought it would be a good time to find a larger entity to team up with, with deeper pockets, to take ownership of GigMasters, and to help ensure the future success of the site.
That sounds like that was your main goal in selling the business, to try to find a bigger partner and take it to the next level?