After a 23-year journey building Non-Linear Creations into a marketing giant with more than 120 employees, Randy Woods sold it in 2017 to Valtech.
Valtech is a distinguished digital agency offering marketing, digital technology, and business transformation consulting services.
Post-sale, Woods now serves as the SVP of Strategic Growth Opportunity at Valtech, a role dedicated to identifying potential acquisitions for the business.
In the latest installment of Built to Sell Radio’s Inside the Mind of an Acquirer series, we sit down with Woods to discuss how to:
Make your company irresistible to an acquirer.
Leverage a “put option” to cover your downside.
Understand the factors that influence how acquirers value businesses.
Target potential acquirers who would see your company as a strategic addition.
Avoid deal breakers during negotiations with potential acquirers.
More About Randy Woods
Randy Woods co-founded the company Nonlinear Creations in 1995, aiming to utilize the emerging commercial internet.
By 2017, Nonlinear had established operations in Canada, the US, Brazil, and the UK. Woods was instrumental in exploring strategic options and successfully facilitated the company’s sale to Valtech, a global agency.
Currently, he’s spearheading several initiatives to drive revenue growth in North America for Valtech, including the development of a pipeline of potential acquisitions.
Put Option: A put option gives you the right, but not the obligation, to sell a stock at a specific price (known as the strike price) by a specific time – at the option’s expiration. For this right, the put buyer pays the seller a sum of money called a premium. Unlike stocks, which can exist indefinitely, an option ends at expiration and then is settled, with some value remaining or with the option expiring completely worthless. Source.
Put options can be used for hedging or speculation. But when it comes to the basics, they work like this: The value of a put increases as the underlying stock value decreases, and conversely, the value of a put decreases when the underlying value of the stock increases. When you buy a put option, you’re placing a bet that the value of the underlying stock will decrease over the contract. When you sell a put option, you’re placing a bet that the value of the underlying stock will increase or stay the same over the contract. For a put buyer, if the market price of the underlying stock moves in your favor, you can elect to “exercise” the put option or sell the underlying stock at the strike price. American-style options allow the put holder to exercise the option at any point up to the expiration date. European-style options can be exercised only on the date of expiration. For a put seller, if the market price of the underlying stocks stays the same or increases, you profit from the premium you charged the seller. If the market price decreases, you have the obligation to buy back the option from the seller at the strike price.
Letter of Intent (LOI): A letter of intent (LOI) is a document declaring the preliminary commitment of one party to do business with another. The letter outlines the chief terms of a prospective deal. Commonly used in major business transactions, LOIs are similar in content to term sheets. One major difference between the two, though, is that LOIs are presented in letter formats, while term sheets are listicles in nature. Source.
Earn-out: Earnout or earn-out refers to a pricing structure in mergers and acquisitions where the sellers must “earn” part of the purchase price based on the performance of the business following the acquisition. Source.
Due-Diligence: Due diligence is an investigation, audit, or review performed to confirm facts or details of a matter under consideration. In the financial world, due diligence requires an examination of financial records before entering into a proposed transaction with another party. Source.
Confidential Information Memorandum (CIM): A confidential information memorandum is a document prepared by a company in an effort to solicit indications of interest from potential buyers. The CIM is prepared early on in the sell-side process in conjunction with the seller’s investment banker to provide potential buyers with an overview of the company for pursuing an acquisition. The CIM is designed to put the selling company in the best possible light and provide buyers with a framework for performing preliminary due diligence. Source.
Preferred Preference: Preferred Preference means that amount equal to the sum of the Preferred Preference Per Share for all shares of Company Preferred Stock (including any rights convertible into, or exercisable or exchangeable for, shares of Company Preferred Stock on an as-converted, exercised, or exchanged basis) issued and outstanding immediately prior to the Effective Time, rounded to the nearest one hundredth (0.01) (with amounts 0.005 and above rounded up). Source.
Want to Sponsor an Episode? Click Here