Loading
Sarasota business owner Tracy Knight recently heard a nightmare story from a friend in Orlando who sold her own company. The worst part: It took five years to go from listing to closed deal.
That prompted Knight, founder of Knight Marketing, which specializes in health care, travel and building products, among other sectors, to think hard about her own exit strategy. With one child out of a college, another halfway there and a recent 50th birthday, those thoughts only grew more pressing. Knight founded the company in 1997, and work, in a growth period in the early 2000s, mostly consisted of print products, such as newsletters, annual reports and related materials. Clients over the years include the Cleveland Clinic, Sarasota County tourism agencies and Venice-based window firm PGT.
“When you have a business as long as I have, it's very personal. It's your baby,” Knight says. “Anyone who built a business doesn't want to just close the door. They want to see it grow.”
Knight ultimately decided to sell her company, and it was a successful mission: In a deal that closed Aug. 20, Spokane, Wash.-based DaRK Capital, a holding company over the Imprezzio Media family of companies, bought Knight Marketing. With about 200 employees and multiple locations in North America and Europe, Imprezzio focuses on website and app development, marketing automation and online marketing. Customers include several Fortune 50 companies.
Knight Marketing, from an office just south of downtown Sarasota, has about $1.5 million in annual sales and eight employees. The name of the firm will remain the same, and operate in the media division at Imprezzio.
“It takes us up a notch in credibility and clout,” says Ticia Mahler, an executive with Knight Marketing who is now a vice president at the firm. “Now we are a more substantial entity, not just a little marketing firm.”
Self taught
The process to get to a sale didn't come naturally to Knight, who went into marketing soon after she graduated from Florida State. She worked on a freelance basis, in copywriting and on marketing campaigns, for seven years before she started her own firm. She also got to know the political side of campaigns through her husband, Sarasota County Sheriff Tom Knight.
But like many entrepreneurs, Knight knew little about how to sell a company — especially one where the emotional attachment was high. “I felt overwhelmed by all of it,” says Knight. “It's not like you could stick a for sale sign in the yard.”
Here are some of the key steps and lessons Knight learned during the process:
Knight read books and took seminars on how to sell a business. She listed the business herself, on bizbuysell.com and mergernetwork.com. She found a buyer in less than four months. “That was really shocking,” she says. “I thought it would take two or three years.”
When Knight listed the company for sale, she treated it like a Realtor would when listing a house. She created a detailed offer package. “I put my own marketing spin on it,” Knight says.
A key decision was to list the business for sale anonymously. That information could cause misunderstandings internally and can be used against you externally. “If your competition finds out you're for sale,” says Knight, “they will eat you alive.”
Knight quickly learned the difference between tire-kickers and legit buyers. The key, she says, is receiving a legally bound letter of intent. Without that, says Knight, it's just chatter. With it, the due diligence process can begin.
Don't scoff at the win-win cliche of business deals. Once Knight connected with a possible suitor who came with specific needs, the deal began to make sense to both sides. Imprezzio, despite its size and digital strengths, lacked experience in marketing strategy and creative development. It also lacked a solid base of health care clients, and the expertise to work in that field.
“They couldn't get bigger without what we do,” says Mahler. “And we needed what they do to get bigger.”
When coming up with an asking price for the listing, don't go exclusively with a strict accounting process. A starting point is three years of earnings before interest, taxes, depreciation and amortization (EBITDA) but Knight says that shouldn't be the endpoint. Bankers and CPAs, says Knight, tend to have a “narrow view of a company's value because they only look at these numbers.”
Knight says the listing price must also include potential and other non-financial assets, such as top talent, intellectual property or a hard-to-get contract.
Knight says it's essential to have an attorney who specializes in business law and selling companies when a possible deal gets to the negotiating stage. Knight worked with Zachary Buffington of Sarasota-based Williams Parker, whom she says saved her a lot of time and money.
Good combination
Once the possibility of a deal began to materialize, it was time for in-person visits. Some Imprezzio officials came to Sarasota, to meet with Knight, Mahler and the rest of the team. Knight, not wanting to give away too much, told employees the guests were possible partners on some upcoming projects.
The element that came up constantly in the courting conversations was what Imprezzio could do for Knight Marketing. Not just in technology knowhow, but in providing the marketing business real departments for things Knight had always done on its own. The list includes IT, human resources and a finance department.
Not that the technology Imprezzio brings to the deal isn't notable. The firm's media division, which Knight Marketing is now part of, has several entities that vary widely in specialties, from cloud computing products to custom software development to Web design. On an individual basis, two Imprezzio employees are ranked in the top 12 among Google Local contributors in the world.
Imprezzio, with an additional group of developers who work from an office in Romania, was founded in 2004. Co-founders Dave Talarico and Kelly Birr started out with marketing automation software for insurance agents called Agents Ally. The product automated daily marketing tasks, and was installed on more than 11,000 computers in the first two years.
On the other side, Imprezzio executives liked what they saw and heard from Knight and the others at the firm. “The addition of Knight Marketing enables our new media division to become a full-service provider of marketing services to existing and future clients,” DaRK Capital President Russell Page says in a statement that announced the deal.
Specific terms of the Imprezzio-Knight Marketing deal weren't disclosed. But Knight says it's a good combination of upfront payment mixed with a pay-per-performance component. Knight Marketing employees can stay with the firm, and will have opportunities to receive enhanced benefits that come with a larger company. Knight and Mahler signed three-year incentive-laden contracts with the ultimate goal of tripling the size of the business in that time.
And with the sale process behind her, that's the challenge that now motivates Knight. “At this stage of my career,” says Knight, “it feels like an energy jolt.”
Your free article limit has been reached this month.
Subscribe now for unlimited digital access to our award-winning business news.
Join thousands of executives who rely on us for insights spanning Tampa Bay to Naples.
