Stick to the strategy you set for yourself from the beginning

After starting our business, we envisioned competing with secondary ticket marketplaces such as StubHub and Ticketmaster. It’s become increasingly difficult to imagine where we’ll be five years from now. From having next to nothing in 2011 (our first year on the market) to reaching nearly US$50 million in ticket sales in the last 12 months, our company has lived up to many of our original expectations. But realistically, we only represent a small percentage of the ticket resale business. Though we continue to grow and make the difference we wanted to see in this industry, as both an entrepreneur and businessman, the question of when to sell is always looming.

Last year, a healthy offer made its way to the table: one which promised a seven-digit payout and 10 per cent ownership in the new joint company. Sure, the prospect of selling was appealing, especially after five years of hard work and a pretty dismal salary. Even though we technically wouldn’t be selling out entirely, we still felt the valuation was low. And in order for the acquisition to be successful, in addition to bearing additional paydays for us, the new joint company needed to be valued much higher, around US$100 million.

Understanding a fair valuation

We learned a lot from this first opportunity to sell. First, there will likely be a discrepancy between how much you think your company is worth versus what others are willing to pay, especially in the case of small businesses like ours. To prepare for this, many companies take the “comparable model” approach. Look at other transactions that have taken place within your industry to see which terms are practical for your business. With this knowledge, you can make the argument your company should be similarly valued. Though these terms are often private and difficult to obtain, it’s important to do so.

At the end of the day, if you value your company at US$100 million but no one is willing to pay for it, then it’s up to you to become more realistic. When it comes to selling, your company is only worth what someone else is willing to buy it for. A general rule of thumb: If the discrepancy is within 15-25 per cent, you should be able to make a deal. If it’s off by 50 per cent or more, you’re going to have big problems.

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Identifying mission and vision alignment

When it comes to selling, we want to find a partner who not only had deep pockets, but who is also on board with our mission and won’t steer too far away from this path. This can be incredibly challenging, since it’s difficult to find buyers in the first place. But when the time is right, we’ll spend a considerable amount of time reaching out to funds, companies and individuals we think we’d partner well with. If selling appears to be the right move, we’ll be working extremely hard to find a partner with the best potential.

Though money is certainly a dominant factor, it’s not our only driving force as a company. So we’ve continued to roll the dice, a decision based primarily on gut feeling and knowing what is best for the company — or at least what feels best. Having a great business partner makes this much easier, as we’re in constant conversation regarding when to sell.

Going with your gut and sticking to your strategy

We knew that if we could continue to double our sales, we could hold off, keep scaling the business, and in the end be much better off. And we did just that. Still, after partly achieving what we set out to do, a sale seems inevitable.

Part of being an entrepreneur is taking on greater financial risks in order to operate and organise the business you set out to create. If we were to sell to a private equity company, one that would likely increase commissions to double profitability, our brand value would be damaged, and in a few years I’d likely find myself battling the same problems I had with the ticket industry five years ago. For the time being, we’ll continue “rolling the dice” for as long as the company can afford to, or until we meet the perfect potential buyer.

As of now, we can afford five more years of being our own growing entity without compromising our mission. If (and when) the time comes for us to sell, I hope that my driving motivations will be to maintain a company whose intentions are good and to keep the business on the path forward in this difficult industry.

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Brett Goldberg is the Co-CEO and Co-Founder of TickPick. TickPick is a technology company focused on improving fans lives by providing them access to cheaper tickets and by creating products & services that simplify the consumer experience.

The Young Entrepreneur Council (YEC) is an invite-only organisation comprising the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship programme that helps millions of entrepreneurs start and grow businesses.

Image Credit: Alessio Lin on Unsplash

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