In a recent episode of Second in Command podcast, Founder of COO Alliance and host Cameron Herold sits down with STS Capital Partners Chairman and Founder Rob Follows, who shares insights into the M&A process – from recognizing hidden value to navigating the final stages of a deal.
Rob and Cameron explore why maximizing value during a sale is more than just chasing a number, it’s about aligning with the right strategic buyer. Rob shares real-world stories of entrepreneurs who either walked away too soon or held out too long, highlighting the need for clear thinking, emotional discipline, and independent guidance to achieve what we call an Extraordinary Exit™.
Here are a few takeaways you can expect to uncover in this podcast:
Maximizing Strategic Value: Beyond the Surface Numbers
Strategic buyers often see what Rob calls the “Rembrandts in the attic” – the hidden assets and growth opportunities in a business that founders may overlook. When entrepreneurs align their narrative with what strategic buyers value, they can unlock far greater outcomes than with purely financial buyers. Business owners need to prepare for this, not just operationally, but psychologically.
Required vs. Preferred Outcomes: Know Them Before You Negotiate
One of the most critical decisions an entrepreneur can make is setting their required outcomes – the minimum acceptable result that satisfies all their goals. A preferred outcome may exceed it, but knowing where the floor is helps protect against emotional decisions that can derail deals. Be clear before the pressure mounts.
The Final Hour: When Independence Matters Most
In high-stakes moments, especially near closing, independent sell-side advisors are critical. Rob shares a cautionary tale of two business owners who had a $256M deal agreed, five times more than they hoped for, only to lose it all after second-guessing the offer. Four years passed before they recovered that value.
Avoiding the Wall Street Trap: Aligning Interests in the M&A Process
There’s a common misconception that large investment banks will act in the entrepreneur’s best interest. But many of these firms are ultimately loyal to the private equity buyers they work with day in and day out. True alignment comes from working with independent advisors, like STS, who are fully committed to representing the seller, especially in founder-led or family businesses. They can help you achieve maximum value by Selling to Strategics™.
Business Maturity and Timing Matter
Another theme throughout the conversation is that smaller companies often face challenges in the M&A process if they’re not ready. Certain levels of business maturity – systems, team structure, cultural cohesion – are prerequisites for attracting top-tier strategic buyers. Trying to sell too early can cost more than waiting and preparing intentionally.
In conclusion, entrepreneurs who want to sell their business for maximum value must go beyond the traditional playbook. They must recognize their hidden key value drivers, align with the right strategic buyer, and work with independent advisors who understand how to navigate the nuances of high-value deals. With leaders like Rob Follows and the team at STS Capital Partners, founders can step into the sale process equipped for not just a successful transaction, but an Extraordinary Exit.
Click here to view the full podcast.
