September 12, 2022

How To Sell Your Startup: Advice From The Black CEO Who Sold His For 8 Figures

Timothy Armoo with Fanbytes cofounders

Timothy Armoo sold his influencer business Fanbytes to global digital marketing agency Brainlabs for an undisclosed eight-figure sum. He’s done what every aspiring business owner hopes to do – all at 27.

We previously interviewed Timothy Armoo on the Techish podcast.

Speaking to Sifted EU, Armoo, whose startup connects social media influencers with big brands for promotion work, says the acquisition is like a marriage.

“You’re merging two companies, cultures and sets of people together, so you want it to be the right fit. Start “dating” partners while you’re still building the company. A CEO needs to spend at least 20% of their time networking — and that includes building strong strategic partnerships with potential buyers (which are normally bigger companies).

“If you plan to sell a company for sub-€10m, you can be relatively informal about how you build relationships — reach out to the founders of companies you think would be a good fit. Or, if a potential buyer is a company known for buying up companies, it may have a corporate development team you can reach out to which will be looking for interesting companies,” he added.

Timothy Armoo, founder of Fanbytes
Timothy Armoo, founder of Fanbytes (now part of Brainlabs)

Have a rough idea of your terms

“If the conversation of buying your company comes up with a potential partner, you want to have a rough idea of what you and the company would want from the deal.

“Firstly, find out how much your company is worth. Speak to a merger and acquisition (M&A) bank — you’ll be able to see how it values companies in your industry. This is the beginning of an acquisition process, so it’s good practice for later down the line.

“When you understand how company valuations work, you can optimize your startup’s strategy for building things that drive value for potential buyers,” he told the publication.

Figure out what you want

“People get obsessed with wanting a billion-dollar exit, but most people won’t get that — nor will it just land in their lap. A significant exit can dramatically change your life — it’s not just about becoming wealthy but the options it gives you around your lifestyle, the people you can hire, the investors you get to choose, and the work you want to do.”

Create an acquisition strategy

“This comes a bit later down the line when conversations are getting more serious, but it’s good to think about it early so you can get everything in order. It can be created by the team or, if you’re a larger company, by an M&A bank.

“Focus on getting your finances in order, getting stuff audited, having a strong management team, and, importantly, organizing your data room — this is where you store all the information concerning your company, from legal to finance, contracts, and people-related information.”

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Abbianca Makoni

Abbianca Makoni is a content executive and writer at POCIT! She has years of experience reporting on critical issues affecting diverse communities around the globe.