This is the story of how I sold my $1.5M business by 20 years old.
and as much as I’d like to say it sold for millions of millions of dollars and I rode off into the sunset and lived happily ever after,
That’s not quite what happened…
It’s January 2022, a new year.
My clothing company, AmericanWaffle, had grown to $1,300,000 in sales in one year.
I moved to Miami
I lived in a high rise apartment,
I drove a specced out Tesla,
I ran a successful business.
I was living the life I dreamed.
But things weren’t all sunshine and rainbows…
In the last year, the business had some troubles of it’s own.
Because our demographic leaned conservative, we were kicked off, banned, canceled, deboosted…
From almost every social media platform, email service provider, and payment processor we used.
All that remained was running ads from a second Facebook page and on TikTok.
See the market loved our products, but with the censorship, quite literally, could not get enough of them.
In fact, we spent so much on TikTok ads, they assigned us our own TikTok representative to help us directly.
At first, this sped up the process of getting ads approved as we were able to bypass the pre-review process.
However, over the span of the next few months, we were ping-ponged back and fourth between TikTok's policy team and our own representative.
At first they simply wanted us to adjust our landing page, then modify our ads,
but this slippery slope continued to a point where the policy team made the ultimate decision to ban our main product outright, and suspended our account.
What was the last straw?
They claimed the word, “pissed” could not be used on the platform. This was false.
— and actually added an addendum to their own policies shortly after.
Other than Facebook, the most expensive, least functional ad platform, we had no where else to go.
I tried looking into alternative forms of advertising like radio, print, or podcasting, but all received the same answer:
The minimum order quantity was too high — at least $10,000 to start testing.
I tried renting newsletters and other alternatives, but no other form of sustainable advertising was available to us.
Although our product was in massive demand where we could advertise,
Since we did not have a unique marketing channel
We finally came to one conclusion: I was no longer the right person to run the business.
It must be sold.
So I researched a few brokerages, many of them unserious.
And was ultimately referred by a buddy of mine who sold his company to a brokerage called Quietlight.
I met a broker who specialized in selling the same type of American/political business as I had run.
And I made the decision to go all in.
Now what most of these internet gurus don’t realize is…
You may fake screenshots,
You may dupe people into your scams,
You rent a Lamborghini, or jet, or yacht,
But what you cannot do, is sell a legitimate business.
Everything is verified
From Sales
To P&L statements
To bank statements
To credit card statements
To business reports
To vendor relationships
To company formation documents
To operating agreements
To trademarks & licenses
To SOPs
To your own tax returns
The due diligence in dealing with mergers and acquisitions is second to none – Unless you’re Sequoia with FTX.
First, we had to come up with a business portfolio.
This was business summary package of financials, questionnaires, interviews, executive summaries, and more overviews for potential buyers to read.
Now when I signed the engagement letter, the broker said we’d go to market at a 2-2.5x TTM valuation, and it’d be sold in 90 days.
(TTM meaning trailing 12 months of profit, not revenue.)
But by the time everything had been sorted out and after I knew what SDE meant, 2-3 months had passed.
(Seller's Discretionary Earnings)
By then, the trailing 12 months had shifted and the multiple we went to market with was 1.5x.
Nonetheless, we started interviewing potential buyer after buyer.
Some I found organically through Twitter or private equity events, but the majority were from Quietlight’s database.
This is the point when I realized, there is a WHOLE other world of very wealthy and anonymous people that pay lots of money to be kept private.
Now it’s June, and the type of buyer we were going after was one who had a unique marketing channel in the political niche so that they would be the missing puzzle piece.
A buyer, let’s call him Luke, approached us claiming to have a list of 3 million email subscribers across multiple businesses.
He could take AmericanWaffle and promote it across his businesses to make a far greater return.
And with the midterms approaching we negotiated a 1.5x multiple and he signed an LOI (letter of intent) contingent on closing in 2 weeks.
This meant Luke was the only buyer we could move forward with because of an exclusivity agreement.
And he started conducting due diligence which took another took weeks.
We negotiated the APA and sent the final draft for him to sign (Asset purchase agreement)
…and then crickets…
Luke went dark.
And the exclusivity agreement had expired.
Should we go back to market at a different multiple? Or keep waiting for Luke?
Maybe something happened to him? Maybe he’s busy? We were so close to closing, what was going on!
After more emails, calls, and texts that I could count from the broker
Luke finally responds saying he has COVID.
And when asked why it took 18 days to recover he said his father had passed as well.
But at this point I did not know what to believe.
After everything was ready to go, the previous LOI and APA had been agreed upon, and not responding to us in the most unprofessional manner,
Luke emails us completely new terms for the deal with two options:
One is a contingency plan for him within a 15% margin of error guaranteeing results after close,
and the other is a 1x multiple with earnout thresholds up to 1.6x multiple.
Luke had gone back on his word.
It’s Now end of July, we finally get on a call with Luke and what do you know?
He suddenly has a business partner in real estate we were never told about suggesting earn outs and thresholds and seller financing! I was fucking PISSED
Now up to this point, I went though a black swan event. I lost everything.
- My business was declining
- I was running 4 different LLCs
- I broke my arm on a $1,000 bike that cost $5k in hospital bills
- I tried launching a dog merch store
- I tried launching a supplement brand
- My CPA had screwed me over in taxes and took a $20k payment plan with the IRS
- I made a bunch of dumb financial mistakes like taking a $52k Shopify loan at 17% interest, leasing a Tesla, buying very expensive furniture that would eventually all be donated to charity, buying random physical items like albums covers or video games
- Moved out of the high rise apartment after almost renewing for another year.
- Got rid of 95% of my physical belongings
- Was doing marketing consulting on the side
- Had heart wrenching stress from this whole process going int a downward spiral
- Spending $10k /month between business and personal
- And was without a doubt the loneliest time of my life
It felt like the business was the one thing I had left
So when I got on the phone and heard this guy suggesting seller financing, I was PISSED!
I was in so deep that it seems like there was no going back.
So we came to agreement of half in cash now, half in 6 months at a 1.9x multiple. Subject to 7 days closing
But even then they tried throwing in impossible liabilities like “retaining the initial payment” to leave me with nothing if something happened or certain indemnity clauses.
And by now it’s early August, the Quietlight exclusivity period is nearing the end of 90 day period (august 11th)
Then Luke goes dark again, my broker sent me a message saying “He's gone completely dark. Every day that goes by, the situation deteriorates”
And finally on August 8 Luke says, “got hit by a frozen wave from my investor after he tried to order on the website and it was errored out”
We were never informed he had any investors to begin with.
He says he was “good with 1.5x multiple to begin with and was approved to spend”, and goes on to say “I feel like the disingenuous asshole here”.
So this guy that helped cause me so much pain, headache, and time after 2.5 months calls himself an asshole. Unbelievable.
After a final phone call on August 9th the deal fell through, and we did a super fast relaunch at 1x multiple,
Interviewed few more buyers, thought all may have been lost
Then found a strategic partner on August 15
We had a call and an LOI by August 17
2 weeks of due diligence
Negotiated and signed the APA and escrow agreement
And begun the asset transfer process.
We gave their team access, created SOPs, and helped them get setup.
So after the entire $1.5M business had been transferred over, and the escrow release forms had been signed on Friday September 2nd, I received… nothing.
For the entire labor day weekend. We had missed the 3pm cutoff by minutes, and the banks had closed.
And that weekend I was packing up all my things to move back home.
So on the morning of Tuesday, September 6th as I’m heading to the airport refreshing my bank account, on the phone with the escrow agent, in line to board my flight.
I looked down…
And the wire hits.
All in all, it felt bittersweet.
On one hand, I wasn’t able to sell my business for millions of dollars,
I put myself through more stress than I knew what to do with,
And I went through black swan event,
But on the other I was moving on,
Free from the chains I had wrapped myself in,
With a sizable cash amount for a 20 year old.
And a new focus in mind: Sharing my story, and building relationships with the people that matter most.
So if I had to sum up the entire excruciating 9 month journey, the thing I kept telling myself was, “You cannot lose if you do not quit”.
