As both the son of a teacher and as a former member of the Israeli national basketball team, Elad Shoushan, MBA ’14, knows about education and competition.
In 2013, he combined both in the form of Ready4, an online test preparation tool for the GMAT, SAT, ACT, MCAT, and more.
Six years after he founded Ready4, Shoushan sold the company to Beijing-based TAL Education Group. Here’s what he learned about the exit process, and himself.
How did you know it was time to exit?
My passion is in technology and building products and the innovation behind the companies, the strategy in growing companies. I didn't see myself as an entrepreneur that wanted to do one company for 20 years.
How did you decide on that exit approach?
We had two different selling processes. The first one was at the end of 2017, in which the process was more formal. We retained an advisory firm, a small investment banking firm. We got one offer but the management and the board were not happy with the offer and decided to reject it.
Fast forward a year after, the process was a little bit different. I actually did it almost by myself. The main reason was I already had the relationships and I thought an advisory firm is not going to add value at this point. The sale is going to be a lot more effective, and the outcome is going to be better, if it's going to be managed by me. When you reach out as a founder or CEO to another founder or CEO, they are a lot more open to having a conversation with you when you say ‘I'm ready to sell, and I'm looking for a good home for the company.’
What made your company most attractive to your buyer?
We were almost an identical company. They were focusing on China, we were focusing on the rest of world. It was a great fit for them, because they just acquired the company in China that was doing test prep very similar to us. They wanted to eventually expand their service and their product offering outside China.
What was the hardest part of the process?
As a single founder and CEO, it's almost impossible to operate the company at the same time [you’re trying to exit] and you don't want your metrics and your financials to slip through, because now we have due diligence and [the buyer is] looking very closely at the company. So the things that you told them about your projections and growth, it's very important not to slip through the cracks.
What do you wish you'd done differently?
I think I could have negotiated a little bit for a better deal if I'd had a little bit more patience. In the negotiation process you always have to have leverage. Which is the best alternative to a negotiated agreement? It basically means you need to have an alternative, a Plan B. But a Plan B that you really believe in.
What is your most important piece of advice for entrepreneurs approaching an exit?
Entrepreneurs don't understand the heavy, personal, mental toll this takes on your life, because there are many unknowns. Find an outlet to really disconnect yourself. I used to run every day. It’s a great outlet to clean your head. You’re a lot more focused and you can make better decisions.
The negotiation itself, I found it very useful to have an external person that cares about you and knows the company enough, and has experience before in similar negotiation processes. Because when you're in the weeds, the things you think you see, you don't really see.
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