60% Concentration That Killed an Exit

In December 2019. Today's guest was three weeks from closing a sale of the software business he'd acquired with a traditional search fund. This was to be a fantastic exit for Raj Mahajan. And just like that, his biggest customer publicly announced it was building a competing product.

His buyer walked. What followed is a story about what concentration risk looks like when your biggest customer not only chooses to stop supporting you, but actually starts stealing from you. Raj bought Super Salon in 2015. It was point of sale software for multi location salon owners.

He converted it from on prem software TO cloud based SaaS, tripled annual recurring revenue and took it to market at the right time in a hot category. Then came the unraveling a whistleblower, a lawsuit filed mid Covid, and a settlement that Raj describes as the hardest thing he's ever done. Listen for his reflections at the end of our conversation.

Reflections originally written when he thought a big exit was three weeks away and revisited. Now on the other side, Rod shares his insights on hiring, on culture as armor, and on my attitude is my decision. By the way, Raj is now searching for another company to acquire to get back in the game as a search fund CEO, we hear why.

Here he is. Raj Mahajan, former CEO of Super Salon how you structure your acquisition the entity, the deal itself has tax consequences that can follow you for years and they're much cheaper to get right up front than to fix later later.

So in a webinar tomorrow Tuesday, attorneys Bill Barlo and James David Williams are hosting a webinar with special guest Joshua Siegel, a tax attorney, to walk through entity and deal structuring issues and their tax implications. Among the topics you'll learn asset versus stock sales, F reorgs, QSBs and S corporations versus partnerships.

Expect this one to get into the weeds a bit, which is exactly where you want your attorneys before you sign anything. The webinar is Tax Issues, Entity and Deal Structuring and it is tomorrow, Tuesday, July 28th noon Eastern. Link to register is right at the top of this episode's show notes or on the Acquiring Minds homepage.

Acquiringminds co. Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this podcast I talk to the people who do it.

Buying a small business sounds simple. Find a company due diligence, get a loan close. In reality, you wear every hat just to get the deal done.

And then the moment you close, you have to throw those deal making skills out the window and learn how to operate. You shouldn't have to rebuild this infrastructure from scratch and you definitely shouldn't do it alone. That's why Walker Deibel created Acquisition Lab, which started as an accelerator, has expanded into a complete ecosystem for acquisition entrepreneurs.

Over six years, the lab's 1200 members have acquired over a billion dollars in businesses. The Lab puts everything under one roof. An active community, deal reviews, post close services, and a dedicated fund helping experienced operators buy larger businesses.

If you're serious about buying a business, come see why Lab members have a 40% success rate. Learn more in the show notes or at acquisitionlab.com acquiringminds Raj Mahajan welcome to Acquiring Minds.