Shegun Otulana

Summary

In this conversation, Todd Sullivan speaks with Shegun Otulana about the intricacies of selling a business, particularly in the health tech sector. Shagan shares his journey of building and selling Therapy Brands for $1.25 billion, discussing the factors that led to his decision to sell, the importance of preparing for an exit, and the role of clarity in value creation and company culture. He emphasizes the need for founders to understand buyer expectations and the risks involved in transferring ownership. The conversation also touches on the significance of having the right team and external partners during the transaction process, as well as the impact of company culture on business success. Finally, Shegun discusses his commitment to giving back to the entrepreneurial community and supporting other founders on their journeys.

Takeaways

• Selling your company is a crucial decision.
• Understanding when to sell is vital for business owners.
• Clarity in value creation is essential for a successful exit.
• The culture of a company can significantly impact its success post-exit.
• Founders must prepare their businesses to be exit ready.
• The market will evaluate your business based on its current performance, not just its vision.
• Having the right team and external partners is critical during a transaction.
• Entrepreneurship has the power to change lives and create opportunities.
• It's important to ritualize and solidify company culture before a transaction.
• Understanding the risks involved in selling is crucial for founders.

Chapters

00:00 The Importance of Selling Your Business
02:57 Shegun Otulana's Entrepreneurial Journey
05:50 Deciding to Sell: Factors and Strategies
09:09 Preparing for an Exit: Getting Exit Ready
11:56 Clarity in Value Creation and Culture
15:10 Understanding Buyer Expectations
18:00 The Role of Team and External Partners
21:13 Navigating the Transaction Process
23:56 Lessons from the First and Second Transactions
26:47 The Impact of Culture on Business Success
30:02 Giving Back: Supporting Other Entrepreneurs

What is The Wise Exit?

The Wise Exit is an open dialogue with fellow founders and former business owners sharing real stories and offering honest advice around selling their companies to some of the top acquirers in the world.

Beyond the entertaining and educational exit stories, host, M&A Advisor, and Exitwise CEO & Co-founder Todd Sullivan is here to help demystify the Mergers & Acquisitions (M&A) process. For example:

- How much is my business worth?
- What is Net Working Capital?
- When should I get a Quality of Earnings analysis
- Should I hire an Investment Banker, M&A Advisor, or Business Broker?
- When do I talk to my Key Employees about a possible transaction?

We hope you enjoy... and learn a few things along the way!

Are you building toward an exit? Learn more about Exitwise https://exitwise.com/

Todd Sullivan: 00:04

As a business owner, selling your company is one of the most important professional and financial decisions you'll ever make. When is the right time to sell my business? What is my business worth? Should I hire professionals to help sell my business? And how much does it all cost?

Todd Sullivan: 00:18

These are questions I hear every day. My name is Todd Sullivan. I'm a 5 time founder and the CEO of exit wise. I've created 4 exits on my own and I've coached hundreds of business owners and executives along the way. We created this podcast to simplify the process of selling your business, to open the m and a black box, to track down the inside information that I wish I had each and every time I sold my own companies.

Todd Sullivan: 00:43

We wanna give you an MBA in m and a. Today, my guest is Shagan Otalana, a Nigerian immigrant who came to the US for college in 1998 and went on to build therapy brands. The gold standard for mental health therapy practice management software, which he ultimately sold for $1,250,000,000 to private equity in 2021. Shagan has recently joined us at exit wise to advise health tech specific business owners on growth, exit preparation, and help them sell their businesses. So if you know any health tech founders looking for the highest level of industry access insights and strategy to achieve their goals, let them know Shagan is now part of our team.

Todd Sullivan: 01:25

I hope you enjoy my conversation with Shagan Otalana. Shagan, thank you for taking the time to chat with me about your entrepreneurial journey. The reason I'm so excited to share your story and advice with our listeners is not only how you used m and a to build an industry and category leading business, which you ultimately sold for $1,250,000,000, but that you've also joined us at ExitWise to help health tech specific founders on their entrepreneurial journeys from growth to exit. So, really, thank you for being here.

Shegun Otulana: 01:58

Thanks for having me, Todd. Thank you.

Todd Sullivan: 02:00

Our audience is really interested in learning about the exit. So I'm I wanna dive really right in there and start with you had this amazing exit therapy brand sells to KKR. Oh, yes. I wanna start with what was the really the the primer? What made you decide that you wanted to sell the business?

Shegun Otulana: 02:20

So here's the thing. Once you take other people's money, sometimes you just gotta sell. Right? Yep. Yep.

Shegun Otulana: 02:26

So Yeah. So I think the the path already in my own journey kind of determined the end. And what do I mean by that? If you bring on so in the earliest days of the company, we did brought bring on Angel Capital. Mhmm.

Shegun Otulana: 02:48

So once you do that, one of the exit paths is one day to sell. Right? Unless you have a way to kind of pay off the capital you've raised, but this will get investors looking for big exits. So the easiest way to give them a big exit is to sell to someone or to sell to the public markets in some way to sell. So I think the end was kind of predetermined, which is what happens for most people that first time around.

Shegun Otulana: 03:14

And then you have a little more control on the subsequent legs of your journey as an entrepreneur. Yep. That's 1. The second thing was failing in a sense, again, when you've raised money from other people. So I guess they're kind of depend they're intertwined.

Shegun Otulana: 03:31

There is a limit to how much you can extract value wise out of a business to secure your family and secure the future once you take other people's money. Right?

Todd Sullivan: 03:45

Yeah. Yes.

Shegun Otulana: 03:45

You can't just say, hey. I'm gonna start paying myself a lot of cash out of this business that I wanna put somewhere for my family. Yep. So once you take all the people's money, once you take the VC approach of giving equity to team members, which we also did, then you have a option pool and everything else. In a sense, traditionally, not always, but traditionally, you've kind of predetermined that at some point in the future, you're gonna have some kind of exit event in some form or the other.

Shegun Otulana: 04:17

So yes.

Todd Sullivan: 04:19

Yeah. That's great. I I've also you know, I've heard you talk about that there's liquidity for investors, family, friends. Yeah. But then there's also, you know, the strategy of, hey.

Todd Sullivan: 04:30

If I'm gonna exit, I would really like to grow this business. Right? So who do I sell to that enables the growth strategy that you have in mind? And I feel like you were very strategic in that way. Do you think you could talk a little bit about how you chose the ultimate acquirer and how that led to enormous growth afterwards?

Shegun Otulana: 04:50

Yeah. So in my journey, I had multiple exit events within the same company. So if you think about it, I had an initial exit event and none of these were about putting money on the company's balance sheet. All of them were really about, selling equity and getting rewarded personally because the company thankfully was very profitable, fast growing. It did not necessarily need external capital to accelerate its growth beyond the initial, seed round that we raised.

Shegun Otulana: 05:24

So one of the reasons for the first exit was just to put give you the background. It was a few years into the business. We were growing very very fast, but I still had nothing to show for it personally.

Todd Sullivan: 05:39

Mhmm.

Shegun Otulana: 05:40

I still have some of the debt I had to build the business. Right. My wife was still working. Not that that's a bad thing, but my point was I wasn't paying myself. The point of me saying that was I wasn't paying myself enough for me to look at my office.

Shegun Otulana: 05:55

Hey, baby, if you don't wanna work anymore, you can stop. Like, you get the stage of life. I mean, but I'm sitting there, like, I have this huge value, this thing that I've created significant value in. And if something happens to it, I'm actually back to square 1.

Todd Sullivan: 06:11

Yep. You gotta

Shegun Otulana: 06:11

derisk. And at the same time, my ambitions were growing. I was like, this is an industry where I can actually win big Mhmm. And I can take on more risk. I can actually go to take additional capital from the markets if I wanted to to go do deals and do acquisitions, you know, things like that.

Shegun Otulana: 06:34

But what I told myself was before I do that, I need to derisk my family. Mhmm. I need to derisk myself before I do that. I can't let this thing that I've created go back to 0. But at the same time, I had this huge ambition about what to go do next.

Shegun Otulana: 06:51

And that was what kind of led me to the private equity route because if you think about this, while it is more common now for VCs to let you do secondary, back then it's typically private equity that will let you take chips off the table, roll, and then continue the journey. So that was one. And then the second thing was they were also the ones that could give me access to, their capital partners if we wanted to use debt in the business to do deals. Sure. Sure.

Shegun Otulana: 07:22

Your local bank is not gonna do that. And I wasn't so sure I could go to Goldman Sachs and say, hey. I have this really fast growing SaaS business. Do you wanna go do deals with me. So so so they kind of played that role for me.

Shegun Otulana: 07:38

They played the role of access to financial markets, derisking my family and myself personally and and some of my investors and team members. And they they also played a third role, which was almost like my business development of the business. So those were the things I was kind of looking for in whoever I partnered with. There were certain opportunities in the market we wanted to take advantage of. It's a it was it's a highly fragmented market.

Shegun Otulana: 08:09

To be able to take advantage of that fragmentation, for margin expansion, for market penetration, they could help do some of the business development m and a work without me having to build out an m and a team internally.

Todd Sullivan: 08:25

Yeah. Totally understand. The secondary is interesting just for the audience. Right? So that is selling your own shares, right, into a market venture or private equity.

Todd Sullivan: 08:35

In your case, was it still venture capital that was buying secondary? So okay. Okay. So it was private equity, and that was a control transaction at that time that you were releasing?

Shegun Otulana: 08:46

The 2 that we brought in. Yes.

Todd Sullivan: 08:48

Yes. Okay. Great. Great.

Shegun Otulana: 08:50

We had a senior partner and a more genuine one from a equity standpoint, which was PSG and GSV. And if you combine their ownership, yes, they would have control.

Todd Sullivan: 09:00

Did you say GSV? Mhmm. Yeah. We yes. We've sold businesses to them before too.

Todd Sullivan: 09:05

Right? Yeah. I think they're a fantastic partner, fantastic acquirer. Alright. So when you made this decision, right, we run into a lot of founders that struggle to understand what being exit ready really is.

Todd Sullivan: 09:17

Right? And, you know, I'd love to hear what you think and how you coach, frankly, business owners on how to get exit ready so they can achieve the goals that are, you know, realistic and be able to view the transaction from a buyer standpoint as well. Could you talk us through how you prepared your company to become exit ready?

Shegun Otulana: 09:37

Yes. And it's probably slightly different for each company, the type of business it is and everything. But at the end of the day, it's about getting your business ready to have the highest possible valuation it can have and be ready for life after a deal with a partner, a financial partner that's going to bring a different set of rigor and needs to the business. Yep. So the more you can be ready for life after that, the more clarity you have around why you're doing what you're doing, both personally and for the business because sometimes they're different.

Shegun Otulana: 10:15

Yep. The better it is for you to be ready from an exit standpoint. So multiple things go into that. So and these are all the things that also go into building a great business, which is how do you real clarity around how you create value in the business. Like, very clear clarity, like a system of growth that works in the business.

Shegun Otulana: 10:38

An operating system that guides how the business operates that you're kind of clear about. Hidden certain metrics and goals in the business that is gonna be very important to a financial partner that wants to give you the highest valuation. Depending on the size, a certain level at which your team is at from the leadership team composition. Sometimes fast growth, very fast growth can paper over some of these things.

Todd Sullivan: 11:06

Mhmm.

Shegun Otulana: 11:07

But then it makes your life more difficult after the exit because your new partners are still gonna expect you to now go deal with all those things. So the more you know what you're dealing with, the better. Clarity around value creation post transaction is also very important so that you and them are on the same page around. This is how we're gonna continue to create value. Even more important if you're gonna stay on in the business.

Shegun Otulana: 11:34

Right? So when PSG came in, I was staying on. But when we now also to KKR, I was moving on.

Todd Sullivan: 11:41

Mhmm.

Shegun Otulana: 11:43

And maybe for KKR, my personal needs or things like that may be less important because I'm moving on. But at the PSG stage, obviously, it was much more important. I'm gonna be dealing with these folks all the time. So clarity around this is the value creation path so that as you guys come into the business, this is how we're gonna go create more value. So it's the team, it's the culture that you want to to start building.

Shegun Otulana: 12:10

We have to be honest that transaction events can have significant impact on the culture of the business.

Todd Sullivan: 12:20

For sure.

Shegun Otulana: 12:21

So the more you've built a solid culture system, because that's a lot of what is gonna drive a lot of things after the transaction. The more you've built that, the more ready it's gonna withstand whatever comes post transaction from a standpoint. It also helps you have clarity if you're gonna go higher into the team on the leadership side, the kinds of people you're gonna hire post transaction. So you're not just at the mercy of your financial partners because they have the tendency to suddenly now start trying to throw people at you.

Todd Sullivan: 12:58

Yes. Yes.

Shegun Otulana: 12:59

Some of those people not matching your own company culture and how you serve your customers and things like that. So as many things as you can have clarity around, the primary thing pre transaction is clarity. Clarity around how you create value, clarity around culture, clarity around that you're gonna create value post exit, clarity around that you're gonna organize your life and your interaction with your new partner, clarity around the kind of team of the future you need to go build post transactions so that you guys are all on the same page. It's all those things that kind of prepare you for the exit. So you go beyond just, oh, I'm a I have this great company that's doing very, very well.

Shegun Otulana: 13:45

If you're gonna stay post transaction, even if you're not gonna stay, but especially if you're gonna stay post transaction. Those things are very, very important.

Todd Sullivan: 13:54

That's really helpful. Obviously, the word clarity makes a lot of sense. Clarity about your business, how you're growing it, how to it creates economic value. But then I think it's a very hard switch for founders to make to say, what is the business? What are the business goals post transaction?

Todd Sullivan: 14:10

And we're giving you a little bit of the reins. Right? You don't have the financial control, but we're asking you to maintain that growth grade, improve profitability. But at some point, they're gonna say, okay. That that's enough.

Todd Sullivan: 14:22

Don't you don't keep growing. Let's throw everything back to the bottom line. Right? And now we're building up our EBITDA because we're thinking about our exit, our money, and and the mindset of a founder, the original founder may be very different and not compatible with the new the new strategy. I think, the beginning But I

Shegun Otulana: 14:39

think that happens when the founder is too fearful. You should not get into a relationship where you think the farther apart you are from the partner on some of those things, the more miserable your life is gonna be post transaction if you stay when you're doing the business. Yep. But sometimes, because people don't wanna kill the deal, they don't address those things. Yep.

Shegun Otulana: 15:06

But that's the best time to address it. So

Todd Sullivan: 15:09

The the beginning of getting your personal kind of house in order, certainly, the the operating system of the business that it that just runs you everybody really understands it. The culture is around understanding that and making that run and and however you're setting up culture makes a ton of sense. Can you talk to me a little bit about a big discrepancy that we see is, in fact, we have a, you know, a business right now doing 40,000,000 of revenue. Profitability is not not great for the industry, but the founders, the op the the team really believes the future is so big. Let's not focus on profitability.

Todd Sullivan: 15:49

The market is coming our way. We're the leading brand in the space. So many good things, but we wanna sell the business for a variety of reasons. And they believe that that story, right, that vision is what we should sell. But inevitably, the buyers are all looking at the economic profile, And we struggle getting owners, founders to understand that we believe in your passion.

Todd Sullivan: 16:15

But a buyer, they also have an investment committee, and they have to run these numbers by, do they check the boxes? And they're looking at 10 other opportunities at the same time. Right? So you're not stacking up. The economics are not stacking up to create the exit of your expectations.

Todd Sullivan: 16:32

Yeah. What advice do you give to founders around getting your expectations correct when going into m and a? And I'm getting to valuation, but it's a little bit more than that.

Shegun Otulana: 16:43

VCs by vision. It's vision capital, not just venture capital.

Todd Sullivan: 16:47

Yeah. Yep. Yeah.

Shegun Otulana: 16:49

Private equity do not just buy vision. They buy clarity about the future, and founders and CEOs need to be pretty clear on that. Okay. If you wanna sell a future vision, you go to VCs that your numbers don't really support as of right now.

Todd Sullivan: 17:12

Mhmm.

Shegun Otulana: 17:13

If you're growing very, very fast. Right? Mhmm. If you're not growing very, very fast at 40,000,000, you also can sell that vision to a venture capitalist. Right?

Shegun Otulana: 17:24

But if you are going to private equity route because you wanna take money off the table, so this is what you're telling a a buyer. You're saying, I really, really, really believe in this future. My numbers may not say that this future is gonna lead to significant profitability. Right now, I don't show that in my numbers, but I really believe in this future so much that I'm willing to sell you some of my future profit now

Todd Sullivan: 17:51

Mhmm.

Shegun Otulana: 17:52

Personally. Mhmm. Do you get what I'm trying to say?

Todd Sullivan: 17:57

A 100%. Yes. There there is a yeah. There's an inherent mismatch.

Shegun Otulana: 18:02

There is there is significant dissonance there. Yes. Because if you really believe that kind of value creation is gonna happen, why are you gonna sell now before it happens? Yep. So you need to now say, hey, I'm transferring the risk of this future happening to somebody else.

Shegun Otulana: 18:22

And in exchange for me transferring that risk, I have to take the risk of less evaluation now. That's kind of how the market works. Yep. And if people cannot get themselves there, they're really not ready for a transaction because they do not understand the risk they're creating for themselves post transaction. They do not understand that they're not just transferring risk to the buyer.

Shegun Otulana: 18:46

If they roll equity, they're also transferring significant risk to themselves. They're increasing the chance that they're gonna lose that business. They're increasing the chance that their new partner is gonna look one day and say, please get out of this business because you sold me a bag of goods, and now I gotta go fix it. Yeah. They they they are also very short term in their thinking, and they are not balancing risk reward very well, even for themselves personally.

Shegun Otulana: 19:10

The market is the market, and the market is not just gonna sell based on your own vision of the future. Right? The market is gonna also make a determination of its own vision of the future. And sometimes the market's off. We know that.

Todd Sullivan: 19:27

Yes. Yes.

Shegun Otulana: 19:28

But if the market is not off to kind of fit your vision or something, you can't force it to.

Todd Sullivan: 19:33

Yeah. I think one of the hardest things to be able to do is to put yourself in the other person's shoes. Right? The the buyer's shoes and what are they actually buying. And private equity wants to derisk.

Todd Sullivan: 19:42

They want the upside. They want they want it all. Like, they're they're gonna double, triple this within a given period of time. Right? So they need to be able to model that playbook and really believe in it, to make the

Shegun Otulana: 19:54

investment transactional by nature.

Todd Sullivan: 19:56

Very, very transactional. What I love about, you know, what we're trying to do is it's not only, okay, let's derisk your transactions with great advisers. Let's get a really great understanding of your value before you go to market. And now we're leaning more into this idea of, like, look, you're just not ready to go to market. But if we do these three things right over the next 18 months, not only can we have a better chance of meeting your expectations, but your business becomes exit ready.

Todd Sullivan: 20:27

Right? You're creating clarity around that business model, the profitability, you can really see it now. And then that becomes a more kind of transferable asset. Maybe could you talk to me about the team that you put together to help you execute the transaction or these 2 these transactions?

Shegun Otulana: 20:44

Yes. So are you talking about internal or external partners?

Todd Sullivan: 20:48

Both. I think they're both really important, mostly external, but then who did you bring under the fold within your company, right, to help you get through this? Because this is really challenging to run a business and do what you've done.

Shegun Otulana: 20:59

Yeah. So when the first transaction so just for background, we did 2, recaps before we did the the exit to KKR within the company. And for the first one, the team was not really built out by then, but the growth story was very solid. Like, the growth story for the company was very, very solid even though the team wasn't fully built out by then. Yep.

Shegun Otulana: 21:26

We could really command compelling value because you you had the numbers to support it. And the partners knew that after the transaction, then we were gonna have to start building out the the team the the the team that was gonna run the company. So for that first transaction, I would say a lot of the burden of doing the deal fell on me Mhmm. And external folks that I worked with, like legal and accounting firms and things like that and the investment bank. So that's kind of how the first transaction went.

Todd Sullivan: 21:58

And can I ask you, was that was that a surprise of, like, how much work it was for you, how much was actually on your shoulders while you're trying to build a business? Yes.

Shegun Otulana: 22:06

It was a lot of work. Yeah. And some aspects of it were kind of surprising. I've been never done it before. So, yes, it it was a lot of work.

Shegun Otulana: 22:16

But, thankfully, I also had really good partners that I I did the work with, so that was great. But it was a lot of work.

Todd Sullivan: 22:21

I think it's critical that you have the right external partners. Right? I'm sure you were surprised at different stages of that things were actually required and how much time they take in the emotional roller coaster. Is there anything specific that you can think of that was a surprise that, you know, our audience would get something out of?

Shegun Otulana: 22:39

So the first transaction was generally straightforward. I think because it was a high quality business, that helps a lot. Mhmm. When you're selling high quality businesses, as in we were selling a business that was growing triple digits with 30 something percent profit margin. So the other side also really wants to do a deal.

Todd Sullivan: 22:57

Right? Yes. Yes.

Shegun Otulana: 22:58

So that helps that helps move things forward. You there's a lot of giving room to each other because both sides are like, this is a win win for everybody. Let's do the deal, and let's get stuff out of the way. So I think that helped. I know that may not be the typical situation, so I wanna be cognizant of that.

Shegun Otulana: 23:16

But we were clear about how we drove growth in the business. They could also see how we drove growth in the business. Yeah. Even though we we hadn't been around for long, we had been around for just a few years, they could see the growth trajectory over time. Mhmm.

Shegun Otulana: 23:28

The numbers were pretty clear. The the investment bankers were also it was very easy to kinda lay it out. Like, it wasn't you didn't have to make anything off or tell people, hey. Take a leap of faith. There was none of that.

Shegun Otulana: 23:40

Yep. It was just out there. We we just had a great business to to transact with. So I think that helped a lot, but I was very dependent on those external partners because my own internal leadership team then was still relatively small. Mhmm.

Shegun Otulana: 23:54

Again, if you remember, this was a situation where we had built this thing that was very successful, growing very, very fast, but I still had that early founder only raised a small amount of money mentality. Sure. I wasn't paying myself anything crazy. Like, we were still very, like, bootstrappy in our thinking as a company. So that reflected itself in a lot of things too, in terms of the business.

Todd Sullivan: 24:23

Could I ask you on the representation on the banker side, were they able to identify buyers, like, right off the bat? Were they very industry specific? So it was easy for them.

Shegun Otulana: 24:33

There were people I said no to, which also helped because I did not have to sell the business. Right. Right.

Todd Sullivan: 24:39

Right.

Shegun Otulana: 24:39

Right. So there were people that did not buy into my vision that I said no to. Actually, the funny thing is even the fine the people I finally did the deal with when we first started talking were trying to sell me a vision that I did not agree with, and I said forget about it. Yep. Let's do our separate ways.

Shegun Otulana: 25:02

And then they came back around, and we did that. So, we joke about it today that, man, look how much money you would have lost if we actually didn't do this deal together.

Todd Sullivan: 25:11

Yeah. Yeah.

Shegun Otulana: 25:12

But that that's an example of you being clear about where you wanna take the journey before you really start interacting with Stellar World. So the kind of deal, the kind of situation, and everything else they were trying to kind of put before me was not really what I was kind of interested in. Mhmm. Even though the returns would have kind of been the same from a dollar standpoint Mhmm. But the situation of the transaction would have been different.

Shegun Otulana: 25:39

Yeah. So they were trying to roll me into a larger company. Okay.

Todd Sullivan: 25:45

And so you wanted to be the platform company.

Shegun Otulana: 25:48

Hold on. I have this vision of this thing I'm gonna go do.

Todd Sullivan: 25:51

Yes.

Shegun Otulana: 25:52

Why are you talking to me about rolling me into this larger thing? You're not serious because we're clearly not even aligned on them. Like the only reason I'm doing this is because I wanna go do X. If I didn't wanna go do X, if I was just looking for money, I'll just keep doing what I'm doing now. So, and sometimes, you know, if you're not sure of where you can take the business, they may just take that kind of a deal.

Shegun Otulana: 26:16

Sure. Exactly.

Todd Sullivan: 26:17

Sure. Now you you also mentioned the internal team. Right? And it's small. So were was everybody were you letting everybody know what you were trying to do?

Shegun Otulana: 26:27

Just a few people did. Not everybody. Just a few people did. And I go back and forth on because we're kind of a transparent culture. Yep.

Shegun Otulana: 26:35

Everybody knew what was happening in the business. And I think this was the first time something big was happening in the business, and everybody didn't know about it. And I was

Todd Sullivan: 26:43

So hard. So hard. So hard.

Shegun Otulana: 26:45

I was really conflicted about that. Yep. I still think that's the right thing to do because of the nature of those transactions and the kind of anxiety it creates on the team. Yep. And people start worrying about what it means for their future.

Shegun Otulana: 26:59

But you have to have the answers ready. And then after the transaction happens, you really present those answers to people. But I think it's kind of dangerous for everybody in the company to know exactly what's happening because it it it adds to the deal momentum that carries you along Yep. In a deal. And we do deals.

Shegun Otulana: 27:26

I'm on the other side of the table now too a lot of times. Mhmm. And I'm gonna lie to you if I tell you that those on the other side of the table don't know the psychology of deals, which is like they take on a life of their own, and then they don't wanna stop. So now when you also have the expectation of the team on your shoulder and a team doesn't happen, the team actually gets even more anxious and they wonder why didn't that happen? What happened?

Shegun Otulana: 27:52

Blah blah blah. And then it becomes so that's the danger of kind of telling everybody when you're about to do it. There there there is a lot of upside to a open transparent culture, but there's so much downside when it comes to deals when you're when that is also just totally open to the whole organization. So very few people knew about it.

Todd Sullivan: 28:19

And and I think that is the right advice. Right? You can't bring everybody in the under the tent. They start thinking about what that outcome's really gonna mean for them. And then there's this added pressure to make something happen when you might see that it's not the real thing that you you want.

Todd Sullivan: 28:34

And on top of it, so many deals fail. Right? So now that you set some expectation, they build it up in their own heads, and now it doesn't happen. Right? It hurts your culture.

Todd Sullivan: 28:43

So

Shegun Otulana: 28:44

A new car, they wanna go get it. And you have a new neighborhood. They wanna move their family to, and and then that. So and it may happen a year later.

Todd Sullivan: 28:52

Yes. But now

Shegun Otulana: 28:53

they're not all in for that year because they're dealing with this thing that just happened, the deep deep sense of loss. Yep. Which is weird because they haven't really lost anything. Yep.

Todd Sullivan: 29:04

Now for you, you do need to let, like, the the CFO, the person that is handling the financial side, the financial truth to work with the accountants, legal. So your CFO is pretty important.

Shegun Otulana: 29:15

First team needs to know. So your first team is that c level team that you cannot do because they are kinda your first team.

Todd Sullivan: 29:22

Yep.

Shegun Otulana: 29:23

I think your external partners need to know, like, your accountant or stock. They were like, your legal, if it's external, they kinda need to know because it is so it is such a big strategic decision that if you're running the company together with them, can they not know?

Todd Sullivan: 29:41

Right.

Shegun Otulana: 29:42

Yeah.

Todd Sullivan: 29:42

Right. I guess, any other surprises before you get to that the second transaction and how that might those decisions might have been different or how you got prepared for the second one. Any surprises that jumped out at you that you can think of when selling?

Shegun Otulana: 29:59

I think I was I was just new to the whole thing. So I'm not sure if it was really a surprise. I was just new to the whole thing. Are there things I should have brought to the table that I didn't probably, but I don't think there were big things that I didn't address.

Todd Sullivan: 30:13

Did valuation surprise you, or did you have a good sense of what the goal was and that you achieved or exceeded the goal before you started?

Shegun Otulana: 30:22

So valuations were kind of all over the place, but we came above what we thought was the market rate back then. So I think I obviously thought my company was even worth more than what they were offering me. Yep. But I think there was this consolation that I was above where the market was that kind of made it say maybe the baby just looks, you know, everybody thinks their baby is the cutest thing in the world. So maybe that's kind of a little bit of what's happening here.

Shegun Otulana: 30:48

I'm not sure I have a Okay. 100% for answer to that. Every every founder always thinks their company is worth more than they get. Right? Yep.

Shegun Otulana: 30:58

At least if it's a fast growing company. But the way I kind of rationalize that was, hey. I'm above market. So I can see the data, and I'm above market. So that's that's all.

Todd Sullivan: 31:12

I think that second point that you just made that you can see the data. Right? Because you're right. Everybody thinks that their company is special, and they wanna be, you know, exceed the what that market expectation is. But when you look at the data, which is really hard to find, we have some tools that can really help with that.

Todd Sullivan: 31:30

Yeah. Then you you have to have reality set in if you really wanna do this transaction. So I'm I'm wondering on the second one, you were able to grow this business so significantly, and you probably had a good sense of, like, if I get the playbook that I wanna run, this is gonna really grow. Did you roll equity into

Shegun Otulana: 31:49

I I wrote I didn't have earn out or anything because I was like I said, it was a very healthy business, so it was more of you take it or leave it type situation in a sense. So I didn't entertain any or I'm not saying that's the right decision for everybody. I'm just saying in my case, I didn't entertain any, like, earn out or anything else like that. And even in the second transaction, I really still didn't entertain earn out or anything else like that. But in the second transaction, I also now had the private equity guys at the table, so they also drove a large chunk of that process.

Shegun Otulana: 32:25

Right? So Yes. So they were my partners in that second process, and they were pretty involved along with my senior leadership team Sure. Which we had kind of grown out a little bit too by then, you know, with the finance team and the ops team and all that stuff. So every I had more hands at the table kind of helping me.

Shegun Otulana: 32:44

I had more people to prep my team, and we had a much, much larger investment banker also running the transaction that was Yeah. More of a huge national investment bank kinda running the operation. We're a much bigger company just in the space of what was then maybe 12 to 18 months after the first deal, but that was how fast we were growing. So we had grown so fast, everybody decided, hey, let's take some more chips off the table just like a year or so after that first transaction. So it was kind of I still pinch myself sometimes.

Shegun Otulana: 33:17

But but but by then, we were at a size where the process of the deal was a little different. There were lots of big boys and girls at the table, but a second transaction, if if you get what I mean.

Todd Sullivan: 33:31

So Yeah. You know, I wanna I wanna step back a little bit. Right? Because it really feels like you had the this unbelievable perfect story. And I'm wondering if there's

Shegun Otulana: 33:43

I find it unbelievable because I was like, but it wasn't perfect.

Todd Sullivan: 33:47

Well, okay. But it was unmade. It's unbelievable.

Shegun Otulana: 33:50

What what good fortune is this? Like, I I I I was filled with gratitude because, you know, you know, when you want something and then it kind of plays out the way you think it's gonna play out, obviously, there's a lot to be grateful for. So but it wasn't I didn't I don't wanna portray, like, everything was now perfect. It wasn't. You know?

Shegun Otulana: 34:08

So

Todd Sullivan: 34:09

Yeah. But, you know, in terms of the entrepreneurial journey, the way you kind of tie that up on the financial side, and it sounds like your team was very happy with what had happened as well. A lot of people benefit benefited from it, but continue to because of who you are giving back and

Shegun Otulana: 34:23

and contributing. The leadership team stayed on. We had no attrition on the leadership team between that first and second transaction, and the new people that came on the team, to a large extent, really just joined on that journey. And at that time, we continue to have good relationships with the financial partners also. So everybody was kind of on the same page, and it was kind of a positive environment, if you get with them.

Todd Sullivan: 34:51

I I I do because we have so many of these conversations, every day, and you this is absolutely rare air. It's not just to sell for well over $1,000,000,000. Right? It's the amount of time that you did and the growth rate and the profitability engine that you created, the culture, and really the strategy of how you exited in in stages like that to secure your family's future.

Shegun Otulana: 35:11

One of the weaker things, to be honest with you, after that second transaction. Because after the second transaction, the holes began to show in culture. Mhmm. And I don't wanna offend anybody. I have a good relationship with all the people that I've that were in this journey with me.

Shegun Otulana: 35:33

But private equity firms are very different one to the other. Right? And, way the last group deal with executive teams was very different from from the way the first group dealt with executive teams. The way PSG dealt with me was very different from the way, like, Aaron Oak dealt with me. Mhmm.

Shegun Otulana: 35:55

And I think that began to affect the culture a little bit, because those guys, I felt like there was more trust in the relationship Okay. Than these guys where it felt more transactional in the relationship. So that started affecting the kind of executives who will both agree with good hires. Mhmm. Like, do you see what I'm trying to say here?

Shegun Otulana: 36:21

Yep. Yep. The way we started perceiving senior people we're trying to bring on the team started deviating a little bit. The the kind of value we would place on things we spent money on in the company, but PSU was like, if you think it's great for you, go get it done. And these guys were more, like, heavy scrutiny.

Shegun Otulana: 36:43

Yeah. Yeah. But they're changing a little bit. Not because we're bad people. I think the styles were just different, and that's the thing private equity.

Shegun Otulana: 36:49

You see 1, you're going to see 1. And even within 1, you see 1 partner, you're going to see 1 partner. But these were all people that on a personal front, I actually had good relationships with, and I kind of still do with most of them.

Todd Sullivan: 37:00

Mister Shagan, is there looking back as you were building this business, is there something that you would have done sooner or later or not do at all to to add to the success, to add to the value?

Shegun Otulana: 37:15

There are many. And time has passed now, so I'm trying to like I said, the first one was we we should have put more energy into concretizing and really deeply ritualizing the culture before that second transaction, because then it's harder for somebody to really change it or influence it in the way that you don't want it to be influenced. And that's what I tell people a lot today. Like because then you have all the senior people that come to the company, and there has to be a strong very strong sense of this is how we do things here. Otherwise, they're gonna bring their own way of doing things, and then now the team is a little confused.

Shegun Otulana: 38:02

Like, we don't do stuff like that here. Yeah. Yeah. Yeah. Good or bad.

Shegun Otulana: 38:05

Whatever they're doing, good or bad. But the team is like, that's not what we do. That's not how we have conversations with customers, or that's not how we prioritize x, y, and z. You know? So so that was one thing that if I had to change, I would probably I'd put a ton more energy in.

Shegun Otulana: 38:21

It's around really ritualizing and really concretizing the company culture right from the top all the way through the organization. Because we were growing so ridiculously fast, And a lot of these new senior people were coming into the company, and they were bringing their own idea of how we should do things.

Todd Sullivan: 38:46

Sure.

Shegun Otulana: 38:47

And the farther down it was from me, the less aware I am. Like, you see your like, the closer it is to me, the more I can say, no. No. No. We don't do it like that.

Shegun Otulana: 38:58

This is But the farther down it is for me, the less likely that by the time I find out some somebody is like, what's going on here? Why are we doing x y z or treating this customer this way? Or do you like do do you see what I'm saying?

Todd Sullivan: 39:11

So I do. I think it's it's great advice. I think it's hard to see when you're in the middle of it. Right? So easier in hindsight to identify something like that.

Todd Sullivan: 39:21

Okay. So I really appreciate all all the time and advice you're giving. What I like I said at the beginning, what I'm really respecting is not only do we get to see this amazing entrepreneurial journey, financial success, a company that continues to do well, which is a great legacy. Right? But now you're taking your not only your financial resources, but your most precious resource, your time, and giving back to other entrepreneurs in a variety of ways.

Todd Sullivan: 39:47

And I'd love to hear, you know, a little bit about how you're doing that. And I know you're gonna be, you know, working with us as we bring entrepreneurs that wanna go through this journey with somebody as experienced as you, is gonna add so much value. It's gonna save a lot of time, and I think we're gonna create greater outcomes together. So can you give me a little bit of, like, what how are you spending your time? How you're adding to the kind of entrepreneurial ecosystem with your time and resources today.

Todd Sullivan: 40:13

Maybe you can, you know, tell us a little bit about it.

Shegun Otulana: 40:15

One of the things I really enjoy in life for many reasons is entrepreneurship and the entrepreneurial journey. If you say what are some of the things that really drive the decisions we make, my wife and I, our family, me personally, it would be extending the reach of entrepreneurship and the the impact it can have on people's lives, creating and building companies, learning and education, the things that changed my life. You know? Those are the things that I'm always passionate about. So those are the things I wanna spend my time doing, honestly, my time building companies, creating companies, working with founders, helping them be successful.

Shegun Otulana: 40:56

So a lot of my time in addition to running businesses goes to that. And some some ways it's shown up is we have a community for early stage founders that you can be part of, and you can ask me questions in the DM. It's on Slack. It's a way for me to scale being able to help earlier stage founders. It became pretty clear to me that one on one trying to help early stage founders is not gonna scale.

Shegun Otulana: 41:22

Mhmm. The funny thing is the earlier you are in the journey, the the more you actually know about your business and how it works and your industry. Mhmm. So the time it takes for me to kinda dig all that out and understand all that and everything, I can scale it across all the people people that kinda reach out and want to add information and talk to me and everything else. So so that one, it's free.

Shegun Otulana: 41:43

You can just talk and talk to each other.

Todd Sullivan: 41:46

It's great.

Shegun Otulana: 41:47

And then as you move further in your journey when you have a more solid business, that's where the one on one coaching kind of comes in. Because in a very short conversation, I can get so much information out of you about what makes your business work, what your market is like. You just know so much more about your business and your market, and it can be much more helpful in a very compressed time through founders. So I do some of that. We have a venture studio here, which is kind of also early stage where we deal with companies out of the venture studio, and then we'll partner with others to go turn them into great start ups.

Shegun Otulana: 42:20

And, you know, one thing that I just say gives me a lot of energy is to see lives get changed either because you're hiring people and building the economy or, you know, I have a story I tell. It's like the piggy bank story. It's when things were very hard for us in the early early days of the entrepreneurial journey. I came home one day. My wife actually told me this story, so I hope I'm doing it justice.

Shegun Otulana: 42:47

I I came home one day, and it was one of those hard days for an entrepreneur. And she said, so how how would I know when to tell you to stop in a sense? Like, go get a job. This is enough. You feel so far enough.

Todd Sullivan: 43:01

Yeah. And

Shegun Otulana: 43:02

we had a piggy bank that was given to us by the same bank that gave us a loan. I was like, yeah. You give me a loan. How am I gonna save anything? You know?

Shegun Otulana: 43:10

So, you know, like, those piggy banks that banks give you kind of a Sure. A lot of money.

Todd Sullivan: 43:14

Sure.

Shegun Otulana: 43:14

And still sitting on our fridge in our old townhouse that we're living in. And she said I said, well, the day I come home and I say and you say, what's for dinner? And I say, hey. We need to take all the money out of the piggy bank because we'll put a dollar here, $5 there, like, we were doing that. I said the data that happens, that's when you know, okay.

Shegun Otulana: 43:35

I need to stop. Okay. I can't we don't have we have 0. I'm pretty much telling that when we go down to 0 and we have to go to the piggy bank, that's that's where we need to stop. I don't know if that's the the right advice for everybody.

Shegun Otulana: 43:48

And after life changed for us, you know, we took that piggy bank and we give it to our oldest just as a gesture. Like, we took all the money we have put in it, and we give it to her. And we told ourselves this would be a symbol of the story we're gonna keep telling her about perseverance and greed and hard work and what that means in life and how this family got to where it is today. And, you know, I wanna see that piggy bank story happen for so many other people, and that's part of what drives me in my own entrepreneurial journey. I just believe entrepreneurship has the power to change lives in a way that few things do.

Shegun Otulana: 44:34

Yeah. Entrepreneurship and high quality learning and education. Those two things just at least in this physical world and life that we're in, it just has so much power to change people's lives. So and I love doing it, and it's part of what drives me every day. So

Todd Sullivan: 44:53

Well, I appreciate you helping us. I wanna, you know, do one shout out to the wives because, you know, I've heard your wife was the one that said she knew, you know, what was in you and really pushed you to go do this while you were consulting, having your work, right, your your jobs, the one to get you going. And and my wife, after I sold my last company, she said to me, she had a couple of rules. 1, you gotta go show the kids that you work hard. And 2, that she didn't know much about any of the companies that had started.

Todd Sullivan: 45:22

But she knew at the dinner table, I would talk about the entrepreneurs that I thought I was able to help, and that was the thing that lit me up. So she's like, so you gotta go do that. Right? So it's it's amazing the the feeling. Somebody called it what was it?

Todd Sullivan: 45:36

Like, emotional capital that you create helping other people. Yes. And so I think we we

Shegun Otulana: 45:42

feel get the chance to be part of their success.

Todd Sullivan: 45:45

Like, it's unbelievable.

Shegun Otulana: 45:46

It's a win win for everybody. When you see a great entrepreneur, they've been part of their story. And in some cases, when you are also part of it from a financial standpoint Yep. It's a it's a win win win for everybody. So

Todd Sullivan: 45:58

I will tell you, Shagan, to be at the end, you know, go through that m and a journey with them. You're gonna you take a lot of punches for them because it's such an emotional roller coaster. But when you see it's not just the end of that that that check. Right? But then that you've prepared them for what life is after that, not just their job, but who they are and what they wanna do afterwards, whether it's buy a business, put your kids through college, buy a second home.

Todd Sullivan: 46:26

Right? When they understand who they're gonna be and what they

Shegun Otulana: 46:28

life a life with a lot of options.

Todd Sullivan: 46:30

Yes. Yes. Options for

Shegun Otulana: 46:32

several fun options to help other people. You know?

Todd Sullivan: 46:35

100%. That this was awesome. Really. Thank you. I it is a real privilege to get to talk to you and work with you.

Todd Sullivan: 46:44

So thank you. Where can people find you? Where's the best I know you you talked about Slack 1 on 1 Venture Studio.

Shegun Otulana: 46:50

I'm a private person that's finally coming out of the show, so I'm kind of everywhere now. Thanks to the team kind of pushing me to say, hey, you know, Get out there.

Todd Sullivan: 47:00

And You're a natural. You're a natural. It's great.

Shegun Otulana: 47:03

So I'm on Twitter or what do we call it now? X?

Todd Sullivan: 47:06

X. Yeah.

Shegun Otulana: 47:07

I'm on LinkedIn. You got your website? Pretty much everywhere. I got my website, shagunotolano.com, and then I'm on LinkedIn as shagunot, and I'm on Twitter as s o tolano. And I'm trying to build my followership across all those channels.

Shegun Otulana: 47:22

So if people wanna follow me, give me a follow. You can inspire me to actually keep coming out of my shell.

Todd Sullivan: 47:28

That's great. Shagan, thank you. Thank you, man. I really appreciate it.

Shegun Otulana: 47:31

Thanks, Todd. I appreciate it.

Todd Sullivan: 47:37

Well, listeners, that's all the m and a wisdom we have for you today on the Wise Exit. But the conversation doesn't stop here. Head over to our website at exitwise.com and sign up for our weekly newsletter to stay informed on upcoming ExitWise events, newsworthy headlines, and m and a advice to support your journey towards exit. And remember, the Wise Exit Podcast is intended for entertainment purposes purposes only. We appreciate you listening and we'll be back soon.