Dealmaking 101: How Much Money I Walked Away With After I Sold My Business For $25 Million

When an entrepreneur sells their company (which is called “an exit”) there’s one thing that everyone wants to know but is afraid to ask: 

“How much money did they walk away with?” 

I know this because I have been an entrepreneur for over 20 years, and I long held a dream of a life-changing exit of my very own. I have pored over the details of every single deal involving someone I know or a company in our space. My business partner and I once spent weeks speculating about how much a competitor got when he sold his company for a whopping $175 million. 

When it came to these deals, I was an outsider looking in, but the glass was almost always opaque. Because when private startup companies are acquired, shareholder information is usually not public, so there is no way to find out where the money went. 

Hence the question, “How much did so-and-so really get?”

Now, this is not something that is usually discussed openly, which further fuels furtive speculation. There are many reasons for this. Many of us were brought up to believe that talking about money is rude, even vulgar. Some entrepreneurs like to perpetuate the mystery, either because they want people to think they made more than they actually did (for the prestige) or less than they actually did (to discourage long-lost friends and relatives asking for loans).

I can’t judge the motives of other “exited” entrepreneurs, but I do believe that the idea that we should not discuss money is pure BS. Because if people do not understand the financial mechanics of these deals, they will be at a big disadvantage if they ever get an opportunity to sell their company. 

My mission is to demystify entrepreneurship for everyone. And that means putting my money where my mouth is, and telling you how much I made when I sold my company AND where the rest of the money went. 

Let’s begin. 

Boardroom Insiders sold to Euromoney LLC for $25 million in cash, which is public information. 

So where did all that money go?

Shareholders

As you would expect, most of it went to our shareholders. As the majority shareholder I grossed just under $13 million, The other shareholders received a total of $9.5 million. These were people who either gave me some seed money when I first got started, or traded their labor for equity early on. 

So the shareholders grossed a total of $22.5 million. So where did the other $2.5 million go?

Professional Fees

A lot of it went to deal fees paid to our Mergers & Acquisition (M&A) firm, our lawyers and our accountants, who all worked together tirelessly for months to get our deal over the finish line.

• Our M&A firm was paid $1,035,000.

• Our lawyers were paid $200,000.

• Our accountants were paid $51,000.

These are the types of deal fees you can expect on a transaction of this size, and believe me, these people earn their money and you don’t want to do a deal without them. 

Phantom Equity Plan for Employees

We had also put in place a phantom equity plan for our employees, which said that if we were to sell the company, all vested employees would receive part of the net proceeds. At the time of the transaction, we had 13 vested employees to whom we distributed almost $800,000. Individual amounts were based on seniority and their contribution to the business.

Taxes

Then there are the taxes. Because the deal closed in January 2022 and the 2022 tax year deadline for Californians was extended to October 2023 due to natural disasters in our state, I was able to spread my taxes on this transaction out over nearly two years. This was a stroke of luck, because it gave me a lot of time to do all sorts of things (all legal, of course) to both minimize my tax liability while earning interest on the money I had set aside for taxes between January 2022 and October 2023. Remember, the interest rates at the time were higher than they had been in many years. 

When all was said and done I paid about $3.8 million in federal and state taxes, which is about 30% of the roughly $13 million that I received from the sale. I had expected to pay quite a bit more, so I was pretty happy with that outcome.

So after all the transaction fees and state and federal taxes, I personally walked away with around $9 million on the $25 million sale of a company I founded back in 2008 and then ran for 14 years.

Planning for Exiting Your Business

While you dream of your own eventual exit, there are things you can do now to begin to understand how the numbers work.

For example, my business partner and I kept a spreadsheet that we would look at from time to time in the two years leading up to our deal. We could plug in any valuation (also known as the sale price) and quickly calculate an estimate of what each of us would walk away with, once all taxes and fees were paid. This spreadsheet was an essential tool because it helped us understand what we really needed to get in order to comfortably retire, if that’s what we wanted to do. Because the last thing you want to do is sell your company and then realize you did not get enough money - and then have to go to work for someone else. 

Every entrepreneur who dreams of an exit someday should maintain a spreadsheet like this so they are clear on exactly what they need out of a deal. And those of us who have been lucky enough to exit should be generous with our knowledge and help those who dream of achieving what we have accomplished. 

As exited entrepreneurs, we should talk about money more, even when it makes us uncomfortable.