No Flipping Allowed
How to ensure that your legacy will live on when you sell your business.
We sat down with Greg Schneider, CEO of one of our portfolio companies, to learn why he chose to sell his company to Eli Global. He told us that the opportunity to be an Eli Global subsidiary seemed almost too good to be true. Do you want to know how the acquisition process works and what really goes on during negotiations? Find out what Greg has to say after being part of the Eli Global family for a year.
Tell us about yourself, and how you are connected with Eli Global.
I’m Greg Schneider, the CEO of 3BL Media. 3BL Media is an Eli Global portfolio company that distributes news about corporate social responsibility and sustainability. In addition to being CEO of 3BL Media, I oversee a portfolio called 3BL Holdings, which seeks to acquire businesses that are similar and that distribute news about corporate responsibility and/or have CSR and sustainability practices.
We at 3BL Media found the M&A process with Eli Global to be very straightforward. We were initially contacted by someone at Eli Global after being featured in the Inc. 5000. It was not uncommon in the company’s past to be contacted by companies looking to provide capital or make acquisitions, but as a growing company, not yet ready to sell, we would usually pass on those discussions. It was too soon in our history, as we were growing very rapidly and adding significantly more value annually.
What was different about Eli Global?
Eli Global committed to letting me run my business as before and run it autonomously. In a lot of ways, it seemed too good to be true. Here we are over a year later, and all the promises that Eli Global made, they’ve kept. I’ve never felt more like an entrepreneur than I do now. We have been able to run the business, grow the business, and fund additional acquisitions and opportunities that we would not have been able to do before. It has worked out so well not only for our company, but also our customers.
The flexibility and structure of how we put together the deal was also unique to Eli Global. For example, we knew we wanted to continue to run and to grow the business, so that over time, the company’s value would increase significantly. I wanted the management team and existing staff to continue to be an integral part of that growth and not sell it just to watch other people change the plan. The structure we negotiated with Eli Global really felt like a win-win situation. They provided long-term contracts which made us feel secure in our continued employment—and meant that the existing team could continue to build the company.
Tell us more about the negotiation process.
It was clear from the beginning the Eli Global was a financial buyer and was not seeking to bring industry expertise to our company. This resonated with us, since we were not seeking a strategic partner. Instead, we wanted to be able to continue to grow the business with the long-term plan we had previously set.
Eli Global’s valuation of 3BL, and the discussion we had about it was fair and straightforward. Like most businesses and entrepreneurs, we had an aggressive target value and we presented that up front. The response from the Eli team made us realize that they could help us reach that goal faster than if we remained independent. We felt very confident that we would soon achieve our target. At the time we were not in discussion with other bidders, but we had been previously, and other potential buyers did not seem to fit with our culture or give us the confidence we would continue to be able to drive the business.
What were your thoughts about the potential acquisition?
Early in the discussions, I asked to fly down to the headquarters in Durham, North Carolina and meet with some of the principals of Eli Global. They were pleased to have two of my partners and myself come down to meet face-to-face. We met with the leaders of the business and expressed a degree of skepticism about the autonomy they claimed we would have running the company post-sale. By the time we left, we felt that Eli was an ideal buyer and this was and that ‘This is the opportunity of a lifetime.’
Much like the structure of the negotiation, the components of the letter of intent were also very flexible. They were cash down, a note, and an earnout/retained ownership that could be almost as much or as little as we chose. We knew that we were going to continue to run the company long-term, so we maintained significant upside. We received no resistance to that strategy.
Tell us about the due diligence process.
The communication between the Eli Global M&A team and my team was fluid throughout the process. The due diligence process itself was intensive, especially for a small business as together, we analyzed and explored we had done over the past eight years since we started the company. Ultimately, I found the process to be informative and a valuable exercise for both sides.
What has been your experience since being purchased by Eli Global?
It’s been about one year since we sold 3BL media to Eli Global and the experience has been ‘as advertised’. There has been as little involvement as promised, allowing the company to function autonomously. I’ve been motivated to make decisions on how to grow, lead, spend, and invest in this business, much like I would have if I had never sold the business at all.
In some ways I have even more freedom to focus on growth, since I no longer have to spend time evaluating potential bidders for the company. Now I can look towards a five, ten, fifteen, and twenty-year plan without hesitation, which promotes different thinking and decision making with an exclusive focus on the long game.
Joining the Eli Global team has also provided 3BL Media with the resources to do additional acquisitions. In just this past year, we’ve made four acquisitions. Before the Eli Global partnership, we had done half a dozen acquisitions, but had to strategically space them out because capital was tight and almost always included personal guarantees and bank loans. The sale to Eli Global was a great way to make acquisitions a bigger part of our growth strategy.
Who do you think should sell to Eli Global?
Eli Global is the perfect buyer for an entrepreneur who wants some equity for all the time and investment they’ve put into their company, but wants to continue to run their business. There are many promises made by venture capitalists and private equity, but Eli Global truly operates like a family office. The opportunity to continue to feel empowered while being financially backed has been liberating. It has been an amazing source of growth already and will continue to be in the future.
Tell us how your customers benefited from your sale to Eli Global.
We have been able to invest continuously in technology at a faster pace than we would have done on our own. Better technology allows us to provide our customers with better services.
How has Eli Global benefited your team?
Eli Global has many leadership development opportunities that are available to members of the team at virtually all levels. This is not something our team had given much thought to throughout the negotiation process, but is a core function of Eli Global’s model: to be constantly growing and developing great leaders. In fact, when I spoke with the CEO of Eli Global, I asked what he wanted from 3BL Media aside from growth and profitability. His answer? Continued leadership development. He told me that if he were to define Eli Global, he would label it as a leadership development company. This really resonated with my partners and me.