Entrepreneur Wes Sierk was elated when he received an unsolicited offer to buy his company.
1: “Given that the potential buyer proactively reached out to him, Wes determined he didn’t need to hire an investment banker, and that he could handle it all himself,” write Dan Sullivan and Benjamin Hardy in Who Not How: The Formula to Achieve Bigger Goals Through Accelerating Teamwork.
The problem with this approach? Wes had never sold a company before. “I was doing something I knew nothing about,” he later recalled.
The other problem? “While drowning himself in all the minutiae of selling the company, he neglected his role as CEO,” write Dan and Ben. “This led to an extreme decline in productivity among his entire team.”
Six months into the negotiation, the potential buyer walked away from the deal. Wes had lost hundreds of thousands of dollars in attorney fees and productivity from his team.
“The transaction seemed so easy and straightforward. Someone wanted what he had,” note Dan and Ben. “Yet in the end, Wes didn’t get what he wanted.”
2: What happened here?
Like many of us, when faced with an opportunity or challenge, Wes asked: “How can I do this?” Dan and Ben call this tendency focusing on “How” instead of “Who.”
“Wes didn’t want to pay someone qualified to help him,” the authors write. “He assumed he could do it himself, and even that he should do it himself.”
The bottom line? Focusing on “How” not “Who” often causes problems.
3: After the failed transaction, Wes went to work fixing his business. One year later, things were running smoothly again. At that point, he hired an investment banker to help him sell his company. This time, he asked “Who,” not “How.” As in “Who can help me achieve my goal of selling my company?”
During the first negotiation, Wes attempted to sell his company for eight times Operating Income.
The second time around? The investment banker generated five offers from interested buyers in less than six months. The final purchase price was ten times Operating Income.
“The investment banker’s fee was approximately $500,000 to structure and secure the deal,” write Dan and Ben. “But that fee pales in comparison to the time Wes saved by not doing it himself. Moreover, the investment banker sold the company for considerably more, millions more, than Wes had ignorantly tried to negotiate himself.”
The moral of our story? When an opportunity or challenge arises, we are wise to focus on “Who” not “How.”
“Not only did Wes save time,” observe Dan and Ben, “but he made tons of extra money by investing in a Who rather than trying to do all the Hows himself.”
Reflection: When faced with a problem or challenge, do I typically ask “How” or “Who”?
Action: Discuss with a colleague or with my team.