Why it’s good to sell your company | Janis Bergs | TEDxRiga


Translator: Raimonds Jaks
Reviewer: Denise RQ Hello! Today I am going to talk to you about how does it feel to create
and sell a company. I have a question for you: how many of you are working
for any business organization? There are a couple of people
here in this room. My message to you is
that there is 53% probability that the company you are working for
will be sold within the next five years. There will be new owners,
everything will be new. So, you better think about it. I have even a more extreme
personal experience. 100 percent of the companies
I have been working for all my life have been sold, at least once. And some of them even several times. What do people – you – usually think when you hear some company is sold? Your friend sold a company
or you just read it in a newspaper. At least I am thinking
that somebody made big money. So, it’s worth talking with him. Maybe we can make some deal or something. Other more skeptical people will think there will be a big mess: reorganization, layoffs,
all kind of shit will come. And some very, very critically thinking
and very pessimistic persons will say he just gave up, he doesn’t have any strength to go on; he just gave up. Then, on the bright side, these are investments when companies are sold, especially to foreigners. Money are coming in, new products are coming in. Somebody might think,
“Oh, this is a nice brand name!” For example, my daughter would love if Victoria’s Secret would buy
some stores and come to Latvia. But we know Swedbank is in Latvia and Narvesen is in Latvia; different kinds of well known brands that very often just buy somebody. All IT industry in Latvia: Tieto, Exygen have bought some local companies
at some moment in time. And this, of course, creates
some kind of opportunities for people, because when there is a change,
something changes, somebody comes in, somebody buys something;
there are a lot of opportunities. Now, why don’t people talk
about these things? I think there are a couple
of reasons why not. Number one is that it happens
quite not very often. Let’s say, a company is sold
maybe once in five years, as I said in the beginning. Secondly, there are
a lot of confidentiality clauses. It’s really secretive. Nobody wants to tell you
how much money they got. It is something similar maybe to sex life; a little bit intimate, So, it’s lcloudy. But I will tell you
at least some things today. First of all,
I should [start with] a disclaimer, because my limited experience
is around technology industry. Technology, so, how to make value
out of nothing, out of human brains. Not land, not agriculture, or– The second limitation is that I have been
working all the time in the Baltics. I don’t know how business
is done in Vietnam or China. Maybe some day… And my experience on creating
and selling companies is of average size, like 100 to 500 employees. So, I don’t know what happens
when these billions are– don’t know, really. If I am looking on a timeline – this is my timeline here – it all started in 1991. Now is 2014. And these white boxes are companies. They were sold at some moment IN time
for many millions of euros. The most fertile time in my career
was between 1999 and 2005, when I was working
for a company called MicroLink, which was a kind of investment bank
or something like that. They had a lot of money from investors and the idea was to buy a lot of companies and consolidate them across the Baltics. So, therefore, you see that these big white boxes
are these large companies. Arrows mean that they are sold. Some transaction took place,
shareholders changed. And then these small boxes, as you see, are like a little buying and selling. Because in Microlink, we bought
like 20 small size companies. Currently, in 2014, my main occupation
is a company called FMS. We also did some little
buying/selling companies. And a number of other businesses,
approximately ten, where I am involved. An unique thing is also,
if you see these red arrows – these are passes, when I was involved
in selling or [buying] the company and sold myself together with a company
as this little bird in a golden cage. Part of the deal with the new owners
was that I come and work for them. As you see, it all started
somewhere in the mid-90s in a company called Fortech. Nobody remembers Fortech anymore. Curator: I do. Janis Bergs: But 20 years ago it was… Yeah, you do. You worked for Fortech. Curator: Yes, yes. JB: Your worked for for me, Haralds, yes. (Laughter) Curator: Now I work for my own… JB: But that was a long, long time ago. And so you are playing
like little kids on a playground, because doing business
is very much like playing with toys. And at some moment, you are stuck. You reach some limitations, you want to play with bigger toys,
nicer toys in a bigger sandbox. And you go there,
and there are other kids. And they are very angry. They won’t let you play. They say, “It is our playground.” Don’t go there! Because, it is an illusion, if somebody
thinks that the world is so open, and you can go everywhere
with your business. There is a lot of competition, I mean. You must fight for your place
under the sun. You must protect your sandbox. If you want to move to a new sandbox,
do something bigger, something more, then you start to walk around
and do some sniffing, finding some partners. Let’s say some partners. And that happened in 1999 with Fortech that somehow, I sniffed these Estonians. Microlink was an Estonian company. It is very rare for a Latvian
to be the CEO of an Estonian company, which is, of course,
is the subject of another story. And it happened five years later, but Microlink bought Fortech, and somehow it was like walking around and sniffing and finding
the right partner, and then we did that deal, and Fortech became a part of Microlink, and then, all that big buying and selling
happened after six years or so. How do people feel, how I feel,
when a company is sold? It is pretty much a moment similar to standing now
here on this stage. A little bit– a little bit like that. Nice speeches, balloons, new logos, employees sitting in the room. Of course, they are much more
interested than you right now, because it somehow,
affects their well-being for the future. And you give the speech,
the deal is done. There are new owners,
there will be a new strategy, bigger toys, nice sandboxes, and so on. And deep down in your heart, your feeling is that “Oh, Jesus!
Oh, shit! What have I done?” We worked all these years, and now this crocodile came
and ate that… But you cannot sell your business
if you don’t have this feeling. You must have it. Because if you don’t like it,
and you don’t love it, nobody will buy it. So, it’s part of the game. What are my impressions?
What do I remember that happens after? The company is sold,
you move in your golden cage. You have new owners, new bosses. The first feeling is full inbox with e-mails
from people you don’t know. They demand different things,
they demand reports. They send you something you don’t know
if you should answer or not. Who is he? Especially, if the company
is bigger than yours. Second is a lot of meetings: an integration plan, strategy, strategic planning. So, you are quite bored to sit in all these meetings,
but it is part of the game, as well. It’s part of how it should be done. The third thing, especially
with the Microlink background, is a lot of nightclub visits
with your colleagues, with your new colleagues. You learn what happens in Tallinn, you learn what happens in Riga, you learn what happens in Vilnius. My good colleague, Allan Martinson,
who was the CEO of MicroLink, even had a theory
that people are expanding, businessmen are expanding, because they want to have a justification
to go to these nightclubs. So, kind of… One big justification. But also, the truth is that in technology,
businesses especially, if you don’t integrate well, then what is left is only
the office and furniture. And all the people
just stand up and walk away. Therefore, it is very, very important to turn your attention
to all these people; it matters. If you want to change a job, like Toms, all the time searching for your soul,
searching for yourself, one good way is just to sell your company. Then it’s like pressing the reset button. New rules of the game. And you just go on with a new environment. This is what I like when doing this. There are some stereotypes. People are thinking that these deals, transactions, sales of companies are done by serious people
in a very formal environment in black suits, in a skyscraper, and everybody is so smart
like in some TV series. I have never closed
any deal in a black suit. And my current company I am working for,
for the last eight years — FMS, the deal was imagined or thought of in the sauna, in a quite funny mood. I was sitting with my co-worker Uldis
in the sauna, and he said, “Jānis, we all know
that MicroLink will be sold soon.” I was the CEO of MicroLink at that time. He said, “Let’s try to buy out that FMS.” It was a smaller company,
30 people at that time. Because the new owners
won’t be interested in product business. They will have other interests. I was, as I said, in a funny mood. I said, “OK, we will try it.
I don’t promise you, but we will try.” So, of course, until we reached that deal one and a half years passed. We did a lot of preparations. We spun off.
We made it as a daughter company. We did some negotiations and so on. We did a lot of things. And we made a proposal to the shareholders
that we want to buy it out. We thought that the price
we are offering is very generous. The right multiples, the accountants
did the calculations and so on. We ended up buying that company
seven times more expensively. Seven times. Really for a high price. And I learned from this that actually the price is not established
by accountants. The price is established
by what one part is ready to pay, and what the other part
is ready to accept. And the right price level is achieved when somebody is making this bridge
and starts to scream. And that scream means
that there is the right price. It cannot be higher. So, by some level of pain. So what? What are the learnings
or the summary of my little speech? Today, startups
are something like a gold rush. Now there is this thinking
that we will make a technology company. Within one year,
we will sell it for one billion. Everybody will be rich. It is so easy. It comes quickly and so on. For me, everything happens
in seven to eight year [cycles]. Nothing happens faster. I don’t know, maybe I am stupid. Maybe I don’t know how to do things. But generally, when you start something, you must be aware of the fact that it might take
seven years, eight years. It will be like running long distances. It will be painful. And the only thing you can’t skip because you are maybe the owner or you are feeling responsible
for the business. You cannot… you must go on. You cannot skip this. The second thing that I learned is that there are no three wise men
in the business. Only you are the wise man. If you want to do a deal,
you must talk with the boss. You must find some personal
connection with him. And only later, you can invite wise people
who are built by ours or by commissions to help you finalize it. And the third thing is that you saw on that timeline
these white boxes, and they were all really
multi-million deals. Some of them were
[worth] tens of millions. If I were so smart
to take all of that and eat it, I would a very rich guy. But, unfortunately, sometimes
I was just a manager. Sometimes I was getting some bonuses
or commissions, something. And also the truth is
that I would never have done it if I weren’t together with so many
wonderful people and wonderful colleagues. And they helped me. And only because we all shared. So, you cannot be successful
in a business, if you are very greedy. Don’t be greedy. You will move
along a much, much longer way. I believe that companies
are very similar to living organisms, because they are made of people, mainly, especially technology companies. And one way you can pass your DNA
is to create a company, sell it; it will live on together with your DNA. Thank you. (Applause)

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One thought on “Why it’s good to sell your company | Janis Bergs | TEDxRiga

  1. "how to make money out ot nothing… human brains." 🙂  If you ask people then they will tell you that Brain is everything! 🙂

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