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In April of this year, I sold TinyPilot, the bootstrapped hardware company I founded and ran for four years.

I wrote a post in May that told the story of the sale, but I’d like to share more about the practical lessons I learned from the experience.

In this post, I’m sharing what went well, what I want to improve in the future, and what surprised me about selling my business.

Table of contents

• Details of the sale
• What I’m glad I did
  • Invested heavily in documentation
  • Created a transition checklist
  • Worked with a broker I trusted
  • Avoided seller financing
  • Assumed I’d get nothing after closing
  • Recognized the limits of my influence on the business post-close
  • Revised the broker agreement so that the broker gets paid when I get paid
  • Discussed contentious issues without lawyers first
  • Used dedicated accounts for the business
• What I’ll do differently in the future
  • Offer incentives for a cash buyer
  • Discuss key contract terms earlier in the process
  • Begin working with a lawyer earlier
  • Create an unofficial “small stuff agreement” with the buyer
  • Announce the sale to my team later
  • Don’t catastrophize every setback
  • Reveal vendors earlier, but put tighter restrictions in the LOI
  • Eliminate inventory from the broker’s commission
  • Assume from the start that nothing written is private
  • Define what happens to money flows around the time of closing
  • In the transition agreement, value calendar days more than work hours
  • Disconnect non-transferable accounts from business email before closing
  • Take even fewer dependencies on Google
• What surprised me
  • Due diligence is unbounded, high-stress work
  • As you prepare to sell, everything costs 4x as much
  • You don’t strictly need a broker to sell
  • If the non-compete is too restrictive, you’re screwed
  • If there’s no cap on liability, you’re screwed
  • Buyers have incentive to keep the seller happy
• Resources that helped me prepare

Details of the sale

• Sale price: $598,000 (2.4x annual earnings)
• Broker commission: $88,900
• Legal fees: $18,297
• My profit from the sale: $490,803
• Payment terms: Full cash payment at closing (no earnout, no seller financing)
• Seller obligations: 30 days of free consulting (max of 80 hours total)
• Lifetime profit from business (including final sale): $920k over four years

What I’m glad I did

Invested heavily in documentation

Before I started my first business six years ago, I read the book Built to Sell by John Warrilow. It encourages founders to build businesses that run smoothly without the founder actively managing day-to-day activities. An effective company should have a set of well-defined processes and a team that knows how to execute them.

tl;dr: Follow @xeiaso.net on Bluesky

Jag har börjat titta på The Pirate Bay på SVT Play den här veckan, och den är asbra! Serien handlar om hur, vem, och när The Pirate Bay var utvecklades i Sverige. Den har en riktig “Hackers” och “Halt and Catch Fire” vibe. Desvärre finns det bara två avsnitt förtfarande, och jag slukade båda i ett nafs.

Jag har börjat titta på The Pirate Bay på SVT Play den här veckan, och den är asbra! Serien handlar om hur, vem, och när The Pirate Bay var utvecklades i Sverige. Den har en riktig “Hackers” och “Halt and Catch Fire” vibe. Desvärre finns det bara två avsnitt förtfarande, och jag slukade båda i ett nafs.