How I Sold My Business: My $20 Million Sale to Intuit
When a company like Intuit comes knocking, you answer... eventually. The first in Divestopedia's How I Sold My Business series, with Nellie Akalp.
Like so many successful entrepreneurs, Nellie Akalp has an impressive memory. Ask her to talk about what kickstarted the sale of her first business—a deal that was finalized more than 15 years ago—and she remembers every tiny detail, like it happened last week.
"You have five guys in suits waiting for you in the conference room.'"
"When I came into the office that day, I was wearing a pink workout jumpsuit and I had cornrows in my hair," Akalp recalls. "It was March 2005. I had three kids and I was still breastfeeding my youngest. My assistant looks at me and says: 'You have five guys in suits waiting for you in the conference room.' "
The guys in suits worked for Intuit Inc., the U.S. software giant best known for TurboTax and QuickBooks. Akalp and her husband, Phil Akalp, were the co-founders of MyCorporation.com, a California start-up that specialized in helping small businesses legally incorporate their new companies.
Intuit, it turned out, was very interested in acquiring the couple's online creation, which by then was bringing in more than $1 million in gross sales per month.
"My response to them was: 'My company is not for sale,' " Akalp says. As the meeting wrapped up, she specifically remembers one of the executives telling her she shouldn’t be so quick to dismiss their pitch because such lucrative opportunities don’t come around every day. "Lightning doesn't strike twice," he told her.
"This is Intuit and they want to buy you. Let's see what they have to say."
Akalp's financial advisor told her pretty much the same thing—though much more bluntly. "My advisor said: 'You're an idiot, you're crazy!' " she says, laughing at the memory. " 'This is Intuit and they want to buy you. Let's see what they have to say.' "
In the end, the Akalps did agree to listen, eventually selling the company for US$20-million. Announced in November 2005, the deal meant financial freedom for their young family (the couple now has four children) and Akalp remains forever grateful. Still, if she could turn back the clock, she would handle a few things differently.
"For us, it was the biggest blessing of our lives," she says now, from her home in southern California. "A lot of great things came about from that sale. But when you go through all the steps, there is both a lot of celebration and a lot of sadness. It's like having a baby, raising him, and then all of a sudden you're giving him away."
The Akalps hatched their inaugural business when they were still in law school (he at Pepperdine, she at the University of La Verne) and Nellie was juggling a part-time job at a family law firm. At the time, they were sharing a low-income apartment in Agoura Hills, wondering how they were going to pay off their mounting student loans after graduation. "I came home one day and Phil said: 'Nellie, I think I've got our big idea. We should start a business online.' I had no clue about the Internet because I was not a techie girl, but it was 1997 and the new hot thing to do was to start an Internet company."
So they paid $100 for a domain name and posted some basic details about their services: for $99 (plus local state fees), the Akalps would fill out and file all the necessary paperwork to incorporate a person’s company. Back then, most aspiring business owners assumed they needed to pay a lawyer thousands of dollars to incorporate. With the click of a mouse, the Akalps had created a cheaper, easier alternative.
It was crazy. We were flying by the seat of our pants, thinking as we went.
"I'm not even kidding you: we put up a one-page website and the next thing you know we're getting inundated with phone calls," Akalp says. "It was crazy. We were flying by the seat of our pants, thinking as we went. When you look back, entrepreneurship was just in us."
They worked countless late nights inside that apartment, their living room floor lined with rows of manilla envelopes destined for mailboxes across the country. Their services were in such demand that customers from all over America were literally leaving orders—and credit card numbers—on their answering machine.
"Once we got the hang of how to incorporate, we added LLCs," Akalp says. "Then we added rush services. Then trademark services. Then people started saying: 'Hey, we need a registered agent.' 'We need to know how to close our corporation.' 'We need to know how to file an amendment.' Slowly but surely, we started adding all those services."
By the time Inuit came calling, their business boasted more than two dozen employees—and a new office that was much more functional than their old apartment.
Initially, Inuit was eyeing two companies: the Akalps’ and a competitor. But with no debt and no outside investors, the Akalps' company was the obvious frontrunner. Intuit made a formal offer just a few weeks after that first meeting. “We went back and forth for a while over the price,” Akalp says. “They were at X amount, we were at X amount, but we were only off a little bit. I wasn’t going to budge and they weren’t going to budge, so we met in the middle.”
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With a tentative deal secured, Intuit dove into the due diligence phase, asking dozens of detailed questions about the operation. "They wanted a record of every employee and independent contractor we ever hired from Day 1,” Akalp says. “They also asked for every lawsuit filed against us. Knock on wood, we didn't have anything like that.”
At one point, Intuit’s lawyers even asked if the Akalps had ever made any promises to anyone—any off-the-record guarantees that wouldn’t show up in company files. They had not.
The original plan was for the Akalps to stay on in management positions, but as the sale inched closer, Phil—an independent personality who has always been his own boss—knew that arrangement wouldn’t work. Conflicted, Nellie agreed to stick around; at the very least, she wanted to ensure her employees were protected. In fact, at one point during the negotiations, Intuit told her a certain staff member would be terminated after the acquisition. “I said: ‘No, the deal is off unless everyone stays on.’ ”
That’s one piece of advice I really want to hit home: make sure the people you choose to become the core of your company, your right hand, are people you truly and genuinely trust.
Looking back, Akalp wonders if that was the right move. “That person didn’t reciprocate that loyalty later down the line,” she says. “That’s one piece of advice I really want to hit home: make sure the people you choose to become the core of your company, your right hand, are people you truly and genuinely trust."
If she could do it again, Akalp would also make sure her new role was clearly laid out. "If you're trying to sell your company because you just want to cash out, then go for it," she says. "But if you're really looking to be acquired because it will open up the opportunity for your company to do so much more and be in front of so many more people—and you really want to stay on and make sure your vision continues—you'd better make sure that is the case. Because a lot of times, it's not."
It didn’t take long for Akalp to see the writing on the wall. Assigned to a distant office, she could do little but watch as the business she built rolled along without her. A few months after the sale, she resigned. “It is corporate America, and when a big company like Intuit purchases you, they want to change everything around—everything,” Akalp says. “The company really lost its entrepreneurial spirit.”
Her other piece of advice for would-be sellers? Make sure you think long and hard about what comes next. Akalp admits she struggled after selling because she missed the action and intensity. She dabbled in other ventures, including a clothing business, but nothing really clicked. "Do I regret selling it? No," she says. "I wouldn't be here today if Intuit hadn't acquired us. But there were definitely some lessons learned. You grow from it."
Ironically enough, Akalp is now back where she began: CEO of a legal filing company. The couple launched CorpNet.com in 2009, shortly after their non-compete clause expired. CorpNet.com has been recognized on the Inc. 5000 list of fastest-growing privately-held companies in America a handful of times and again in 2020, despite the COVID-19 pandemic
At the end of the day, if you get a good offer for your business the default position should always be: "Let's have a conversation"
"At the end of the day, if you get a good offer for your business the default position should always be: 'Let's have a conversation,' " she says. “If you're given the opportunity to have your business acquired, you should be celebrated and acknowledged for it, just like we were."
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