5 Exit Lessons From Fresh Heritage’s Founders

Imagine turning your thriving business into a golden ticket for a new life adventure. That's exactly what the founders of Fresh Heritage did, and their journey offers invaluable lessons for every business owner.

When the founders of Fresh Heritage, a popular beard grooming product brand for men of color, decided to sell their business in 2021, it wasn't just about the money. It was about embracing a new life chapter filled with family moments and future opportunities. With this blog post, we wanted to dive deeper into their decision-making process, valuation strategies, and the key lessons they learned along the way of selling their business.

Reasons for Selling

Natarcia Codner, her husband Gamal, and her brother-in-law Jamil decided to sell their e-commerce brand due to big life changes and business reasons. Natarcia, co-owner, and COO at the time, said the birth of their daughter and a challenging birthing experience made Gamal and her want to spend more time with family.

Even though there was strong international demand, they realized they didn't know how to expand globally or sell on platforms like Amazon. They believed that working with someone experienced in these areas would help their customers better and grow their business.

Valuation of the Business

The team at Fresh Heritage decided to fairly value their business based on 4 critical metrics:

• Market Value
  They looked at the prevailing market value for similar online beauty and personal care brands.

• EBITDA Margin
  With a remarkable 46% EBITDA margin, their business showcased strong above-average profitability.

• Customer Metrics
  Over 3,000 customers were on their subscription program, with a repeat customer rate exceeding 40%, indicating a healthy and predictable revenue stream.

• Growth Opportunities
  The potential to expand into new marketing channels and international markets added significant value.

Here is more data on the Top 6 Highest Value Businesses, including e-commerce.

Examples of Adding Value to a Company

Several value drivers significantly boosted their business sales price. The company’s 46% EBITDA margin showcased its robust profitability, while high repeat customer rates and a substantial subscription base demonstrated strong customer loyalty and predictable revenue.

Their beard oil product had garnered over 3,000 five-star reviews, establishing it as a top product in the industry. Additionally, their community engagement, with over 150,000 followers, provided a solid foundation for direct-to-consumer (DTC) sales.

Finally, there was a strong strategic fit for their buyer BRANDED. Although they had expertise in retail and Amazon, they sought to expand their DTC sales, which made the acquisition of Fresh Heritage particularly valuable.

Overcoming Buyer Concerns

The negotiation and sale process went smoothly, with BRANDED offering a fair market value without requiring price reductions. But one key concern was the location of their warehouse, which necessitated deciding whether to set up a team or relocate the business.

Ensuring compliance and maintaining up-to-date liability insurance and third-party product testing records were also crucial to address potential buyer concerns and facilitate a smooth transaction.

After-Exit Life and a New Masterpiece

After the sale, the founders experienced a mix of emotions but ultimately enjoyed their newfound freedom. Natarcia and her family invested time in renovating their dream home, spending quality time with their daughter, and enjoying the simple pleasures of life.

It’s crucial to develop a post-sale plan, knowing that many owners feel lost or depressed after selling a business. Here are 3 essential but ignored activities post-exit.

Six months later, they launched a consulting business, Codner & Co., to help other e-commerce founders achieve similar success. This new venture allows them to leverage their experience and guide others through the challenges of growing and selling an online e-commerce business.

Key Lessons for Business Owners Looking to Exit

1. Align Business Decisions with Personal Values:
   The founders prioritized family and recognized the importance of work-life balance in their decision to sell.

2. Leverage Expertise for Growth:
   Partnering with an experienced buyer can provide the necessary skills and resources to expand into new markets and channels.

3. Strong Financial Metrics Increase Value:
   High profit margins, customer loyalty, and positive product reviews significantly drives business value.

4. Prepare Thoroughly for Sale:
   Ensuring compliance, up-to-date records, and understanding potential buyer concerns can facilitate a smoother sale process.

5. Plan for Post-Sale Life:
   Consider how you will transition after the sale, whether it involves starting a new venture or enjoying more personal time.

Conclusion

Natarcia’s exit story showcases the importance of aligning business decisions with your personal goals, leveraging partnerships for growth, and preparing thoroughly for a successful business exit. Any small business owner can learn from her experiences to navigate their own big exit effectively.

Remember, your business is not just a job; it's an asset that can create incredible opportunities when managed thoughtfully.