They Got Acquired - Why buyers like contractors-only models

December 5, 2023
​Read on web​

Did you grab our new report yet?

It's about companies that grew and sold without employees, using a team of contractors instead. And it's free:

Tips for selling a business that runs on contractors (no employees)

Many business owners, especially those of us who run lean, online businesses, rely on teams of contractors rather than employees because it allows for flexibility and cost savings.

But what does that model mean for an acquisition?

What do buyers think of this structure, and how does it affect a company’s valuation?

And how can potential sellers make a contractors-only business more appealing to buyers?

We wrote an article on this to go along with our latest report.

But first, a quick personal story, as I went through this myself when I sold a company for the first time.

How I sold a business that relied on contractors, not employees

I was at a critical decision point when I sold my content marketing agency in 2015.

My team included a handful of regular contractors plus a broader network of freelance writers. A couple of our regular contractors were approaching full-time hours, so I was asking myself: Do I want to hire them as employees? What kind of business do I want to run?

I never had to choose, because that year a buyer came knocking. One of our biggest clients was interested in an acquihire, whereby he brought my team and me in-house at his business to grow the content operations there.

A few months later, we signed the deal, with an interesting twist…

While all of my team had worked for me as contractors, we offered several of those contractors full-time roles with the buyer through the transition, and several of them agreed. We continued to work with most of the others in a contractor capacity.

If you’re building a business that’s heavy on contractors or freelancers, and you want to set yourself up to sell that business in the future, read our story for tips on how to make your company appealing to buyers:

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Behind the business (of TGA)

Years ago, I ran a content marketing agency with a team of contractors.

As I wrote about above, when that business was acquired, I went in-house at a fast-growing media startup, where I hired and managed dozens of full-time employees.

So now that I'm building a new brand, They Got Acquired, I've asked myself: which do I prefer? What do I want to build now?

My answer is, a little bit of both.

Right now our team is me + several contractors (mostly reporters and editors, plus an operations lead). And while I enjoy relying primarily on contractors, in my ideal world, we'd add one or two full-time employees to that mix.

Contractors offer access to a variety of skill sets and expertise (which is important for a content business), the flexibility to scale up or down quickly according to our needs, and lower costs than hiring employees.

But I miss the camaraderie, quick turnarounds and focus of an employee team. I'd love to have a couple of employees to work alongside, who are fully invested in the brand. That will come with time, as our revenue increases.

That's one of the downsides of bootstrapping: you can only grow headcount as fast as your revenue allows. Or perhaps that's a strength of being bootstrapped? It forces us to keep our expenses in check and build a sustainable business.

Have thoughts on this topic? How are you approaching it? I'd love to hear from you.

See you next time,

Lexi Grant
Founder & CEO
​They Got Acquired​