How I Convinced Intuit to Sell Me the Division I Managed
By Deborah Sweeney, CEO and Owner, MyCorporation Business Services, Calabasas, Calif.
In 2004 the company I worked for as general counsel was bought for $20 million by Intuit, the company behind products like Turbo Tax and Quickbooks. There were clear synergies between the two companies. MyCorporation provides software and services that help small businesses incorporate; businesses planning to incorporate often need Quickbooks to manage their finances. Following the acquisition, I transitioned to general manager of Intuit's MyCorporation division.
There are always drawbacks to being owned by a large corporation, but those drawbacks became especially apparent when the economy began to slow down in 2008. At that point, I made a bold proposal: I suggested that everyone would be better off if Intuit sold MyCorporation, and I offered to buy the division. The plan was accepted, and while we still have a strong relationship with Intuit, my company is more efficient and more profitable on its own.
The pros and cons of being big
There were some major advantages to being owned by Intuit. Most significantly, they had a huge marketing budget. Before Intuit bought us, we spent less than $20,000 a month on marketing, but afterwards we were able to spend $150,000 a month. That increase allowed us to have a much stronger presence in online searches, along with a significant budget for television and print advertising. We also benefited simply from being associated with Intuit's brand, which is well-known and respected. MyCorporation was a $4 million company when it was purchased in 2004, and under Intuit it grew into a $10 million brand.
But becoming a division of a major corporation brought about lots of changes, not all of which were positive. Corporations tend to move at a slow pace, and small divisions like ours were low priority. For us, this was a major problem. We needed to be able to update our products quickly and frequently in response to ongoing state law changes that apply to business structures. Under Intuit's ownership, we'd have to wait for the needed tech fixes for days or weeks, which left our products out-of-date until we could make the updates.
The turning point
There were two "Aha!" moments that really led me to take action. The first was the result of an analysis by our internal finance team in 2008. They looked at the cost to MyCorporation of being a part of the broader organization. It turned out that there were a lot of costs -- everything from the rent of a large corporate building to legal expenses -- that we were helping bear but not fully benefitting from. The analysis showed that being part of Intuit was not cost-effective for MyCorporation.
The second moment that pushed me towards proposing a break with Intuit occurred just after the start of the economic downturn in 2008. Corporations all across the country were slashing budgets, and Intuit was no exception. For example, we had been spending $100,000 each month on search engine marketing, but that was cut to $10,000. One of the best parts of joining Intuit was the huge marketing budget, and that was gone.
Proposing a break-up
I didn't want MyCorporation to be sold to another party and I didn't want it to be shut down. So in February of 2009 I worked a proposal into a presentation I made to the company on our goals and strategies going forward. One of my presentation items suggested that Intuit and MyCorporation could work together more effectively as partners than as subsidiaries. I pointed out that it was difficult for a small division like us to be nimble and to effectively make the changes necessary to survive. Our division was very small from Intuit's perspective, and I knew that smaller divisions often become headaches for large corporations. So as I presented my plan to executives at Intuit, I hoped that they would be relieved by the idea.
Eventually, my presentation materials reached upper management of Intuit, who ultimately agreed to go ahead with it.
A new company and a new partnership
I financed the purchase of MyCorporation in 2009 with a combination of bank loans, savings, and funds from friends and family. I'm under contract not to disclose the purchase price, but I can say that I now own the business outright with no debt.
Now when we want to change one of our products, we simply submit a tech request and it's taken care of the next day. When we want to have a meeting, we go to our conference room or Starbucks instead of flying across the country to a corporate conference center. And even though we don't have as much money for marketing, we're able to develop more flexible and effective marketing strategies.
We also have an important and effective partnership with Intuit. We include Intuit brands in our product bundles, and many of Inuit's products direct customers our way. Altogether, we estimate that about 10% of our business is Intuit-related. Our revenue this year is expected to reach about $9 million, which is down slightly from what we brought in as part of Intuit. Being part of a larger company allowed us to operate at a loss and invest in growth. But now that I own the company myself, I want to be sure we turn a profit.
Deborah Sweeney joined MyCorporation in 2004 after serving as general counsel for five years. She has taught courses in corporate and intellectual property law as an adjunct professor at the University of West Los Angeles and San Fernando School of Law.
-- As told to Zack Anchors
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