Did you know that liquidity event mistakes cause 75% to 90% of businesses listed for sale to fail?
The irony is that most business owners don’t realize the fatal mistakes they’re making. It’s the same liquidity event mistakes that also drive down enterprise value.
When it comes to your exit or liquidity event, you have one chance to get it right, and you better make it count.
In business and life, knowing what not to do is as important as knowing what to do.
What can you do to overcome the odds and have a successful liquidity event?
Preparation gives you the certainty that you’ll capture your maximum business value.
Who am I, and how do I know?
I was the kid who started his business right out of school with no money, experience, or team. I failed forward all day, every day. It was my grit and passion that kept me in the game long enough to experience success.
Success brought an unsolicited 7-figure offer based on 3-times EBITDA. My gut instinct told me something wasn’t right. I said “no” to the 7-figure offer and “yes” to mastering the art of the sale.
Two years later, I said “yes” to a 9-figure offer based on 13-times EBITDA.
I created a 9-step road map of preparation that gave me the certainty to capture maximum value. Today, I pay-it-forward and help business owners prepare through a 90-day program.
The 90-day program, called the Deep Wealth Experience, teaches you the 9-step road map. Along the way, you remove mistakes and have the certainty to capture maximum value.
Five liquidity event mistakes can cost you the deal and your future.
Do you know what the five liquidity event mistakes are?
Preparation, Or Lack Of It, Will Either Make Or Break Your Liquidity Event
You’re either preparing to succeed or fail. You choose – Jeffrey Feldberg
When it comes to liquidity event mistakes, preparation, or lack of it is at the top of the list.
Most business owners believe that they will prepare before the liquidity event itself.
Don’t make this fatal mistake.
Preparing well in advance of your liquidity event saves your health, time, and money.
A liquidity event in and of itself is consuming and adds a level of stress. Attempting to run your business, prepare, and have a liquidity event is a recipe for failure.
Capturing the maximum value for your business has you prepare years in advance. Preparation in advance gives you and your team the time to take the time.
Along the way, you’ll learn about your business and marketplace. Your new insights will help you drive up revenues and profits.
Having the time to prepare removes the stress of attempting to do everything at once. Say goodbye to sleepless nights, stress, and pressure. Give yourself the gift of vibrant physical and mental health.
Time to prepare avoids expensive consultants from doing the work you and your team can do. The insights you have on your business, as a result of your preparation, is priceless.
Don’t fall into the trap that you’ll “prepare” through due diligence from the buyer. The due diligence from the buyer isn’t enough.
Buyers are too happy to discount the value of your business when they found your skeletons in the closet. In the world of mergers and acquisitions, you’re guilty first and never innocent.
Do you know the one liquidity event mistake that can make or break your deal?
Do You Run Your Business Or Does Your Business Run Without You?
Independence is happiness – Susan B. Anthony
At the top of the list for liquidity event mistakes is your business not running without you.
Read and prosper from “Why You’ll Be Happier And Richer When Your Company Runs Without You.”
For most business owners, they are the business, and the business is them.
As far as liquidity event mistakes go, this is a costly one to make.
There are significant benefits of having your business run without you.
For starters, you lose the golden handcuffs and do what you do best. Think back to when you started your business. You found a painful problem for people that you were passionate about solving.
When your business runs with you, there is now the opportunity to find new problems to solve. While you’re at it, you can create a market disruption. Revenues, profits, and your business value thrive.
A business that runs without its owner also attracts top talent who sees a lucrative career path.
Your future buyer has peace-of-mind that your business operates without you. Buyers assume that there will come a day when you’re no longer in the company.
Buyers either walk away from a deal or lower the value when a business doesn’t run without its owner.
Having your business run without you keeps buyers at the deal table and increases value.
Keep your thriving and profitable company forever, or sell it tomorrow. You choose either of these two desirable scenarios.
Liquidity event mistakes rob you of value at best or the deal itself at worst.
With your company running with you, are you ready to tackle the next liquidity event mistake?
Great, let’s do it.
When Your Advisory Team Works, Your Dream Works
It’s better to have a great team than a team of greats – Simon Sinek
Liquidity event mistakes that cost you the deal include selecting the wrong advisors.
In the 9-step road map, step four is finding and hiring the advisors who help you get the deal done.
You may have a world-class business lawyer who has helped your business grow. Your first inclination is to have your lawyer represent you for your liquidity event.
Please don’t do it.
Instead, find a mergers and acquisitions (M&A) lawyer with a track record of success. Your M&A lawyer must also know your industry and have experience in deals similar in size.
Members of your advisory team include:
- Investment bankers
- Tax advisors
- M&A lawyers
- Key management
Each of the above advisors has a track of liquidity event success. In finding the best advisors for you, there are key questions to ask. Diligence on your advisors upfront pays big dividends later in the process.
Most business owners neglect to have one advisor that makes all the difference.
Who is this advisor?
A Chief Exit Advisor.
Most advisors fall victim to two costly mistakes. The first mistake is not looking at the big picture. The second mistake is getting the deal done instead of ensuring it’s the best deal.
Your Chief Exit Advisor keeps the big picture in mind and helps you navigate toward the best deal.
You don’t know what you don’t know, but your Chief Exit Advisor does. Your Chief Exit Advisor reports to you and you alone. There are no conflicts of interest.
Do you know one of the biggest liquidity event mistakes most business owners make?
Liquidity Events Mistakes Include Thinking Like A Seller Instead Of A Buyer
Show respect to all people, but grovel to none – Tecumseh
One of the top liquidity event mistakes that most business owners make is not thinking like a buyer.
When it comes to the future buyer, most business owners only care if the check clears the bank.
Your future buyer knows everything about you. What do you know about your future buyer?
In the Deep Wealth Experience, the third step of the 9-step road map focuses on the buyer.
There are different types of buyers, and each buyer has different needs. Generally speaking, there are financial buyers, strategic buyers, and family offices.
Your buyer is looking at your company to solve a painful problem. Your mission is to find out what that painful problem is and show how you’ll solve it.
Buyers pay a premium for your business if it solves their problems and has a promising future.
Knowing what your buyer wants is the first step. The next step is to determine which buyer has the best cultural fit.
The highest offer may not be the best offer. Issues arise when the business is under pressure.
During the early stages of a liquidity event, buyers can and will say many things to look good.
How do you know if buyers are as good as they say they are?
One of the areas that Deep Wealth Experience focuses on is helping you determine if a buyer is the real deal or not. Through specific questions and a special process, you go from believing to knowing.
Once you know with certainty who the right buyers are for your business, it’s time to do one more thing.
Keep reading to learn what this one thing is and how to avoid making more liquidity event mistakes.
Liquidity Event Mistakes Include Not Finding The Hidden Rembrandts In Your Attic
Knowledge is the treasure of a wise man – William Penn
Liquidity event mistakes rob you of your enterprise value and can cost you the deal.
Not finding the hidden Rembrandts in your attic is one of the liquidity event mistakes you must avoid.
What’s a hidden Rembrandt in your attic?
Your business is world-class in at least one area, if not more.
If you’re like most business owners, you may think that everyone does what you do.
In the 9-step road map, I created for my liquidity event, finding the hidden Rembrandts is step eight.
The 9-step road map is a cumulative process where one step builds upon the other. With each of the steps, you do a deep dive into your business.
You are the world’s expert on your business. You have the answers but don’t have the questions to ask.
In my liquidity event journey, one of the hidden Rembrandts that I uncovered was my contracts. My contracts with customers were seven to ten years. In my case, I believed this was an industry norm.
I couldn’t have been more wrong. This one Rembrandt alone did two things for my deal. First, it made my deal sticky. Buyers took comfort in the security of long-term contracts. Second, my enterprise value shot up.
Rembrandts give you leverage for your deal. At the same time, Rembrandts benefit your future buyer. Everyone wins.
Don’t fall victim to liquidity events mistakes. Find your hidden Rembrandts in the attic and incorporate them into your story. You’ve earned it.
Liquidity event mistakes cause two scenarios you want to avoid at all costs. Liquidity event mistakes are why up to 90% of businesses listed for sale don’t sell. The same liquidity event mistakes have you leave the value of your deal on the deal table.
Your future buyer is counting on you to make costly liquidity event mistakes. Each mistake you make lines your buyer’s pocket with your hard-earned money.
You’ve worked too hard and long to lose on your liquidity event. But this is exactly what happens to most business owners. The irony is that most business owners don’t realize the amount of money they left on the deal table.
How can you avoid liquidity event mistakes?
The 9-step road map of preparation for my liquidity event helped me level the playing field to win. I walked into my liquidity event with the certainty that I would capture the maximum value.
The preparation process helps you create a thriving and profitable business. Keep your business forever, or instead, sell it tomorrow. You choose.
You know this, and your future buyer knows this as well.
The value of your business isn’t created during your liquidity event. Instead, the value of your business is a result of the quality and depth of your preparation.
With my 9-figure exit, the results speak for themselves.
My mission is to help business owners level the playing field and not be a statistic. I achieve this through the 90-day Deep Wealth experience, which has you master the 9-step road map.
Don’t be the victim, and instead, be the victor.
You can do it. I know you can.
Here’s to you and your success.
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