Do you know the M&A deal killers that will stop your liquidity event and rob you of your financial freedom?
Most business owners should but don’t. Depending on who you speak with, up to 90% of M&A deals never cross the finish line.
Success in both life and business is knowing both what to do and what not to do.
Who am I, and how do I know?
I was that kid who started his eLearning company right out of school with no money, experience, or team.
The truth is I had no business being in business, and the results showed. Failure became my new best friend.
My saving grace was my grit and passion which, kept me in the game long enough to experience success.
With success came the proverbial knock at the door from a sophisticated and savvy buyer. I said “no” to an unsolicited 7-figure offer based on 13-times EBITDA.
At the same time, I said “yes” to mastering the art and science of a liquidity event. Two years later, I said “yes” to a different buyer with a 9-figure offer based on 13-times EBITDA.
I increased my enterprise value 10X even though it was the same company, people, and service.
What did I do to avoid the M&A deal killers, and how did I do it?
The Level Of Preparation You Do Today Increases Your Enterprise Value Tomorrow
One secret of success in life is for a man to be ready for his opportunity when it comes – Benjamin Disraeli
Do you know one of the most common M&A deal killers?
Preparation, or in this case, lack of preparation.
Read and prosper from “5 Reasons For Exit Planning You Really Need To Know.”
Most business owners believe their business value comes from the liquidity event process.
Let’s put this myth to bed.
Your business value comes from the preparation for your liquidity event.
The level of preparation you do today increase your enterprise value tomorrow.
Full stop. End of story.
The truth is your future buyer is counting on you to make mistakes. Each mistake you make takes your hard-earned money and puts it in your buyer’s pocket.
Most liquidity events take about nine months. Your preparation can take years if you want to maximize enterprise value.
Two important things happen when you prepare your business for a liquidity event.
First, you find the skeletons in your closet in advance so you can fix them. When you show up for your process, you have a clean slate.
Second, the preparation process helps you identify the hidden Rembrandts in your closet. Your Rembrandts are things that your business is the best in the world and sets you apart from everyone else. It these same Rembrandts that make you attractive to your future buyer.
Know this and know this well.
To maximize enterprise value, put the time in to prepare for your liquidity. Prepare first. Your liquidity event follows.
Ready to find out the next M&A deal killer, and in the process, protect you from you?
Why The Wrong Emotional Mindset Is One Of The Top M&A Deal Killers
Only changes in mindsets can extend the frontiers of the possible – Winston Churchill
Welcome to the art of a liquidity event. One of the top M&A deal killers is having the wrong emotional mindset.
Start by tuning in to my favorite radio station, WII.FM, the “What’s In It For Me” radio station.
WII.FM puts your future buyer as the center of your universe. From the buyer’s perspective, ask what’s in it for me when it comes to a liquidity event for your business?
You must have a mindset of service with a smile as you and your business go under the microscope. Lose your deal over the wrong terms, but never lose the deal over the wrong emotional mindset.
Smart sellers prepare well in advance so they can answer any and all questions with speed. Service with a smile helps to earn the buyer’s trust and respect.
On the back end, you need to know in advance your deal breakers. Some issues to consider:
- The structure of the deal and its impact on taxes
- Reps and warranties that work for you
- What you’re prepared to accept in an escrow
- How you’ll deal with an earnout
- Life after your liquidity event
The right mindset is knowing your top three to five terms that must-have in your deal for you to say “yes.”
With an emotional mindset as one of the top M&A deal killers, ensure you ready before you start the process.
When it comes to M&A deal killers, do you know why vulnerability is the key to your success?
Why Not Being Perfect In The Eyes Of Your Buyer Is A Strength And Not A Weakness
Successful people focus on progress and not perfection – Jeffrey Feldberg
M&A deal killers have you believe the myth that you must be perfect in the eyes of the buyer.
The reality is that striving for perfection is a weakness and not a strength.
In the eyes of your buyer, perfection means there is no room for growth or higher profits. It’s essential to give your buyer the hope that arises from your shortcomings.
Read and prosper from “5 Reasons To Sell Hope On Your Exit That Will Blow Your Mind.”
Buyers want to know that you’re not perfect, and there are things that you have failed at or cannot do.
You may have failed in your business in certain areas from lack of time, money, or talent.
Your future buyer has the time, money, and talent to turn your so-called failures into success.
It takes both courage and strength to admit that you’ve either failed at something. Your future buyer needs to know that you’re open to your mistakes and correcting them.
Your shortcomings open up the door to leverage the synergies between you and your buyer.
Knowing that both you and your business are not perfect gives the buyer hope for a better tomorrow.
Do you know one of the M&A deal killers that will stop your liquidity event dead in its tracks?
M&A Deal Killers Include Either Missing Your Forecast Or Presenting A Too Good To Be True Forecast
Life is largely a matter of expectation – Horace
Of all the M&A Deal Killers around, missing your forecast or creating a forecast that’s too good to be true is at the top.
Your future buyer is counting on you to make mistakes. In the world of M&A, every mistake you make lowers your enterprise value.
Mistakes around your forecasts are ones that shouldn’t happen in the first place.
The currency of your liquidity event is not money, and instead, is trust.
When you either miss your forecast or paint a picture that’s too good to be true, you lose the trust of your buyer.
In your buyer’s mind, missing your forecast has your buyer ask what else you’ve over-inflated.
You’ve created a slippery slope that doesn’t have a good outcome.
Even if your buyer accepts your forecast, as buyers often do, you’re now expected to meet that forecast.
Either way, you’ve boxed yourself into a situation that will hurt you now or later.
The previous section revealed the strategy of providing hope to your future buyer. Your buyer wants to see forecasts that are consistent with what you’ve done in the past.
Create forecasts of what’s possible with your buyer’s resources. Be clear and firm about not guaranteeing the forecast. Instead, your mission is to paint the picture of a prosperous tomorrow.
Ensure the forecasts you are guaranteeing are ones that you can and will meet.
Full stop. End of story.
Of all the M&A deal killers, do you know the one you can and must avoid?
You Welcome M&A Deal Killers Into Your Life When You Choose The Wrong Advisors
Making a wrong choice early may limit making the right choice later – James E. Faust
After my 9-figure exit, I’ve made it my mission to help business owners with their liquidity event. I now help business owners through the Deep Wealth Experience. Preparation is both art and science, and the Deep Wealth Experience walks you through it.
It’s the preparation process itself, and not the event, that increases enterprise value.
Recently an experienced buyer reached out to me. The buyer shared how he would rather pay more money for a business that’s prepared. The buyer’s frustration was time and money spent on unprepared business owners.
Of the many M&A deal killers the buyer shared with me, the wrong advisors at the table was at the top of the list.
You may have the world’s best business lawyers, but don’t look to them for your M&A deal.
You may believe the investment banker you met is the nicest person around. But don’t believe for a moment that this investment banker is the right one for your liquidity event.
Each advisor you choose must have the M&A experience, but don’t stop there. Ensure that the experience is for both your industry and the size of the deal.
Every one of your advisors’ goal is to help you identify the hidden Rembrandts in your closet. The hidden Rembrandts are what make your business world-class and in a league of its own.
Communicating these Rembrandts to your future buyer increases enterprise value.
Choosing the right advisors with the right experience makes all the difference. Choose wisely.
One of the most important chapters in your business life is your liquidity event. A successful liquidity event ensures you lock-in your financial future and independence.
You have one chance to get it right with your liquidity event, you must make it count.
As you think about your liquidity event, know that the odds are against you. Up to 90% of M&A deals never cross the finish line.
Lack of preparation is the leading cause of failed M&A deals.
Heading into a liquidity event when you’re unprepared is a waste of your time and money.
Take the time and spend the money on preparation. Even if your liquidity event is five years away, the best time for preparing is today.
When you’re prepared, you have choices. Keep your business forever or sell it tomorrow, you choose. Either choice is a great one.
You can’t time the market, but you can time when you go to the market.
Too many business owners lose their opportunity through unnecessary M&A deal killers.
Success in business is knowing both what to do and not do, especially when it comes to M&A deal killers.
I’ve revealed five M&A deal killers that I avoided, and in the process, led the charge for my 9-figure exit.
If I can do it, so can you.
Where do you start, and what do you do?
Start with the first strategy and stay with it until mastered. Repeat the process until you’ve mastered all five strategies.
You can do it. I know you can.
Here’s to you and your success.
Your Biggest Raving Fan,