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Dec. 7, 2021

5 Dumb Liquidity Event Mistakes Most Business Owners Make

5 Dumb Liquidity Event Mistakes Most Business Owners Make

"If you want the highest enterprise value, think like a buyer." - Jeffrey Feldberg
 
Jeffrey Feldberg is the co-founder of Deep Wealth. The M&A journey for Jeffrey began when he said "no" to a 7-figure and "yes" to mastering the art and science of a liqu...


"If you want the highest enterprise value, think like a buyer." - Jeffrey Feldberg

 

Jeffrey Feldberg is the co-founder of Deep Wealth. The M&A journey for Jeffrey began when he said "no" to a 7-figure and "yes" to mastering the art and science of a liquidity event. Two years later, Jeffrey said "yes" to a 9-figure offer. During the process, Jeffrey increased his company value by 10X.

How did Jeffrey increase his company value 10X and go to a 9-figure liquidity event? Jeffrey created the 9-step roadmap of preparation for a liquidity event. 

The Deep Wealth Experience has you learn the 9-step roadmap in 90-days. At the end of the 90-days, you create a blueprint to help you optimize your business value. You also have the certainty of capturing the maximum value for your liquidity event.

There are five things nobody tells you about a liquidity event that you should know. After all, your liquidity event is the most important financial decision of your life. 

Learn how to master five powerful strategies that help maximize enterprise value.

Please enjoy!

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The Deep Wealth Experience

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This podcast is brought to you by Deep Wealth. 

Your liquidity event is the most important financial transaction of your life. You have one chance to get it right, and you better make it count. 

But unfortunately, up to 90% of liquidity events fail. Think about all that time, money and effort wasted. Of the "successful" liquidity events, most business owners leave 50% to over 100% of their deal value in the buyer's pocket and don't even know it.

Our founders said "no" to a 7-figure offer and "yes" to a 9-figure offer less than two years later. 

Don't become a statistic and make the fatal mistake of believing that the skills that built your business are the same ones for your liquidity event. 

After all, how can you master something you've never done before? 

Are you leaving millions on the table? 

Learn how the 90-day Deep Wealth Experience and our 9-step roadmap helps you capture the maximum value for your liquidity event.  

Click here to book your free exploratory call.

Enjoy the interview!

 

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FREE Deep Wealth eBook on Why You Suck At Selling Your Business And What You Can Do About It (Today)

Book Your FREE Deep Wealth Strategy Call

 

Did you enjoy this episode of The Sell My Business Podcast? 

Please leave a review. Reviews help me reach new listeners, grow the show, and continue to create content that you'll enjoy.

Please click here to leave a review on The Sell My Business Podcast.

 

This podcast is brought to you by Deep Wealth. 

Your liquidity event is the most important financial transaction of your life. You have one chance to get it right, and you better make it count. 

But unfortunately, up to 90% of liquidity events fail. Think about all that time, money and effort wasted. Of the "successful" liquidity events, most business owners leave 50% to over 100% of their deal value in the buyer's pocket and don't even know it.

Our founders said "no" to a 7-figure offer and "yes" to a 9-figure offer less than two years later. 

Don't become a statistic and make the fatal mistake of believing that the skills that built your business are the same ones for your liquidity event. 

After all, how can you master something you've never done before? 

Are you leaving millions on the table? 

Learn how the 90-day Deep Wealth Experience and our 9-step roadmap helps you capture the maximum value for your liquidity event.  

Click here to book your free exploratory strategy session.

Enjoy the interview!

Transcript

[00:00:05] Jeffrey Feldberg: Welcome to the Sell My Business Podcast. I'm your host Jeffrey Feldberg.

[00:00:10] This podcast is brought to you by Deep Wealth and the 90-day Deep Wealth Experience.

[00:00:16] Your liquidity event is the largest and most important financial transaction of your life.

[00:00:22] But unfortunately, up to 90% of liquidity events fail. Think about all that time, money and effort wasted. Of the "successful" liquidity events, most business owners leave anywhere from 50% to over 100% of their deal value in the buyer's pocket and don't even know it.

[00:00:43] I should know. I said no to a seven-figure offer and yes, to mastering the art and science of a liquidity event. Two years later, I said yes to a different buyer with a nine-figure offer.

[00:00:56] Are you thinking about an exit or liquidity event?

[00:00:59] If you believe that you either don't have the time or you'll prepare closer to your liquidity event, think again.

[00:01:05] Don't become a statistic and make the fatal mistake of believing that the skills that built your business are the same ones for your liquidity event.

[00:01:13] After all, how can you master something you've never done before?

[00:01:17] Let the 90-day Deep Wealth Experience and our nine-step roadmap of preparation help you capture the maximum value for your liquidity event.

[00:01:26] At the end of this episode, take a moment to hear from business owners, just like you, who went through the Deep Wealth Experience.

[00:01:32] Welcome to episode 84 of The Sell My Business Podcast. As it's become a tradition here on The Sell My Business Podcast today, we're going to do a deep dive on one particular topic. Before I jump into the topic, let's go over the stats of a liquidity event.

[00:01:48] Believe it or not up to 90% of liquidity events fail. So, I want you to imagine for just a moment, all that time, effort and money, just being thrown away. And as I jokingly say sad, but true, you'd be better off going to Las Vegas and just blowing it all in the casino. It'll be done a lot quicker. It'll put you out of your misery earlier and you'll have a lot more fun. But have the quote-unquote successful liquidity events, most business owners are leaving anywhere from 50% to over 100% of the deal value in the buyer's pocket and they don't even realize it. So, the next time someone tells you, hey, I just hit it out of the park. I had this incredible liquidity event. Look at what I got. Well, they certainly got that, but they probably left that much maybe even more. They don't even realize it. So, why do up to 90% of liquidity events fail? Well, to be blunt today, we're going to talk about five dumb liquidity event mistakes that most business owners make, and they don't even know it.

[00:02:44] So, let's talk about strategy number one how to avoid these five dumb liquidity event mistakes. And strategy number one is why you need to prepare more than you think. And if we're honest about it, most business owners in their mind, they say, hey, you know what? I want to sell my company this year.

[00:02:59] They go find an investment banker and they sign up the investment banker and, in their mind, they think, okay, I'm done. Let's go, let's have that liquidity event. Now, what they don't realize is that when you start a liquidity event, congratulations. You now have a second full-time job. You're running the business. You now have this thing called a liquidity event.

[00:03:19] And to put it simply, you're not prepared. It's practically impossible for you and your team to get everything ready in the timelines that you have. And so how do you avoid that? Well, let's take a step back. The first thing that you need to understand is that the enterprise value or the value of your business doesn't come from the liquidity event itself.

[00:03:40] What do I mean by that? The liquidity event, this is like a rear-view mirror. And the rear-view mirror looks back at the quality and the depth of the preparation that you've done heading into the liquidity event. So, it's preparation. Not the liquidity event. It's preparation. That's the key that unlocks the enterprise value.

[00:04:02] And this is why in a Deep Wealth Experience with our 9-step roadmap of preparation we focus on both the art and the science of preparation to ensure that you're doing two things. When you do the right kind of preparation, number one, you create a blueprint that really increases the enterprise value of your business because these strategies of preparation, surprise, surprise are the same as the strategies of growth.

[00:04:29] And as I like to say, when you prepare for a liquidity event, you tell me you can keep a thriving and profitable company forever. Or you sell it tomorrow. Both are fabulous choices, but the point is you actually have a choice. And so, preparation does that, but the other thing that preparation does it gives you certainty. You can't believe that you have the best deal. You have to absolutely know that this is the best deal.

[00:04:54] So, preparation unlocks the enterprise value. And what does that preparation really mean?

[00:04:59] In step number four of the 9-step roadmap what we do is an internal due diligence audit. Why are you doing a due diligence audit on yourself before you even sign up the investment banker? Because what we recommend a Deep Wealth is number one, you hire an M&A lawyer.

[00:05:16] And once you have the lawyer on board, you and your team at your own time and your own convenience perform a deep dive, a due diligence audit on your business. Because when you do that, you do the opposite of what most business owners do. Because one of the dumb liquidity event mistakes that most business owners make is they sacrifice their health, their time, and their money because they're simply not prepared.

[00:05:39] So, when you do a due diligence audit on yourself first, before you even in market, you're saving your health, you're saving your time and you're saving your money. It's at your team's time and convenience, you decide when you do it, how you do it. And that process, you learn so much more about your business and your industry than you ever thought possible.

[00:05:57] So, the question becomes well. okay. If I'm going to prepare. How much time do I need? So, I hope you're sitting down because most business owners think, hey, I can prepare today and go out to the marketplace tomorrow. Not really practical. If you want to get the best deal and not any deal, ideally, you should set aside at least two years before your liquidity event. And hey, if you told me I'm going to put aside three years or five years, I'm not complaining. The more time, the better. So, strategy number one is why you need to prepare more than you think. If you want to avoid the five dumb liquidity event mistakes that most business owners make what's the next strategy?

[00:06:33] So, this next strategy is an interesting one. It's why you must crack the investment banker code so you can thrive and prosper.

[00:06:42] What is the investment banker code? Well in the world of investment banking all investment bankers are not equal. There are two types of investment bankers. The first type is what I'll call a transactional investment banker. So, what is a transactional investment banker? A transactional investment banker is someone who is a specialist in your industry.

[00:07:03] He or she would be telling you I know this buyer. I know that buyer, I know all about your business. I know what's going on. I'm the sun, the moon, and the stars when it comes to your industry. And I'm the one that should be taking you to market. And what's attractive about a transactional investment banker is yes, they do know all the players.

[00:07:20] And they can get you to market relatively quickly. But and this is a big one. There's a huge downside to a transactional investment banker. And that downside is that all of the buyers are on speed dial for the transactional investment banker. So, I want you to think about this for a moment. I'm going to ask you a little bit of a loaded question, but here's the question.

[00:07:41] If you took your transactional investment banker, and this is the investment banker that you've hired, you've signed the contract with, you're going to pay a big commission to, and you backed this investment banker into the corner. And you asked this investment banker to choose between you or the buyer on a sensitive issue. Who do you think is going to win? Well, most business owners say I'm going to win. Of course, I'm the client. I'm paying the commission; the investment banker is loyal to me. Right? Wrong. The transactional investment banker is not loyal to you. Think about this for a moment. And there's nothing wrong with this. The investment banker is in business to be in business you're in business to be in business.

[00:08:19] So, part of not making five dumb liquidity event mistakes that most business owners make, you need to know the rules of the game. And so, when you understand that a transactional investment banker. Is someone who chooses the buyer over you every time, because the investment banker will do a book of business. They will do hundreds of millions, maybe billions of dollars of deals over the years or maybe over a single year without one buyer, they don't want to kick the gift horse in the mouth as the saying goes. And they're there to appease the buyer. So, our advice is stay away from a transactional investment banker. So, if we're not using a transactional investment banker, who's the second kind of investment banker that we should be working with.

[00:09:02] Well, the second type of investment banker is what we call an advocate. So, an advocate is a generalist. A generalist does not know your industry. They do not know your business. They do not know the buyers. It will take an advocate longer to pull together a list of buyers that you should be speaking to. And yes, by the way, we always recommend at Deep Wealth. This is part of the 9-step roadmap that you have an auction or a competitive bidding process when you're having a liquidity event.

[00:09:31] Now you may be saying, hey Jeffrey, wait a minute. You just said that an advocate is a generalist, a generalist doesn't know my industry. They don't know my business. They don't know the buyers. It takes them longer. To get a list of buyers. What gives, why should I be going with an advocate? Well, what appears to be the weakness of an advocate is actually the advocate's biggest strength. The advocate doesn't have any business relationship with the buyer. In fact, the buyer for your business will probably be a one-time event for your investment banker who's the advocate.

[00:10:04] So, if the advocate investment banker doesn't have the loyalty to the future buyer, who do you think the loyalty is to? The loyalty is to you and that's exactly where you want it. Because the advocate doesn't know the buyer the good news here is that the advocate can be the bad cop and you're the good cop. The advocate can push that buyer to get you the best absolute deal and hold nothing back. You're not in the mix. You can always blame the investment banker and all as well in that particular scenario.

[00:10:34] So, you always want to look for the advocate of an investment banker. Who's going to take you to market. The advocate's going to pull together a very wide list of buyers. And, you know, speaking of buyers, one thing that I want to point out, this is actually another, I'm going to call it a dumb liquidity event mistake that most business owners make is that most business owners assume that they have to be the ones to go out and find the buyers. And that couldn't be the furthest thing from the truth. You pay your investment banker very well. Let your investment banker go out and find the buyers. In the case of the advocate, the advocate is going to be doing a very wide search of all kinds of buyers and will bring buyers that you never even knew existed. So, let your advocate do that.

[00:11:13] And so one thing that you also have to think about when it comes to investment bankers, and this is part of strategy number two, of why you must crack the investment banker code so that you can thrive and prosper. Even if you have an advocate. It's human nature that we don't like risk. So, let me ask you a question and this isn't just for investment bankers. This is really for any sales professional.

[00:11:34] So, let me give an example. I'm just going to use round numbers here. Let's suppose you're having a liquidity event. And it's a sure thing that you can have a hundred-million-dollar deal. It's a done deal, in fact, but there's also the possibility that you might be able to get a $160 million deal. So, there's a $60 million differential.

[00:11:54] But the $160 million deal, it's not a sure thing. There are some risks that are associated with that. It may not happen. It may take a little bit longer. What do you think the investment banker is going to do? And it doesn't matter if it's a transactional investment bank or an advocate investment banker human nature is let me take the hundred million dollar deal that you may be saying, wait a minute, what about that extra $60 million what's going on with that?

[00:12:19] That's a huge quantum for me. That's a life-changing thing for me. Well from the investment banker side of things the small amount of commission that they're going to be paid on that $60 million differential isn't worth it for them to lose the deal. So, that they would rather get the sure thing instead of something that may happen, but it may not happen. So, what are you going to do? One of the things that we do in the Deep Wealth Experience, step number six of the 9-step roadmap. We focus on the advisory team.

[00:12:46] And when we focus on the advisory team, particularly with the investment banker, we recommend that you create what we call a waterfall compensation. So, what's a waterfall compensation for an investment banker? Well, what you do is before you go to market you determine fair market value for your company.

[00:13:05] And let's just use the example that you have a deal that's a hundred million dollars, and let's just assume that the fair market value for your business is a hundred million dollars. And you've had this verified by outside people. The investment banker has verified this. What you do with your investment banker is you say, okay, up to a hundred million dollars, I'm going to pay you the industry rate, which will be somewhere between 1% and 2%.

[00:13:27] But for every dollar over a hundred million dollars I'm going to pay you a bonus. So, maybe from a hundred million dollars up into $120 million, I'm not going to pay you one or 2%. I'm going to pay you 10% and maybe from $120 million to $140 million I'm going to pay you 15%.

[00:13:49] And from $120 million up to $170 million, I'm going to pay you 20%. And anything over that, I'm going to pay you 30%. Now you may be saying, hey, wait a minute. Jeffrey, that's a big commission check that I'm paying. Why would I want to do that? Well, as the saying goals, something of something is better than something of nothing.

[00:14:10] And now you incentivize your investment banker to not look at the hundred million dollar deal. You're incentivizing them to get the highest enterprise value for you. Because again, you have one chance to get this right. You want to make sure that you do it. And we're now appealing just to the human nature, particularly with people who are professional salespeople, which investment bankers are, what effectively you're saying is it's okay to take a risk because I'm going to reward you for that. In fact, the bonus that I pay, you will likely be larger than your regular commission. Now you have that investment banker’s attention, and that's exactly where you want to be. They want this liquidity event as much or more as you do. And everyone is now in alignment. So, that's strategy number two of why you must crack the investment banker code so that you can thrive and prosper.

[00:15:00] What is strategy number three, of five dumb liquidity event mistakes that most business owners make?

[00:15:05] Well strategy number three, it's really a question for you. Do you know why enterprise value is not a complicated formula in a spreadsheet? It's a simple enough question. The challenge that most business owners face is when they speak to investment bankers or they speak to other people in M&A, what you typically hear is yeah you know, we have a formula for enterprise value.

[00:15:26] It'll be a very complicated formula of based on your financials, based on industry comparables, based on this, based on that. And I say, well, that's one way to look at it. But fundamentally at Deep Wealth, we disagree with that. And here's what I'm going to share with you. Take a step back and again, this is going to everyone now.

[00:15:45] People make decisions based on emotion first and they justify it later with logic. Think about yourself, maybe you're looking at a home you want to buy, or maybe you looking to purchase a new car. And you absolutely love it. When you look at it, it just moves the dial for you on the emotion side. And maybe the numbers don't make sense.

[00:16:06] But you find a way to justify it. I'm going to live in that house forever. By the time I sell it, I'm going to more than get back my return on investment is going to be a terrific value for me.

[00:16:16] Or, you know, this car is a representation of me. I want it to look good. I want it to play its part and speak the part. And I just absolutely love the car. So, once we really fall in love with something, we then justify it later with logic. Another way of saying that is, and it's an old saying beauty is in the eye of the beholder.

[00:16:35] So, if we've now confirmed that the enterprise value is not a complicated formula in a spreadsheet. What do you do? Well in step number three of the 9-step roadmap, we focus all on the future buyer. And I'm actually going to talk about the future buyer in the next strategy, but let's focus in on one key component of the future buyer. And this is why a narrative is more important than you think.

[00:17:00] So, what's a narrative? When you're preparing for your liquidity event, you're creating a narrative of what your business is, the problem that you solve, and why you're the best thing since sliced bread. Why you walk on water of all the other business opportunities that a buyer may have?

[00:17:16] Why you're it in terms of being the opportunity of opportunities. What you're doing is you're storytelling. You're showcasing what we call Deep Wealth, your X-Factors and what we call your Rembrandts. So, you're doing all of these things to put your best foot forward. And your narrative when you story tell, you're getting that future buyer excited. They're not looking at the spreadsheet. In their mind, they're connecting the dots. Hey, if I buy your company.

[00:17:44] You're solving a really painful problem for me. When I buy your company, you're going to not only solve that problem, but you're going to increase my ROI. I'm going to become a rock star in the industry. I'm going to become a hero. I'm going to do all these wonderful things. I'm going to make a difference for society. And they become very, very excited.

[00:18:01] Now here's the key. You need a terrific advocate of an investment banker who's able to push the buyer, but you also need the competitive process or an auction to get all the buyers excited and have them start fighting over your business because when competition takes over and believe me, these investment bankers are as competitive as you are. They're all type A-personalities. Like all of us business owners, they don't want to lose a deal. So, when you have an incredible narrative that gets people excited. Industry comparables go out the window. All these complicated formulas, go out the window. They will establish a value to win the deal and they'll justify it with logic later. So, this is why you must know why enterprise value is not a complicated formula in a spreadsheet, and that beauty is in the eye of the beholder, and that people are making decisions based on emotion first and they're justifying with logic later.

[00:18:56] So, that's the third strategy. So, what's the fourth strategy of how you can avoid the five dumb liquidity event mistakes that most business owners make? Well, the fourth strategy is why you must think like a buyer to thrive in your liquidity event.

[00:19:12] Let me go back to that 90% statistic of why most liquidity events fail.

[00:19:17] There are many reasons for that high failure rate, but one of the reasons is, and I'm just going to be blunt on this one. Most business owners are selfish. They only think of themselves and they don't think of it from the buyer's perspective. I want you to think about this for a moment when you started your business did you think about yourself or were you thinking about your prospective customer? How you can help them? How are you going to make a difference? How you can talk to them? How you can demonstrate why they should be working with you and no one else. So, in Deep Wealth, what we say is we want to tune in to the world's favorite radio station. And the world's favorite radio station happens to be the same favorite radio station for your future buyer. And we're going to tune into WII.FM. The What's In It For Me Radio station. So, what does this mean? Well in the 9-step roadmap, step number three, the future buyer. What we're doing is we're training you on how to think like a buyer. You're internalizing how to view the world as a buyer. So, how does the buyer view the world? Well, you need to understand that a buyer's objective is to at all costs, reduce risk. Whatever it takes a buyer is going to reduce the risk. Look, a buyer knows what you did today.

[00:20:33] A buyer knows what you did yesterday. What a buyer wants to know is what is your business going to do not only tomorrow but down the road. And for many years to come. Because the buyer wants to get a high return on investment and they want to do that through the profits that your business is going to do. So, this is why a buyer will have all kinds of reps and warranties, and I'm going to use that dreaded E word. In fact, we banished this E word at Deep Wealth. Buyers love an earnout and earnout can protect the buyer just in case things don't work out.

[00:21:05] And more times than not things don't work out and business owners never see that earnout. So, what can you do to number one think like a buyer and then number two, reduce the risk? When you understand the buyer's perspective, the buyer's world you've put together a narrative and a narrative will get a buyer excited. But it's not enough.

[00:21:26] The next thing that you must do is both show and tell the buyer why your business is as risk-free as possible. Now in the next strategy, I'm going to be talking about skeletons and Rembrandts. I'm going to leave that out of this. But let's focus on how you can show and tell. Well, part of it is having all kinds of data, stats, and case studies that prove to the buyer. What you're saying is true.

[00:21:53] Where most business owners get it wrong. When it comes to a liquidity event, they think, oh, I really have to be out there in this new market. I've got to be established for many, many years to be able to show that I'm a market leader. Well, not necessarily. One of the things that we do in the Deep Wealth Experience is we're helping you identify your X-Factors. Areas that you're world-class and we're helping you find your Rembrandts. And when you know what those are you don't have to go out there for many, many years. You can go out there and have a small case study, maybe over a year. Maybe you only have a few clients in this one particular new service or this new product that you're bringing to market. But that's okay because you put an attractive narrative around what you're doing. You're demonstrating why you're the best. You can show what your profits are. You can show all the growth.

[00:22:40] And so when a buyer hears an attractive narrative, that's combined with all the data and the statistics of why it actually works. So, you're proving your thesis. You're now reducing risk. So, when you think like a buyer, you're going to thrive in your liquidity event. And when you think like a buyer, you're tuning into the What's In It For Me, for your buyer.

[00:23:00] Of what he or she wants to see. So, you've done some research on your buyer of what they're looking for, how you can solve that problem, how you can reduce that risk. And then you both show them and tell them.

[00:23:11] And so now we're coming up to the fifth strategy of the five dumb liquidity mistakes that mistakes that most business owners make. And we definitely don't want you making any of these.

[00:23:19] And the fifth strategy that's going to save you big time it's all about removing skeletons and displaying your Rembrandts before your liquidity event. So, let's take a step back.

[00:23:29] Here's what you need to know about your future buyer. Your future buyer is not only hoping your future buyer is praying that you're going to make many, many mistakes. And in fact, when you're not prepared, it becomes a self-fulfilling prophecy. You're going to make so many mistakes. Why do buyers love when you make mistakes? Well, every time you make a mistake, this lowers your enterprise value. Even if it's not such a big deal, even if the buyer can really overcome that mistake easily, the buyer's not going to tell you about that.

[00:24:02] It's going to be okay. Listen, you made a mistake over here. Enterprise value just went down a hundred thousand. You made a mistake over there. You didn't do this. We found this. Enterprise value just went down half a million. Oh, by the way, this other mistake. Oh, now we're going to have to increase the earnout.

[00:24:15] And the list just goes on and on you back yourself into a corner that's very difficult to get out of. So, when you follow strategy, number one of why you need to prepare more than you think you've done that internal due diligence audit. What you're doing is you're looking to find those skeletons in the closet and you're removing them.

[00:24:35] And so when you do this before your liquidity event when it comes time to find an investment banker. You're showing up to the investment banker. You have your own data room. Yes. You've created a data room. You have everything in there and you're showing up to the investment banker and you're saying, hey, I'm prepared. Take a look. I've done all the diligence. You're going to impress the investment banker.

[00:24:53] You don't get a second chance to make a terrific first impression. And that's exactly what you do when you're prepared, but you remove the skeletons. And have you removed all the skeletons? Maybe, maybe not, but you remove the majority of them or quite a bit of them that it's going to make all the difference. But the second thing that you do is that you found those hidden Rembrandts in the attic, and you're now putting them out for public display.

[00:25:18] So, again, what's a Rembrandt? A Rembrandt is something that you're, world-class in. Most businesses are world-class in at least one area. And typically, it's three to five areas, but here's the thing. Most business owners don't think that they have a Rembrandt. They assume that, oh, my competition is doing this. Or the industry does this. I'm not really so great at doing this. Couldn't be further from the truth.

[00:25:42] And again, in step number two of the Deep Wealth Experience, we have you do a deep dive on X-Factors. Where we find your X-Factors. We find your Rembrandt's, but why is it important for you to put your Rembrandt's out before your liquidity event? Well, let's use the example of you're looking to buy a home.

[00:25:59] You've gone to an open house. You've toured the house, the owner is there. Are you going to go up to the owner and say, I absolutely love your house? This is the best house that I've ever seen. It looks like it came out of a magazine. The interior is absolutely perfect. The front lawn is manicured and looks incredible. The backyard is over the top. I don't think I've ever seen a more beautiful house.

[00:26:20] Well, you could say that, but if you do you know that you're going to be paying top dollar for that house because you want to know that you love it. Again, beauty is in the eye of the beholder. You think the house is beautiful and you've just really made it very difficult to buy the house at a better price.

[00:26:36] Instead, you'd probably go to the homeowner and say, well, you know, the house is okay, but it needs a little bit of work. I'm not so sure if I want to put an offer in, I really got to think about it. I have some other options that might be more attractive. Well, it's the same thing when you have a liquidity event, your buyer knows what you are world-class in. Remember your future buyer does deals all day, every day. This is all your future buyer does.

[00:26:58] They through the due diligence will have identified what you're really good in. In fact, they've probably done that even before they speak with you. And so now that they know this, they're not going to tell you that. So, when you just turn that model on its head, when you head into your liquidity event and you let all of the buyers know these are the Rembrandts, you now change the rules of the game, because what you're telling them is, hey, I know we're, world-class in this area.

[00:27:24] Now in the off chance that the buyer hasn't recognized one of those Rembrandts. You're now doing double duty because not only are you informing the world and the future buyer, but they can now see why that Rembrandt is so valuable to you. And by the way, for my company, when we put out the Rembrandts before our liquidity event, it actually gave us the ability to attract new clients because when they saw that they were impressed, they didn't realize it. And they signed up for the services. So, putting your Rembrandt's out before your liquidity event is really a win-win-win. So, let's take a quick step back here because when you do effective preparation and remember everything is a simple story, but let's not confuse simple with simplicity.

[00:28:06] So, effective preparation does two things. Number one, it has you find and remove all the skeletons in the closet, and then number two, it has you find those hidden Rembrandts in the attic and put them out for public display. So, when you're prepared, you remove the skeletons, you've put the Rembrandts out.

[00:28:23] And now what you've done is you have eliminated the excuse for an earnout. You've done your internal due diligence audit. You're showing up to the buyer saying, hey, I'm prepared. I've already done the work ahead of time. This is how good the business is. And if you don't like this business, that's okay. Because I have a room full of other buyers who will only be too happy to speak with me. So, are we going to do a deal or not? Let me know. Don't waste my time because I have other choices.

[00:28:49] And when you combine all those factors, it becomes a perfect storm to be able to get the maximum enterprise value while eliminating an earnout. So, that's the fifth strategy. Let's take a quick step back and let's now review five dumb liquidity event mistakes that most business owners make and how you can avoid that.

[00:29:10] So, strategy number one is why you need to prepare more than you think. And there we spoke about how preparation is the key that unlocks enterprise value. The more you prepare, the better off you are, you're going to be saving your health, your time, and your money, and how you should set aside at least two years, if not more, to get ready for your liquidity event. Remember 90% of liquidity events fail. You don't want to become that statistic.

[00:29:35] Strategy number two, why you must crack the investment banker code so you can thrive and prosper. We mentioned that there are two types of investment bankers. You have the transactional investment banker and you have the advocate investment banker. You want to focus on the advocate who is not friends with the buyer. Who's going to do a wide search for as many buyers as possible. And then we spoke about why you must create what we call a waterfall compensation system for your investment banker to incentivize your investment banker to get the best deal and not any deal.

[00:30:10] Strategy number three, do you know why enterprise value is not a complicated formula in a spreadsheet? And in this third strategy, we spoke about why people, including your buyer, make decisions on emotion first and justify it later with logic. Remember, beauty is in the eye of the beholder and the stronger your narrative is it's going to help lead the way to have your buyer make a decision based on emotion and not logic. They'll justify it with logic later. Strategy number four, why, you must think like a buyer to thrive in your liquidity event. And there we spoke about tuning into the world's favorite radio station for your buyer. The What's In It For Me, radio station.

[00:30:52] And how you must reduce risk. And you can reduce the risk for the buyer when you both show and tell the buyer through your narrative, but also through data facts and case studies. And then we rounded this out with strategy number five. Why it's all about removing skeletons and displaying Rembrandts before your liquidity event?

[00:31:11] And here we spoke about how every mistake lowers your enterprise value. This is why an internal due diligence audit is absolutely key. To having to remove those skeletons. So, you make less mistakes in your liquidity event. And we spoke about how, when you do this, you come prepared, you have your Rembrandts out, you're going to eliminate the need for an earnout and you're going to justify the value of your business through your Rembrandts. And you really set the stage for getting the best deal instead of any deal.

[00:31:40] So, there you have it. These are the strategies that are going to help you avoid the five dumb liquidity event mistakes that most business owners make. And when it comes to your liquidity event, again, this is the largest, biggest single financial transaction of your life. You want to make sure that you not just get it done, but that you hit it out of the park. You get the best deal and not any deal. These strategies are going to help you. And this is what we talk about a lot of in the 90-day Deep Wealth Experience with the 9-step roadmap of preparation that has you walk out of it on the 91st day, number one, you've created a very specific blueprint to increase the value of the business. And then number two, you've developed that certainty that you know you're going to capture the maximum value in your liquidity event. So, as we wrap up this episode as always, thank you so much for your time today.

[00:32:29] You could be doing other things. It's always easy to make money, but you can't get back your time and you spent time with us today. A heartfelt thank you for that. We're so grateful. And as we wrap this up as always, please say healthy and safe.

[00:32:42] Sharon S.: The Deep Wealth Experience was definitely a game-changer for me.

[00:32:45] Lyn M.: This course is one of the best investments you will ever make because you will get an ROI of a hundred times that. Anybody who doesn't go through it will lose millions.

[00:32:55] Kam H.: If you don't have time for this program, you'll never have time for a successful liquidity

[00:33:00] Sharon S.: It was the best value of any business course I've ever taken. The money was very well spent.

[00:33:06] Lyn M.: Compared to when we first began, today I feel better prepared, but in some respects, may be less prepared, not because of the course, but because the course brought to light so many things that I thought we were on top of that we need to fix.

[00:33:22] Kam H.: I 100% believe there's never a great time for a business owner to allocate extra hours into his or her week or day. So, it's an investment that will yield results today. I thought I will reap the benefit of this program in three to five years down the road. But as soon as I stepped forward into the program, my mind changed immediately.

[00:33:44] Sharon S.: There was so much value in the experience that the time I invested paid back so much for the energy that was expended.

[00:33:54] Lyn M.: The Deep Wealth Experience compared to other programs is the top. What we learned is very practical. Sometimes you learn stuff that it's great to learn, but you never use it. The stuff we learned from Deep Wealth Experience, I believe it's going to benefit us a boatload.

[00:34:08] Kam H.: I've done an executive MBA. I've worked for billion-dollar companies before. I've worked for smaller companies before I started my business. I've been running my business successfully now for getting close to a decade. We're on a growth trajectory. Reflecting back on the Deep Wealth, I knew less than 10% what I know now, maybe close to 1% even.

[00:34:26] Sharon S.: Hands down the best program in which I've ever participated. And we've done a lot of different things over the years. We've been in other mastermind groups, gone to many seminars, workshops, conferences, retreats, read books. This was so different. I haven't had an experience that's anything close to this in all the years that we've been at this.

[00:34:51] It's five-star, A-plus.

[00:34:53] Kam H.: I would highly recommend it to any super busy business owner out there.

[00:34:57] Deep Wealth is an accurate name for it. This program leads to deeper wealth and happier wealth, not just deeper wealth. I don't think there's a dollar value that could be associated with such an experience and knowledge that could be applied today and forever.

[00:35:11] Jeffrey Feldberg: Are you leaving millions on the table?

[00:35:13] Please visit www.deepwealth.com/success to learn more.

[00:35:20] If you're not on my email list, you'll want to be. Sign up at www.deepwealth.com/podcast. And if you enjoyed this episode of the Sell My Business podcast, please leave a review on Apple Podcasts. Reviews help me reach new listeners, grow the show and continue to create content that you'll enjoy.

[00:35:43] As we close out this episode, a heartfelt thank you for your time. And as always, please stay healthy and safe.