5 Stupid Liquidity Event Mistakes That Rob You Of Enormous Success (#133)

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

This podcast is brought to you by Deep Wealth and the 90-day Deep Wealth Experience.

Your liquidity event is the largest and most important financial transaction of your life.

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.

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.

Are you thinking about an exit or liquidity event?

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

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?

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

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

Welcome to the Deep Wealth Sell My Business Podcast. Well, it's right around that time where we're going to do another deep dive on one particular topic. And this was actually a question that came in from a listener. Both an article was written about this and let's talk about this now on the podcast.

And here's what the question was. What are some of the typical liquidity event mistakes that can either rob you of success in the deal itself or actually killed the deal?

And it was a terrific question because most business owners just jump into the liquidity event, do not put a lot of time and attention into it..

And then they really are rolling the dice and they're gambling with what's the largest, biggest, single most important financial decision of a lifetime. So in this episode, let's do a deep dive in terms of what are the typical mistakes that most business owners make. And, you know, there's that saying that success leaves clues.

Well, so does failure when we know what not to do, that's just as important as knowing what to do. So with that in mind, let's jump in there and begin the process of talking about what strategies you should know about what you should be deploying? And there's five key strategies. And the first one may come as a surprise to you, but I'll just throw that out there.

And that's why you need to prepare more than you think you do.

And again, for most business owners, when I speak with them, the typical attitude is, hey Jeffrey you know what when I'm ready for liquidity. I'll just call up the investment banker and my company will be sold in less than a year. And technically that's probably true, but it's not the outcome that you want because when you're not prepared, all kinds of things are going to happen.

I want you to think about preparation in a completely different light. Most business owners when it comes to preparation, not just with the liquidity event, but preparation in general, they think of it as a pain in the you-know-what. But when it comes to your liquidity, Preparation I want you to view that as a key, it's like a magical key.

And the key of preparation this is what unlocks your enterprise value in the 9-step roadmap, which I'll be talking a lot about today as we talk about the five biggest mistakes that you can make for a liquidity event, I want to turn to step number four and that's due diligence. Now you've all heard of due diligence. And I jokingly say that if you want to see a grown person cry just mentioned two words due diligence, and that'll do it.

But what we do is step number four is we turn due diligence on its head. What do I mean by that? Well in the 9-step roadmap, you master the art of due diligence, but very specifically, you're doing an internal due diligence audit. What does that mean? Why should it be doing that? Why are you asking me Jeffrey to do the due diligence twice before the liquidity event and during the liquidity event?

And they're all terrific questions. Let's go through what not to do and what happen. And then I'll walk you through why you want to do this. And this all revolves around preparation and the internal due diligence audit. Again, most business owners and you know, the statistics.

I say it again on every episode, I'm like a broken record, but they're worth repeating. Up to 90% of liquidity events fail. Think about that for a moment, all that time, that effort, and your hard-earned money is for nothing. And as I jokingly say, it's not a joke, but as I jokingly say, you'd be better off going to your favorite casino and just gambling away that money.

 You'll be put out of your misery a whole lot earlier and you'll have fun while you're at it. So when you don't prepare, congratulations you now have a second full-time. Otherwise known as a liquidity event. So you and your team, you're running the business, but now you're doing the impossible. It's literally impossible for you and your team.

You are trying to get the business ready. You're having the investment bankers asking all kinds of questions, all kinds of reports. You need information, data, budget projections, the list goes on and on. So there goes your weeknights, there goes your early mornings, there goes your weekends, and now you're finding, geez, I'm just flat out a time.

Your stress is through the roof and there goes all the health and the pressure that comes along with that. And then you get to the point where you realize know I don't think we can do this. We're going to have to go outside, get some outside consultants to help us put this together. And there goes your money because you're asking very talented but expensive people to do these reports for you in a short timeframe.

And that is not the way to go. When you do an internal due diligence audit, you're saving your health, your time and your money. How are you doing that? Well, for starters, you and your team on your own time and on your own schedule, you're now beginning the process of the internal audit and what we recommend in the Deep Wealth Experience.

That's our 90-day system for the 9-step roadmap of preparation is that you bring on board and mergers and acquisitions lawyer to help you go through the internal audit. So now with the M&A lawyer on. You're going through the internal audit at your own. Leisurely pace. You're learning more about your business than you ever would have thought possible.

You're saving the money because you're not having these outside expensive consultants come in and do it for you. And because you're doing it on your own time at your convenience, you're not under the pressure. You're saving your health. You're actually believe it or not. You can actually enjoy the process because everything that I'm going to be talking about today, this all goes back to really, you're doing two things with preparation and that's the thesis with a 9-step roadmap and the 90-day Deep Wealth Experience. Our thesis, which has proven time and time again when you put the time when you put the preparation in place, you're finding those hidden skeletons and you're removing them, but you're also finding those hidden Rembrandts in the attic and you're putting them out for public display. So when you do an internal audit, you save your health, you save your time, you save your money.

You're actually showing up when you're ready to the investment banker, you have your own data room. And you're saying to the investment banker here, you go. Here's the data room. Here's all of our information. We've done all the audits. We have audited financial statements. We have the quality of earnings reports.

We have our budgets, we have our projections, you've done everything. Who does that? Well, you do, but aside from you, nobody else. And investment bankers love it because it shows that you're prepared and talk about making an incredible first impression, not just with your investment banker, but with all of your advisors.

Because when you do that, you are ready to go and you have the confidence that comes along with that. Now you may be asking, okay, Jeffrey, you know, you kinda didn't have me at the beginning, but you have me now on an internal audit. It makes sense. How long does it take? It's a good question. And the short answer is it depends.

Well, you may be saying, what do you mean Jeffrey it depends? It really depends on you. Some business owners, when they're really organized, they can do it in 9 months. For most business owners, it's up to two years. So if you want to say somewhere between one to two years that you can do that preparation, that's how long it's going to take.

Now, if you're a groaning don't groan, because I have some good news with this. What you're actually doing when you're doing the internal audit is you're also finding ways to grow the company. The 9-step roadmap of preparation, we could just as easily call it the 9-step roadmap of growth, because our strategies of preparation are one in the same for growth.

And as I like to say, create a thriving and profitable business that you keep forever or sell it tomorrow. The choice is yours, but either way is a terrific choice. So strategy number one to wrap it up is why you need to prepare more than you think.

What is strategy number two? And this one is a terrific one and pay attention here. Strategy number two is why you must crack the investment banker code so you can thrive and prosper.

Now you've heard me say this before. It's worth repeating. I will say it again. Not all investment bankers are equal. There's two types of investment bankers and most investment bankers fall under the category of what we call a transactional investment banker. What's a transactional investment banker?

I'm sure you've spoken to these investment bankers when they've perhaps cold called you and they want to take your company out to market. They have a terrific narrative. What a transactional investment banker will tell you is this, hey, Jeffrey I know your industry inside and out. In fact, I've done most of the deals in your industry. I know who all the buyers are. I know who the sellers are. I know what's going on. I know the trends. I know your business. I can put together a list of buyers very quickly because I know your business.

You're not going to have to prepare all that much. I will take you to market and we'll get you a deal. Now on the surface what's being said is absolutely true. But as the saying goes it's always in the details. So what's wrong with that you may be saying Jeffrey, a transactional investment banker they know my business.

They've been involved in most of the transactions. So their experience, they're a subject matter expert in my specific industry. Why wouldn't I do that? Well, what's being conveniently left out is that a transactional investment banker will do deal after deal after deal with the same buyers.

So I want you to think about this for just a moment. You are a one-time transaction. You know what? Maybe it'll be a two-time transaction. If you're really push it maybe you'll have three liquidity events, but that's about it. Now, I want you to think about the value of your liquidity event compared to the many deals that a transactional investment banker will do with the same buyer again and again. We're talking hundreds of millions of dollars, if not billions of dollars over a lifetime of that business relationship. So here's a question for you. Is your investment banker going to really push that buyer to the wall, upset that buyer get the best absolute value for you, and ruin that relationship with that buyer just because you're the client? Of course not. And what you don't realize. And listen, we've had investment bankers on the Deep Wealth, Sell My Business Podcast. I'd encourage you to listen to those episodes. I'll put those episodes in the show notes and we've had investment bankers who have said, Hey, I've been on both sides.

I've been a buyer. I've been a seller. And when I was a buyer and I was working with investment bank, I would tell the investment banker. I know you're telling me that this company is worth $90 million, but you know what? I really see being worth as $65 million. Oh, by the way, I have a book of business that's going to be coming up.

It's hundreds of millions of dollars. You know, if you can't bring that company to me at $65 million, why don't we talk maybe in a year and a half or two years, lo and behold, what do you think. The investment banker is coming back and that $90 million company is coming in at $65 million. Now, for the sake of this conversation, I've just been filling in some of the numbers there, but that's what happens and is not far off.

You got to listen to the episode. So it's absolutely crazy. So you want to stay away from transactional investment bank. They're positives again, they can take you quickly to market. They can put together a list of buyers. They know all the buyers, they know your business, but the downside is you're getting any deal, not the best deal.

Where you want to focus on is what we call the advocate. So an advocate, investment banker, here's the narrative of what you're going to hear. Hey, Jeffrey, we don't know your industry. We don't even really know your business. And in fact, we don't know your buyers but leave it with us. We'll learn your business. We'll go out there. We will cast a very wide net.

We're going to attract a lot of buyers and we'll work with you through the competitive process to find you the best buyer. Now, at first glance, you might be saying, Jeffrey, are you nuts? Are you serious? Really? You want me to work with an investment banker who knows nothing about my industry who has never done a deal in my industry before? Doesn't even really know my business?

Why would I want to do that? Well, if you're listening carefully to the narrative the investment banker, what you heard was, and this is key. We don't know the buyers. And that's what you want. Your investment banker, who is an advocate will probably never do another deal with your future buyer ever again.

Why is that important? Well, that allows your investment banker to really push the envelope. If your investment banker upsets that buyer. And that buyer says, you know, we'll never work with you again, the investment banker, your investment banker, who's the advocate is saying, hey, that's okay. I don't mind that because I'll probably never work with you again either.

So it's not a big deal. I want the top dollar for this liquidity event. And the other thing that you heard was, you know, we'll have to cast a wide net to get the buyers. And you may be thinking, well, it's going to take longer. Initially, it'll take longer for an advocate to put together a list of buyers. But the advantage of that is you will not only have the same buyers at the table that a transactional investment banker would have brought.

You will have more buyers because the advocate is going into different industries, probably different countries, casting a very wide net. And when it comes to your liquidity event, and we talk a lot about this in the Deep Wealth Experience in step number three of the future buyer. You want to have a competitive process, a competitive bid, otherwise known as an auction.

You want to have as many buyers at the table as possible because they're quick, they're responsive. They're likely not going to play games with you. And that really helps you get the best deal instead of any deal.

And the third thing when it comes to cracking the investment banker code is how you compensate your investment banker. Now you may be saying, well, wait a minute, Jeffrey, what are you talking about? I'm already paying a commission and it will be a hefty commission to the investment banker.

And the short answer is yes you are. And depending on your deal, it could be as low as 1%. It could be as high as 10%. The bigger the value of your company, the smaller, the commission that you pay. But in the Deep Wealth Experience, one of the things that we talk a lot about, we call it the waterfall compensation system.

And this is where you want to incentivize your investment banker to really go above and beyond. Let me talk now with my sales hat on, and it doesn't matter if it's an investment banker, if it's a real estate agent, if it's a sales professional, we're all people. And for any sales professional, if you went to them and you gave them a choice, he said, look, here's a deal.

And let's just call it an index of 100. That's the standard. This deal that has an index of 100, you have a 95% chance of getting that. Or you can go after a deal that has an index of 125, but you only have an 80% chance of getting that. What do you think is going to happen? Now? Some of you might be saying, well, Jeffrey, clearly the salesperson is going to go for the index of 125 because they're getting a higher commission.

But the short answer is absolutely not. It's the opposite. As people, we always go for the sure thing. So whether it's an investment banker, a sales professional, the index of 100 for that particular deal, with that 95% probability that's where the sales professional is going to put his or her attention. And truth be told, let's say it was a hundred million dollars versus $125 million.

You may be saying, yeah, you know, there's a lot of commission on the $25 million and perhaps there is, but there's no commission on $0. And so the investment banker may be thinking, well, you know what the a hundred million. That's pretty much a sure thing. It's not guaranteed, but let's just do that. And that's going to fall within the range of what's a really good deal.

And perhaps it does, but what if the investment banker was incentivized to go after that other $25 million? What if that additional $25 million could be as much commission or more commission than what they're getting on the first 100 million? And in the Deep Wealth Experience, we have a whole formula of how you break that out and what the percentages look like.

But when you provide that waterfall compensation to your investment banker. And this is where you're establishing the top-end value of your business. And there's a number of ways that you can do that. But once you go to your investment banker and say, look, here's the top value for our business. And again, let's use that index of 100.

The top value for a business is that that index of 100, well, from a 100 to 110, I will pay you X percent above and beyond what you're getting paid. And from 110 to 120, I'll pay you X plus Y percent. And from 120 to 140. I'll pay you X plus Y plus Z percent. You get the idea and now you're incentivizing your investment banker to get you the absolute best deal instead of any deal.

So this is why you must crack the investment banker code so that you can thrive and prosper. Let's talk about strategy number three. And this one, I love this one. Here's the question for you.

Do you know why enterprise value is not a complicated formula in a spreadsheet?

Now you may be saying Jeffrey, come on there's no way that my value is not a complicated formula in a spreadsheet. What are you talking about? And it's a fair question, but now let's do a deep dive into the art of a liquidity event. And in the art of the liquidity event. And again, I'm going to put my sales hat on.

I'm going to throw something out that you may find controversial, but I can tell you in my own experience and speaking with other sales professionals this is absolutely the truth. And I want you to think about this for yourself. Again, as people buyers are people, sellers are people, we're all people. We're all wired in the same way.

People make decisions based on emotion first, and they justify it with logic later. And I want you to think about something maybe you're looking to buy I don't know what it was maybe it was a property or a car or something that you really loved, and the price was a little bit out there. You love it. You know you want to do it. And in your mind, you start to justify why it's worth it. I love it. I'm going to do it. Oh, you know what? It has tremendous resale value. This is well-respected in the marketplace.

This really tells people that I've arrived or I'm going to use it for many, many years because, unlike all the other products, this one lasts a long time. You find the reasons to justify why you're going to be paying a premium. It happens every day, all day, every day. So how can you capitalize on that?. Well, this all goes back to again, step number three in the 9-step roadmap.

When you master the art of thinking like a buyer. And we're going to talk a lot about that in step number four. So I don't want to take the wind out of my sails, but I'll simply say this when you know how to think like a buyer, you know how to talk like a buyer and you have the opportunity of getting the buyer excited through a narrative, a very powerful narrative about your business.

And again, I'm going to put this in the show notes. I brought on a valuator and the valuator he valued everything from Uber to the Golden State Bridge, to everything else in between. And in the interview, I asked him, how does the narrative makeup the actual value of the business itself? And the next thing that he said really demonstrates that truth can in fact be stranger than fiction.

He said Jeffrey before I even look at the spreadsheet before I look at the data and the numbers, I want to understand that narrative. For me, he said that narrative is 80% of the value. Now, of course, there has to be the numbers to back up the narrative. You can have a world-class narrative, but if you don't have the numbers to back it up that's a whole other issue.

But if you have a terrific narrative that gets me excited, and then you have the numbers to back it up well your enterprise value just went through the roof. And so your mission as a business owner, as the seller is to craft a narrative that paints a very exciting vision, where there's hope, where there's a high ROI for your future buyer. And this is how we can really leverage the art side of the liquidity event. And this demonstrates why the enterprise value is not a complicated formula.

Here's a quick personal story for my own liquidity event. I asked the investment bankers and I asked some the advisors to give me the top dollar value of Embanet.

So they came back and we all compare the numbers and we agreed on what the number was. and it went to the investment bankers and I said, do you think we can get a dollar more? And they looked me in the eye and they said, Jeffrey, we can not get a dollar more, that's it.

This is all you're going to be able to do. And in fact, we're going to give you a range. We don't want you just to have your eyes set on that. Here's what your range is going to be. And they gave a range. And I said, okay, watch, what's going to happen next. So myself and Steve and Waleuska crafted this narrative and we shared that narrative with the buyer and the narrative was exciting. It painted a bright and prosperous future.

And a few things happened. All the buyers became excited. And the buyers are just like us as business owners, they're competitive. They don't want to lose a deal. Their name is on the line. They are kicking themselves over the last deal that they lost, that went on to become a huge success. And in the back of their mind, they're saying here's another deal. It's going to be a huge success. I really like what I'm hearing. I'm not going to be the one to lose it. I'm going to make sure that I get that. And here's where the competitive process comes in the auction. They know there's other buyers, and now they're really putting their best foot forward to make sure that they're the winner.

And so what do you think happened? Well, the enterprise value for Embanet exceeded every single projection of what was there. Was it a complicated formula in a spreadsheet? No, those formulas didn't make any sense. And they're not supposed to make sense because beauty is in the eye of the beholder. So when you create a narrative, because you know how to think and talk like a buyer and your narrative is exciting.

It's interesting and it paints a bright and prosperous future. That's how you increase your enterprise value.

And that ties nicely into strategy number four, why you must think like a buyer to thrive in your liquidity event. So I have a question for you, and if you've been listening to the podcast for a while, you get to know the answer, but let me ask it anyway.

What is the world's favorite radio station? Do you know it? And by the way, this is the same radio station it's the favorite radio station of your future buyer. Well, it's called wwi.fm. The What's In It For Me radio station. And when you master the art of thinking like a buyer, you're tuning into WII.FM.? And when you learn what the buyer is all about, what they're looking for, what you're doing is you're figuring out how can I solve a painful problem for the buyer?

After all your buyer didn't just show up to the liquidity event just because it sounded like a good day. Your buyer showed up to the liquidity event because they believe that you can help them solve some kind of a painful problem. And depending on how well you do it, your buyer will pay a premium for you. So you're ensuring that you demonstrate how you solve the problem.

You demonstrate how you reduce the risk for that buyer of why there's going to be a high ROI. And this is where step number two, X-Factors That Insanely Increase the Value of Your Business. They play a really big role in your narrative, and you've heard it on some of the other episodes. Some of the X-Factors may be that you have a terrific management and leadership team that the business actually does run without you.

You have a thriving culture where there's transparencies, you have key performance indicators. You have an incredible business model. You're in a blue ocean. I can go on and on and on. But you're taking those X-Factors and you're weaving them into your narrative that you're sharing with the buyer and what you're doing with that narrative.

When you're tuning into WII.FM, you're both showing and telling the buyer why you're the best thing around. It's not good enough to just show if you just show the buyer and you can't tell it with the data and the facts and the quote-unquote proof, they're not going to believe you. And you can't just tell because the data and the facts and the figures in and of themselves, they're boring, you're going to lose her interest.

It doesn't stir the imaginary. But when you combine the two, when you both show and tell, and it's a narrative and you're really good at it because you've practiced. And we talk a lot about that in the Deep Wealth Experience. And in fact, in the Deep Wealth community, we have all these incredible subject matter experts who can help you craft your narrative of how you talk and how you sound.

Well when you nail that and when you put that out there, you now get the attention. Of all the buyers and you know how to think like a buyer because you've tuned into WII.FM and that's, what's really making the difference. Now again, does thinking like a buyer show up on a spreadsheet? Is it a complicated formula? Absolutely not, but it's the art side of a liquidity event and in the art side of a liquidity event, which plays nicely into the 9-step roadmap, because the 9-step roadmap, really a lot of it leans on the art side of doing things. That's where you get the competitive edge. And by the way, just to loop this back around to the first strategy, why you need to prepare more than you think.

Some of the strategies that I've spoken about coming up with a narrative, both showing and telling, thinking like a buyer. Do you think you can do that from just showing up to the investment banker today and you're in the market tomorrow? Of course, you can't. And now you're starting to see and understand why it's so important that you give yourself the time to prepare. So that's strategy number four, why you must think like a buyer to thrive in your liquidity event.

Let's bring this home. What's strategy number five?

Strategy number five, why it's all about removing the skeletons and displaying the Rembrandts before your liquidity event. And now I'm bringing this full circle because I spoke about skeletons and Rembrandts a little bit earlier, and that's what I love about the nine separate my preparation and the Deep Wealth Experience.

Everything is tied together. It's not one plus one equals two. It's not even one plus one equals three it's one plus one equals 10. When you put all these things together, you have a very powerful package that you're bringing to your investment banker to your stakeholders, to your liquidity event, to your future buyers.

So let's take a setback. Everything always gets boiled down to a very simple story. And as I like to say, let's not confuse simple with simplicity. Preparation, big picture wise preparation is doing two things. Number one, it's helping you find those hidden skeletons in the closet and remove them. And please remember that every one of those skeletons that you don't find that your buyer finds in the liquidity event because you didn't have time to prepare.

One of two things is going to happen. Either number one, you're going to get penalized with your enterprise value, not good. Or even worse number two, the deal is off. Skeletons are costly. Every mistake that you make is hurting you in ways you can't even begin to imagine.

Said in another way. Every time you make one less you have a higher enterprise value and that's the power of preparation. But the second thing that we do with preparation, those hidden Rembrandts in the attic, and you may be saying Jeffrey, what the heck is a hidden Rembrandt in the attic? Well, these are areas that you are world-class in, but you probably took it for granted that you're world-class you think?

Well, everyone is doing this, I'm doing this, my competition's doing this. It's not really special. Well, I have news for you. It is special. You are world-class in two, maybe three areas, probably even more than that when you look to find what that is, and this is what's so powerful.

In fact, this is why step number two of the 9-step roadmap X-Factors that Insanely Increase Your Enterprise Value. We put, X-Factors a step number two because many X-Factors are Rembrandts. And the Rembrandts and the X-Factors when you know what those are, and you take that to your marketplace, to your stakeholders now, even before the liquidity event, number one, you're going to impress your customers. And number two, you're going to get more customers than you would otherwise.

A quick example at Embanet. We knew that having long-term exclusive contracts that were 10 years were important, but we didn't realize how important they were until we really got involved in the world of mergers and acquisitions.

And once we realized that those exclusive contracts for 10 years were Rembrandts, we began to broadcast that to our existing clients also to prospective clients. And what was interesting was perspective clients said well, look at this so-and-so has a 10-year contract with Embanet. Well, if Embanet is good for them, they must be good for me.

And it helped us get more business because we put that X-Factor, which was a Rembrandt of those exclusive contracts out there. And for every X factor that we identified Embanet was in a blue ocean. Our business model was an X factor. When we put all that out there, it became exciting, particularly during the liquidity event, because it showed the buyer how we're reducing risk.

It showed the buyer why there's a higher ROI for them. And again, that's what the buyer wants. They want the minimum amount of risk for the highest ROI, and that's really what you're doing. So the buyers love hearing both about your X-Factors and your Rembrandts, but here's something else that you need to know.

And I'm going to use the word vulnerability when you're talking about some of the mistakes that you've made, some of the skeletons that you have in the closet, it's important that you share that with your future buyer. Firstly, if there's a skeleton that you can't get rid of, you always want to be upfront about that.

You're telling your investment banker about that right up front. The future buyer is going to know about that, right upfront. Because if you don't and as business owners, sometimes you want to say, well, maybe I won't say that. Maybe I'll just kind of keep that behind the scenes. You don't want to do that. If you do that, the buyer's going to find out anyway, you're going to lose the trust of the buyer.

And remember in the world of mergers and acquisitions, the currency is trust, not money. So you want to always be upfront. But when you know how to tell a good narrative and you can go to a future buyer and say, listen, we need to be upfront with you. We try to expand internationally. It took us two years.

We lost XYZ dollars and it was a complete failure for us. And looking at that, we know we failed because we weren't properly capitalized at the time. We didn't have the experience. We didn't have the right talent. Now, Mr. or Ms. buyer, we researched you and we know you definitely have the capital. You do have the experience and you also have the people.

So really our failure is your gain and here's how it could work for you. And then you go into detail of what that could look like for the future buyer. In that one instance where you're vulnerable, you showed where you really mess things up. What do you think just happened with that future buyer? Number one, there's a tremendous amount of respect because you shared not only how you messed up, but why you messed up.

You're putting that on the table. You're gaining that trust of the future buyer, but you didn't stop there. You went on and you explained to the future buyer, how your loss is the buyer's gain and who wouldn't want to do that. And the other thing, just as we wrap this up for the third point of why it's all about removing the skeletons and displaying Rembrandts before your liquidity event, you know, at Deep Wealth, we have a word that we ban from ever saying, and we certainly don't want to see it in the deal.

What's that word? It's the e word, otherwise known as an earnout. We don't believe in earnouts. When you remove the skeletons that were your blind spots that you didn't know about and you then put some light on them and you now remove them.

You are doing so much in terms of number one, increasing deal certainty. And number two, because you've done your preparation. You have a competitive bid. You're having an auction. You can now eliminate an earnout in that competitive bid. Because you're prepared because you have a terrific narrative because the buyer's excited because you've demonstrated, you've shown, you've told you've done all those things.

You can ensure that an earnout is a no-fly zone for you. And it doesn't show up in the LOI and it doesn't show up in your purchase agreement. And again, it all comes back to preparation of why it's a competitive edge.

So let's do a quick recap of the five areas of the five common liquidity events, mistakes that most business owners are making that can either cost them the deal or the enterprise value.

So strategy number on. Why you need to prepare more than you think. And there you learn that preparation is like that magical key that can unlock enterprise value. And when you do step number four, the 9-step roadmap, the internal audit, you're saving your health, your money, and your time.

Strategy number two, why you must crack the investment banker code so you can thrive and prosper. And here you learn why you want to stay away from transactional investment bankers and why you want to gravitate towards advocate, investment bankers. And once you choose your advocate of an investment banker, you learn all about the waterfall system of compensation, which really encourages and motivates your advocate of an investment banker to get you the best deal instead of any deal.

Strategy number three. Do you know why enterprise value is not a complicated formula in a spreadsheet? And there, we talked on the art side of a liquidity event. We spoke about how people make decisions based on emotion first, and they justify it with logic later. Why beauty is in the eye of the beholder and how your narrative is so critical to having your future buyer become excited about your business.

Strategy number four, why you must link like a buyer to thrive in your liquidity event. And again, this was step number three of the 9-step roadmap. We spoke a lot about that, of your buyer's favorite radio station, WII.FM. The What's In It For Me radio station. And we spoke about how, when you think like a buyer, it's all about reducing risk and creating narratives that both show and tell.

Strategy number five, why it's all about removing skeletons and displaying Rembrandts before your liquidity event. And this goes back to the whole preparation side of things where you've taken the time through your internal audit, that you've identified the skeletons, you remove them because you know, every mistake that you make will either lower your enterprise value or it'll kill the deal. And you also know that some buyers may actually want you to make mistakes because they're looking for every excuse to penalize you. But you also learn that when you remove your skeletons and you put your Rembrandts out for public display. And you create such a powerful narrative that's compelling. It gives you all the ammunition that you need to eliminate an earnout.

 So there you have it. Those are the five liquidity event, mistakes that rob you of enormous success. And now that you know what not to do you also know what to do. And on that note, you're all set to begin that process of preparation.

So as we wrap things up here, I have a question for you. Did you enjoy this episode? Did you get value from it? Well, if he did, I would love it. If you went to your favorite podcast site and give us a review. Your reviews helped to get the word out there so that we can pay it forward to more business owners.

And also if you liked what you heard if you got value from today, why not think about going through the 90-day Deep Wealth Experience? You'll immerse yourself with other successful business owners from different industries that are not your competitors.

You'll learn the exact same strategies of preparation that I used for my liquidity event, my 9-figure liquidity event, and you'll also get success coaching. It doesn't get any better. And you come out at the end of the 90-days, you've built a blueprint to increase the value of your business, and it's very specific to your business.

And you also have the certainty of knowing how to capture, not just a deal, but the absolute best deal. So there you have it. We're going to wrap up this episode and as always, thank you so much for spending part of your time with us here on the Deep Wealth Sell My Business Podcast. And as always, please stay healthy and safe.

[00:37:54] Sharon S.: The Deep Wealth Experience was definitely a game-changer for me.

[00:37:57] 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.

[00:38:07] Kam H.: If you don't have time for this program, you'll never have time for a successful liquidity

[00:38:12] Sharon S.: It was the best value of any business course I've ever taken. The money was very well spent.

[00:38:18] 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.

[00:38:34] 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.

[00:38:56] 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.

[00:39:06] 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.

[00:39:20] 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.

[00:39:38] 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.

It's five-star, A-plus.

[00:40:05] Kam H.: I would highly recommend it to any super busy business owner out there.

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.

[00:40:24] Jeffrey Feldberg: Are you leaving millions on the table?

Please visit www.deepwealth.com/success to learn more.

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.

As we close out this episode, a heartfelt thank you for your time. And as always, please stay healthy and safe. 

This podcast is brought to you by Deep Wealth. 

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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!