"Speed always favors the seller" - 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, Jef...
"Speed always favors the seller" - 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.
This podcast is brought to you by Deep Wealth.
When it comes to your liquidity event, you have one chance to get it right, and you better make it count. Enterprise value is created from preparation and not the event itself.
Learn how the Deep Wealth Experience helps you maximize enterprise value. Master the same strategies our founders used to increase their company value 10X.
Access the same 9-step road map of preparation that paves the way for success. Enjoy the certainty that you'll capture the maximum value on your liquidity event.
Enjoy the interview!
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This podcast is brought to you by the Deep Wealth Experience. In the world of mergers and acquisitions, 90% of deals fail. Of the successful deals, business owners leave millions of dollars on the deal table.
Who are we and how do we know? We're the 9-figure exit guys. First, we said "no" to a 7-figure offer. Then, two years later, we said "yes" to a 9-figure offer. In the process, we increased the value of our company by 10X.
During our liquidity event journey, we created a 9-step road map of preparation. It's the quality and depth of your preparation that increases your business value.
After our 9-figure liquidity event, we committed ourselves to help business owners dominate and win. The Deep Wealth Experience has you create a blueprint to optimize the value of your business.
Our solution is resilient, relentless, and gets results. Enjoy the certainty that you'll capture the maximum value on your liquidity event.
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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.
Enjoy the interview!
Jeffrey Feldberg: [00:00:05] Welcome to the Sell My Business Podcast. I'm your host Jeffrey Feldberg.
[00:00:11] Are you thinking about an exit or liquidity event?
[00:00:14] This podcast is designed to help you increase the value of your business, and at the same time, give you the certainty to capture the maximum value in your liquidity event.
[00:00:26] At the heart of the Deep Wealth Experience is the nine-step roadmap of preparation. Learn and master the same strategies that had me say no to a seven-figure offer, and a short time later, say yes to a nine-figure offer. In the words of a business owner who went through the system, "the Deep Wealth Experience was hands down, the best program I've ever participated in."
[00:00:50] To learn more about the 90-day Deep Wealth Experience, please visit www.deepwealth.com/success.
[00:01:01] Welcome to episode 63 of the Sell My Business Podcast.
[00:01:06] In today's episode, we're going to do a deep dive on the letter of intent. Now for most business owners when it comes to their liquidity event, they look at the letter of intent that they received from a buyer or an investor as an actual done deal. And this couldn't be further from the truth.
[00:01:25] A letter of intent is the beginning of the process, not the end of the process. And what we're going to focus on today is how your deal benefits from a strong letter of intent. And what you're going to find out as we go through the episode, the more detailed and the more specific that your letter of intent is the better off you're going to be. The more likely you're going to have a deal.
[00:01:48] So, let's talk about the five strategies that are going to benefit you when you have a strong letter of intent. The first strategy is the temptation that you must avoid with the non-binding terms within the letter of intent. Now in the letter of intent, you'll have binding terms and non-binding terms. And just as it suggests the non-binding terms, these are areas that your buyer will put on paper but doesn't have to live up to when all is said and done.
[00:02:19] And the three key areas that we're going to look at for the non-binding terms are purchase price, the structure, and payment method, as well as key deal terms. So, let's start with the purchase price. Most buyers are investors in the letter of intent they're going to give you a range of what they're prepared to value your business at.
[00:02:39] It’ll be somewhere between X dollars and Y dollars is what's put within the letter of intent. And for a lot of business owners, when they see the dollar signs on the paper, they have euphoria. Number one, an outside party has now put an actual value on the business. And for many business owners, this is fulfilling and they feel like they've done it. Someone is valuing their business in the millions and millions of dollars.
[00:03:08] And the truth is that most buyers want you to feel this way. They want to have the dollars overrun your emotions.
[00:03:17] So, when you look at the purchase price in the letter of intent, there are a few things that you want to keep in mind. For starters, you want to make sure that your buyer isn't going to play the bait and switch game. Not all buyers are like this, but there are some buyers who will deliberately put a high value in the letter of intent.
[00:03:36] And because it's non-binding, these buyers will find every excuse that they can to give you a much lower price after due diligence. And these buyers will use deal fatigue and timing, and you're already well within the liquidity event. You just want to get it done and over with that, they'll pull out this lower price, hoping that you go for it. Now, again, not all buyers are like this, but there are some, and so you should have a heads up on this and you should be aware of this. And that's one of the nice things at Deep Wealth that we do with our nine-step roadmap.
[00:04:08] We have you prepare well in advance so that you can anticipate these things and not fall victim to it. So, in the non-binding terms, the first thing that you want to look at is the purchase price. And you want to understand that whatever the buyer puts down on paper, the buyer doesn't have to commit to that.
[00:04:26] So, on the flip side, I spoke about how the purchase price could go down. But there's nothing to say that it can't go up. And this is the beauty of preparation when you're prepared well in advance of your liquidity event, when you've mastered our nine-step roadmap, you can use the strategies and the tactics to do what you can to actually increase your enterprise value.
[00:04:50] When it comes to purchase price the other thing that you want to keep in mind is if there's a range or a specific value.
[00:04:57] The more specific, a letter of intent is the better off than you are. And having a specific value on the business is much better than a range. So, as an example, just to pull some round numbers out of the air, you could have a letter of intent where the buyer says, I value your business somewhere between $100 million to $175 million.
[00:05:16] Or you could have a buyer that comes in and says, I value your business at $165 million. There's a big difference between $100 million and $175 million. So, you want to have the purchase price as specific as you can. And that's the beauty about the letter of intent of why the more detailed it is the better.
[00:05:35] Before you sign the letter of intent. You can go back to your buyer and say, I don't agree with a wide range. I'd like to have a specific value that unless unforeseen things come up, this is what you're going to pay.
[00:05:47] And this is the beautiful thing about a detailed letter of intent. It's like a crystal ball. When all the details are in there unless something unforeseen happens what's in the letter of intent is what you'll see in your agreement and that's what's going to help get you over the finish line and close the deal
[00:06:03] So, keep in mind the purchase price. You want to make sure there's not going to be a bait and switch.
[00:06:07] Now the second area in terms of non-binding terms. That's the structure and payment method. A detailed letter of intent will tell you the kind of structure that the deal is going to take.
[00:06:20] Is it going to be an asset purchase? Is it going to be a stock purchase? The structure is important. And by the way, if the structure is not in the letter of intent, you want to have it in there? Why, why does it matter?
[00:06:35] Well, depending on the structure and your situation it'll have tax implications. One structure will have less taxes. One structure will have more taxes, and obviously, you want the one that has less taxes. Again, your liquidity event it's not about how much money you get. It's how much money you keep when all is said and done. And this is why your deal benefits from a strong and detailed letter of intent.
[00:07:01] The more details that you have the better. And that's the other nice thing about preparation. When you go through our nine-step roadmap of preparation, you'll know, well in advance, the kind of structure that you need for the deal. So, when you see a specific structure in the letter of intent from your buyer, or if your buyer doesn't include that and you then insist on that, if it's the wrong kind of structure, while you're in the letter of intent mode before you've signed it. You can insist on having that structure in there. And guess what. if it's not the right structure for you, you can walk away from that buyer.
[00:07:37] And when you're doing this within an auction all the better because you'll have all different kinds of buyers lined up and you'll have choices. Buyers will know that. And it's a terrific way of putting leverage on the buyers. Now the other thing that's often associated with the structure is the payment method. Is your future buyer going to pay all cash?
[00:07:58] Is there going to be financing involved? And if there is financing involved, how's it going to be financed? Is it going to be a loan from a traditional bank? Is it going to be bonds? Is it going to be some other kind of instrument? Why is the payment method important?
[00:08:12] Well you want to know the payment method in advance so you can determine your level of risk.
[00:08:18] So, as an example, if it's an all-cash deal, there's zero risk. If the buyer has the cash in the bank, you know at the time of closing, there'll be a wire from the buyer to you and the deal is done.
[00:08:30] If the buyer is putting some kind of financing in a letter of intent well, now you have risk involved. There's no guarantee that the buyer will be able to get financing. And this is all part of the process. Not every deal is equal. You can have a deal that is of a higher value, but it may have things within the letter of intent that don't work for you, that you may look to another buyer, a different letter of intent, and that value for your business will be perhaps slightly lower, but it has better terms for you.
[00:09:01] And that's the beauty of a letter of intent. The more detailed that it is, the more insight you have in terms of what you can expect. So, we've talked about the purchase price. We've talked about the structure and the payment. The third non-binding term that you want to look at our key deal terms.
[00:09:19] Key deal terms could be having an escrow and how much that escrow is going to be. And when that escrow is going to be released, heaven forbid an earnout. We definitely don't recommend an earn-out at Deep Wealth. If you find yourself with an earn-out, well better that you know that now in the letter of intent. So, you can determine if you want to move forward without or not.
[00:09:38] But are you starting to see a pattern here? When it comes to non-binding terms in the letter of intent, the more details that you have the better. Because when you know everything that's involved with your deal and you know that in advance, you're going to avoid surprises and the buyer is going to avoid surprises.
[00:09:57] Shortly I'm going to talk about what you're going to want in a letter of intent from your side, that you'll put into the letter of intent to give the buyer the courtesy of what you need. But for the moment we're looking at what the buyer wants in that letter of intent and why you need to know these things.
[00:10:11] So, as a recap, we've talked about the temptation that you must avoid with non-binding terms in your letter of intent, and what's that temptation? Well, the temptation is just to overlook it and say, well, it doesn't matter. Yes, there's a high purchase price looks good. Well, don't worry about the structure of the payment method. I'll get to that whenever we get to that. And I'll just figure out the escrow and the earnout, not a big deal.
[00:10:32] You don't want to do that. You want to have all these things worked out well in advance so that you know exactly what's coming your way. So, that's strategy number one of avoiding the temptation with non-binding terms in your letter of intent.
[00:10:45] The second strategy is why you must walk away if your buyer insists on walkaway fees. So, what's a walkaway fee? Well, some buyers will use a walkaway fee because they want to protect themselves. And I can't blame the buyers. Up to 90% of liquidity events fail. So, let's go and tune in to the world's favorite radio station. WII.FM, the What's In It For Me radio station from the perspective of your buyer.
[00:11:17] So, can you imagine that you're now a buyer and you're spending a lot of money on the due diligence and the deal process. In some cases, it could be hundreds and hundreds of thousands of dollars that a buyer is spending to not have a deal go through. And can you imagine for a moment as often happens, a buyer does all the right things, spends the money on due diligence and then the seller for no particular reason walks away from the deal.
[00:11:44] Oftentimes the business owner wasn't prepared. And the business owner didn't answer my famous "what now?" question. And this is where you imagine the liquidity event is done.
[00:11:54] You've now moved on. You're looking at the rest of your life. You've traveled the world. You've bought your toys. You're sitting on a beach, you're bored out of your mind. And you're asking now what, what does that look like? For many business owners, they don't go through the nine-step roadmap of preparation.
[00:12:09] And right before they sign the deal, they realized that they don't have a life without the business and they walk away. So, what a buyer will often do is they will say, okay, If a seller walks away from the deal for any reason whatsoever, you're going to pay me a certain amount of dollars. And not a great situation to be in. You're not like most buyers. If you've gone through the nine-step roadmap if you've gone through the Deep Wealth Experience.
[00:12:34] You've done your preparation. And you're not going to be in that situation. You know exactly what you want. Now, there may be other reasons that you're going to walk away from the deal. You may walk away from the deal because the buyer, all of a sudden is changing his or her tune. And you're walking away for legitimate reasons that the buyer is using all different kinds of tactics that just aren't above board.
[00:12:56] The best-case scenario is that you have no walkaway fees or whatsoever. This is better for you. If this is going to be a sticking point and the buyer insists on having a walkaway fee well you may want to think about, do you even want to deal with this buyer?
[00:13:11] And if you come back with a yes, then you may want to have a reciprocal clause that says, okay. If either party walks away from the deal, there is a penalty that will be paid. And here's one of the reasons why you want to have a terrific mergers and acquisitions lawyer who is experienced, who has a track record of success, who's going to represent you. And it's your mergers and acquisitions lawyer. Who's going to walk you through the letter of intent clause by clause. Of what works for you and what doesn't work for you.
[00:13:44] But the key takeaway here for you to know is that you must be prepared to walk away if your buyer insists on walkaway fees.
[00:13:52] So, let's now look at strategy number three, when it comes to how you deal benefits from a strong letter of intent. And strategy number three is how to deal with the exclusivity period following the signing of a letter of intent. So, let's talk about this for a moment. You'll remember at the beginning of this episode, I said that a letter of intent is simply the beginning of the process, not the end of the process.
[00:14:19] And particularly when you're doing an auction. The highest amount of leverage that you have is heading into the letter of intent. Until you sign that letter of intent you can do what you want to do. You can go to another buyer, you can decide to work with that buyer, but once you sign that letter of intent what you're now saying to all the other buyers is I'm not able to work with you.
[00:14:42] For a specific period of time I'm going to work with is one buyer. And until you sign that letter of intent that's when you have leverage, once you sign that letter of intent, your leverage goes away. Yes, you can go back to the other buyers if things don't work out, but that's going to take time and that's going to take money.
[00:15:02] And you're not going to want to do that if you don't have to. So, when it comes to the letter of intent, once you sign it, you're now in an exclusivity period, and this is why you want to have your letter of intent as specific as possible with all the details mapped out well in advance. So, there are absolutely no surprises.
[00:15:21] In reality, the letter of intent should just be a shorter version of the actual agreement itself. All the points in the terms and the deal points and what we call your no-fly zones, all these things that you mapped out through the nine-step roadmap of preparation. Those should all be in a letter of intent.
[00:15:40] So, let's imagine for a moment, all those things are there. The letter of intent is incredibly detailed. You know exactly what you're getting into. Let's talk about this exclusivity period because this is an important area. Your buyer will want a very long period of time for the exclusivity period.
[00:15:59] And your buyer is going to give all kinds of reasons. They're going to say that they need time to do due diligence. They're going to need time to do market studies, or they're going to need time to do this and do that. And in most instances, the buyer is correct in what's being said, because unlike you, most business owners aren't prepared.
[00:16:17] Here's the beauty of doing your preparation and a nine-step roadmap well in advance. When you show up prepared when you've done your internal due diligence audits well in advance, this is where a year or more before you started your liquidity event, you've hired your Chief Exit Advisor. You've hired your M&A lawyer. You've gone through an internal due diligence audit.
[00:16:41] You've gone through the nine-step roadmap. You found your skeletons in the closet, and you remove them. You found your hidden Rembrandts in the attic, and you put them out for public display. You are now ready. And the truth of the matter is that when it comes to a liquidity event, speed wins. The shorter time that you're in the market, the better, the shorter time that the buyer has to do due diligence, the better.
[00:17:07] So, when you've done your preparation, you can go back to the buyer and say, I understand that you want a certain period of time. However, I'm going to ask for a shorter period of time because I've already done the preparation. I've already done my quality of earnings report. I've already done my data privacy report. I have all the information ready for you in the data room. So, I'm not going to give you this period of time. I'm going to give you a shorter period of time to work within.
[00:17:33] And when you put in that shorter period of time, you're going to be very specific in the letter of intent. It will be however many weeks or months and not a day more. Because again, once you sign that letter of intent, you lose your power. So, it's absolutely critical that the exclusivity period of following the letter of intent is as short as possible.
[00:17:58] As we wrap up strategy three, it's actually a precursor and ties nicely into strategy four. And strategy four is all about why you must do diligence in the time required for the due diligence period.
[00:18:14] Now we spoke about the buyer wanting as long, a time period as possible. And you came back and you put in a shorter time period. Let's assume that the buyer has now gone along with this. And a shorter time period is agreed upon. It's now up to you to ensure that you hit those timelines. You don't have any time to waste. You have the shorter time period. You want to have your full time and attention on answering all the questions that the buyer is going to be asking.
[00:18:45] And this is also why it's so important that you're prepared and that you're ready. The nine-step roadmap of preparation will have you do this. It'll also have, you know, how to find and select the right advisors. Time is money. Speed wins. The shorter, the time that your due diligence is the less time that you're in the market.
[00:19:05] The more likely it is that your deal is going to close.
[00:19:09] Let me share a quick story for you before I get back to the points here. In my own nine-figure exit we closed two weeks before the start of the Great Recession. Now, in my particular case, the buyer decided to use bonds to finance the purchase of the business. Now, I knew that financing was involved. I knew that there was risk involved and it was a calculated decision for both myself and my business partners to still agree to move forward with the financing for the deal.
[00:19:38] What nobody knew though, was that the Great Recession was coming. Because when the great recession started the first markets to feel the effect of this were the financial markets and the bond market.
[00:19:49] And interest rates in the bond market went up. So, very long story short. Had our deal closed 14 days later, there wouldn't have been a deal. When the great recession hit, I spoke to the buyer and asked, would you have done this deal today? And the short answer was no, the deal wouldn't have been done today because the cost of financing would have gone up and it wouldn't have made sense for the buyer to move forward with it. So, I can't underscore enough that speed wins. So, let's go back to strategy number four.
[00:20:21] When the buyer is asking you to do things, you better get on that as quickly as possible. And this is really a 24/77 effort, not just by you, not just by your key employees, but all your advisors. Whether it's a weeknight, whether it's a weekend, the time counts, and everyone needs to be fully prepared for this to get that turnaround done and get it to the buyer. And this goes back to why preparation is the key.
[00:20:50] When you've done the nine-step roadmap and step number four and step number five of the nine-step roadmap is doing an internal due diligence audit and also developing the right mindset around due diligence. When you've done that preparation, when you have that information, when the buyer asks for it, it's not a big deal. You can then give it to the buyer in a timely manner.
[00:21:11] Should the buyer ask you for something that you don't have again, it should not be a big deal because you've already done the work in advance. You're not going to be scrambling, trying to do everything all at once, like most business owners.
[00:21:24] And in this instance, because you're prepared, you're not giving away your health. You're not giving away your time and you're certainly not giving away your money. So, preparation is the absolute key to get through that due diligence period quickly, even ahead of schedule. And again, as I mentioned previously when you're prepared, you've done all the reports ahead of time.
[00:21:44] You have your audit of statements done. You have your projections done. You have your quality of earnings done. You have your data privacy done. And the list goes on and on and on. You can put a check box next to all those things. This will impress your buyer. Show that you're ready. You show that you're prepared and show that you're serious, but you must come through and be quick in terms of your deliverables.
[00:22:05] So, as we wrap up strategy number four, let's go into the final strategy when it comes to how your deal benefits from a strong letter of intent. And these are the three must-have deal terms in your letter of intent. So, I spoke earlier about a letter of intent being the beginning and not the end of the liquidity event.
[00:22:24] Your buyer is going to come forward with a letter of intent. And I want you to look at that as a draft. It's not in final form. You have every right to put your edits in there and go back to the buyer with what you want. So, most buyers, aren't going to focus in on these three areas that I'm going to talk about that are to your advantage.
[00:22:43] And these three areas are life changers. They're not only life changes, they're game-changers. So, the first thing that you want to really hammer out in the letter of intent, it's the non-compete. Yes, your buyer is going to insist that you have a non-compete.
[00:22:59] Most buyers will look to have a noncompete that's as long as possible and as wide as possible. And who can blame them? They're spending millions and millions of dollars to buy your business. The last thing that they want to do is see that you go back into competition tomorrow and now you're competing with them.
[00:23:17] So, your buyer does have the right to ask for a non-compete. What's key though, is what that non-compete covers in terms of what industries is it covering and the time period that it's covering? From your part, the shorter, the time period, the better, the more narrow the non-compete the better, but that's going to be up for discussion. So, you want to make sure that your non-compete in the letter of intent, not by the time you get to the deal is already worked out well in advance. Because again, before you sign your letter of intent, you have the highest amount of leverage.
[00:23:50] So, imagine for a moment that you left the noncompete out of a letter of intent. And it's now coming up to the deal. You've gone through the entire process. You're going through the deal agreement. And the buyer puts in a very tough non-compete that just openly isn't fair. The buyer is going to pressure you. The buyer is going to use deal fatigue to have you tire to just agree to it.
[00:24:14] Maybe it's just a ridiculous non-compete but now you have limited options because you waited till the very end to address it, that you either agree to it or have some kind of minor modifications, which aren't great. Or you walk away. When you can do this in advance before you sign your letter of intent you may well end up walking away from that buyer, but you're doing that before you signed the letter of intent.
[00:24:37] So, make sure that you hammer out your noncompete. What's the second area of a deal term that you really want to have in your letter of intent? Well, it's personal, but one area that most business owners usually come up with is how the employees are going to be treated. Are the employees going to be fired? Are they going to be kept? If the employees are going to be fired, is there some kind of compensation package that's going to be there? Now the truth is the buyer is buying your business and the buyer has a right to run the business as he or she sees fit.
[00:25:07] But in the letter of intent, you may be able to specify for a period of time or for certain employees how they're going to be treated. It may be another issue, but I'm just using this one example. In the nine-step roadmap through the Deep Wealth Experience, one of the things that we have you do is well in advance to work out what your deal points are and what your no-fly zones are. And your deal points and no-fly zones are things that you absolutely must see in the agreement and things that you're absolutely not willing to have in the agreement and how your employees are treated may be one of them.
[00:25:41] The third area that absolutely must be in your letter of intent is the governing law. And a lot of business owners overlook this until it's too late. A good mergers and acquisitions lawyer will pick up on this right away, but I want you to be prepared. You're going to be relying on your mergers and acquisitions lawyer, but he also wants you to know for yourself what to be looking for.
[00:26:02] And the governing law is important. So, what is the governing law? Well, the governing law states that if there's going to be some kind of dispute, if there's going to be some litigation or a lawsuit, the governing law is where that will take place. Which laws of a particular State or country will that happen in?
[00:26:21] So, let me use an example where you're based in New York City. And your buyer is based in Tokyo. Just to pick any city. Your buyer may say that the governing law is Tokyo. So, what does this mean? If there's going to be a lawsuit now, you're going to have to find a lawyer in Tokyo. You're going to have to be in Tokyo for the litigation when that takes place. And obviously, this is not to your benefit.
[00:26:47] And remember before you sign the letter of intent, that's where you have the maximum leverage. So, what you'll want to do in your deal terms that you're going to have in your letter of intent. And this is how your deal benefits from a strong letter of intent. You're going to insist on that the governing law being where you're based out of in this example, New York City, and at least it's a starting discussion with the buyer. Now, the buyer may say, well, look, I don't want to agree to New York City.
[00:27:14] You don't want to agree to Tokyo. Let's find a place that's mutually inconvenient for both of us. And perhaps they'll pick Delaware just to pick a city. Well, at least that's a little bit closer for you than Tokyo.
[00:27:28] The point is before you sign your letter of intent, you'll hammer it out in a way that works for you. And when it comes to governing law, your takeaway is to fight for and insists that the governing law is your backyard. Wherever you live, wherever your businesses, whatever that may be whatever's best for you, that's where you want your governing law to be.
[00:27:48] So, let's do a quick recap now of the five strategies that you really want to master and internalize and how these strategies benefit your deal when you have a strong letter of intent.
[00:28:01] The first strategy that we talked about was the temptation that you must avoid with non-binding terms in your letter of intent. And the temptation is to ignore what the purchase price is to ignore what the structure and payment method is. And to not really look at key deal terms such as an escrow or heaven forbid an earn-out.
[00:28:21] And we spoke about how you want to be specific as possible in the purchase price. If there's a range, you don't want to have a range, one of a very specific price. You want to know exactly what it is. You want to know exactly what the structure is. You want to know if there's going to be financing involved. Is there an escrow? How much, and when does it get released?
[00:28:38] The second strategy that we talked about is why you must be prepared to walk away if your buyer insists on a walkaway fee. And again, you don't know what the future holds. All kinds of things can come up in the deal process. Having a walkaway fee is asking for problems. It's a penalty that you don't want to have put upon you and you don't need that pressure.
[00:29:00] And again, this is why you want all these details hammered out well in advance in the letter of intent before you sign it.
[00:29:07] Strategy number three was how to deal with the exclusivity period of following the signing of a letter of intent. And we spoke about how the exclusivity period must be as short as possible. Your buyer will want it as long as possible, but because you're prepared because you've done all your reports and your diligence in advance, you can ask for and receive a much shorter period of time in the exclusivity period.
[00:29:34] Strategy number four is why you must do your due diligence in the time required for the due diligence period. Speed wins. The shorter that you're in the market, the more likely your deal is going to close, you have a higher deal certainty. But that only works if you have a quick turnaround time based on the requests that the buyer is going to give you, and you will know what those requests are heading into your letter of intent because your buyer will have indicated that to you. And if your buyer hasn't, in your letter of intent, you can specify for that so that you do have those details. So, again, there are no surprises.
[00:30:11] And then strategy number five, we spoke about the three must-have deal terms in your letter of intent. And what those three must-have deal terms are. It's the non-compete. It's how your employees will be treated after the deal closes. And it's the governing law.
[00:30:28] So, that wraps up the strategies of how your deal benefits from a strong letter of intent. Lots of powerful takeaways.
[00:30:36] You may be asking yourself, well, where do you start? And what do you do? Well in the nine-step roadmap of preparation, the best time to start was five years ago. The next best time is today. Go through those five strategies. Think about them. How does that impact you? What do you want? What do you not want?
[00:30:53] Stay with each strategy until you master it, then move on to the next one, rinse and repeat. And before you know it, you'll have done all five strategies. You will have mastered it. And you're one step closer to being prepared for your liquidity event.
[00:31:06] Speaking of your liquidity event, if you haven't heard at Deep Wealth, we have an absolutely world-class experience. It's called the Deep Wealth Experience. It's a 90-day system where you learn how to master the nine-step roadmap of preparation.
[00:31:21] These are the same strategies and tactics that myself and my business partners created for our nine-figure exit. Remember we said no to a seven-figure offer. We mastered the art and the science of preparation. And two years later, a different buyer, a different offer. We said yes to a nine-figure offer.
[00:31:39] Here's your opportunity in this 90-day system to learn from that. To master that and begin to apply that for yourself.
[00:31:47] The business owners that have gone through the Deep Wealth Experience are all now raving fans because they walked away on that 91st day, they created a blueprint to optimize the value of their business. And they now have the certainty that they'll capture the maximum value in their liquidity event.
[00:32:04] If you'd like to find out more, please go to deepwealth.com/success. Again deepwealth.com/success. And this is where you can book your free call and explore what this is all about and how it can help you.
[00:32:19] 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.
[00:32:43] As we close out this episode, a heartfelt thank you for your time. And as always, please stay healthy and safe.