When it comes to your liquidity event, do you know how to find the ideal buyer for your business?
Knowing what to look for in the ideal buyer upfront can lead to a higher offer later.
After all, the skills that built your business are not the same ones to sell it.
The statistics for liquidity events say it all. Up to 90% of liquidity events fail. Imagine the time, effort, and money wasted with a 90% failure rate. A liquidity event is the largest and most important financial decision of your life.
The statistics go from bad to worse. Of the “successful” liquidity events, sellers leave 50% to over 100% of the deal value in the buyer’s pocket. Yes, you read that right.
I should know as I was almost one of the statistics. I created my eLearning business right out of school with no money, experience, or team. Failure became my new best friend.
My saving grace was my grit and passion, which kept me in the game long enough for success. With success, I received a knock at the door from a successful and experienced buyer.
I said “no” to a 7-figure offer and “yes” to mastering the art and science of a liquidity event. I said “yes” to a 9-figure offer from a different buyer two years later.
During my journey I created a 9-step roadmap of preparation for my liquidity event. Today, I pay it forward. I help business owners through the 90-day Deep Wealth Experience. At the heart of the Deep Wealth Experience is the exact 9-step roadmap.
There are five strategies to help you identify the ideal buyer for your business.
Would you like to know what these strategies are and how you can leverage them?
Inside of every problem lies an opportunity — Robert Kiposaki.
Chances are, your ideal buyer is not the one with the highest offer. You can do one thing to have buyers value your business at an even higher level.
What’s the one thing?
Understand the problems of your buyer and how your business solves those problems.
It sounds simple enough, but please don’t confuse simple with simplicity.
In the 90-day Deep Wealth Experience, step 3 teaches you how to master the art of thinking like a buyer. All too often, business owners are selfish and only think of themselves.
When you understand buyers’ problems, you transform any buyer into an ideal buyer.
How do you transform a buyer into an ideal buyer?
The short answer is your narrative.
A compelling narrative has buyers excited about a bright and prosperous future.
Up to 80% of your enterprise value results from your narrative. The remaining 20% is from your data and numbers.
People make decisions on emotion first and justify it with logic later.
Let’s go back to the beginning. When you started your company, you found a problem that you were passionate about solving. The problem you solved was so painful that people paid you to take the pain away.
You were world-class in solving the problem. Prospects became clients who went on to become raving fans. The rest, as the saying goes, is history.
It’s no different when you’re working with buyers. Understand the painful problems you can solve for buyers to find your ideal buyer.
Do you know what you must do to identify your ideal buyer?
Lack of clarity is always a sign of dishonesty — Celia Green.
To identify your ideal buyer, discover the problems of the buyer. Once you know your buyer’s problems, you can do the unexpected.
What’s the unexpected?
Be transparent with your buyer through your vision. Craft your vision of how your business solves the buyers’ problems. The more details, the better.
In the previous section, you learned about the power of a compelling narrative. Leverage the power of your narrative by customizing it for each buyer.
In step three of the 9-step roadmap, Future Buyer, there are two essential steps. First, master the art of thinking like a buyer. Second, have a competitive bid, or auction, for your business.
One of the many benefits of an auction is attracting many buyers to your liquidity event. Once you’ve identified the top buyers, customize your narrative for each one.
The time invested in custom narratives helps increase enterprise value. You create hope and excitement when buyers understand how you solve their problems.
Buyers, like yourself, hate to lose. An auction creates competitive pressure for buyers not to play games. Instead, serious buyers make compelling offers.
Your transparency helps buyers become excited about your opportunity. Transparency also does two critical things.
First, transparency shows why your business is unique and in its category. Second, transparency creates trust with the buyer. In the world of mergers and acquisitions, the currency is trust.
Speaking of trust, there’s one thing that you must do to ensure you capture the best deal.
Please keep reading to find out what this one thing is and what you must do.
Trust, but verify — Ronald Reagan
When it comes to finding your ideal buyer, how can you master something you haven’t done before?
The short answer is you can’t.
But you can master something you haven’t done before when you learn from others who have done what you want to do. A case in point is the Deep Wealth Experience. The 9-step roadmap in the Deep Wealth Experience has you master a liquidity event.
Conventional wisdom tells you that buyers are the only ones to perform diligence. But, in this instance, conventional wisdom is wrong.
Let’s return to step three of the 9-step roadmap in the Deep Wealth Experience. In step three, you learn to run a reverse RFP for the buyers in your liquidity event.
Your mission in running the reverse RFP is to identify the ideal buyer with the best cultural fit. Expect pushback from your investment bankers, but know that the time and effort are worth it.
As the saying goes, talk is cheap. Identifying the ideal buyer takes you from “believing” a buyer is the best one for you to know.
Coming out of the reverse RFP, you have certainty in knowing which buyer is the ideal one. As a result, your leverage in the liquidity event is highest before you sign a letter of intent (LOI).
Knowing whom you’re dealing with and what you can expect before signing an LOI gives you peace of mind. You also leverage your knowledge of buyers to capture the best deal instead of any deal.
Speaking of the best deal, do you know the one thing you can do that makes all the difference?
Please keep reading.
Preparation puts you at the intersection of success and certainty — Jeffrey Feldberg
Finding your ideal buyer means that preparation becomes your North Star. So at the heart of the 9-step roadmap in the Deep Wealth Experience is preparation.
Preparation is the gift that keeps on giving. Effective preparation increases both deal certainty and enterprise value. Through your preparation, you’re achieving two things.
First, you are finding and removing skeletons in the closet. The quickest way to have your ideal buyer walk from the deal is skeletons.
Through preparation, you identify skeletons well in advance of your liquidity event. Then, you do whatever it takes to remove the skeletons on your time.
The second thing preparation achieves often overlooked by business owners. Preparation has you find hidden Rembrandts in the attic and put them out for public display.
Rembrandts are the things that set you apart from the competition. The ideal buyer may know some of your Rembrandts. Your mission is to ensure that the buyers know all Rembrandts. Your Rembrandts increase enterprise value.
Step four of the 9-step roadmap, Due Diligence, have you perform an internal audit. You complete the internal audit in advance of your liquidity event. It’s also your internal audit that saves your health, time, and money.
Besides a higher enterprise value, effective preparation can remove an earnout. Through preparation, you become more attractive to buyers and investment bankers.
Step six of the 9-step roadmap has you master the art of selecting the best advisor instead of any advisor.
The time and money invested in preparation help you capture the best deal and ideal buyer.
Complexity is the enemy of clarity — Andy Stanley
When you lack clarity on what you want you will either have no deal or you’ll get any deal instead of the best deal. Neither of the above scenarios is desirable.
Imagine your life after your liquidity event. There is power in focusing on the exit first so you know how and where to enter.
Imagine how you want your life after your liquidity event. Some business owners want to stay in the business after the liquidity event. Other business owners want to start a new chapter. The only “right” answer is what works best for you.
If you don’t want to be in the business after the liquidity event, your ideal buyer supports you in this decision. Having both the ideal buyer and yourself know what you want upfront is essential.
In step three of the 9-step roadmap, Future Buyer, you learn how to create deal points and no-fly zones. A deal point is something that must be in the deal or there is no deal.
As an example, suppose you own the building the business operates out of. One deal point could be that the building is not for sale. Your ideal buyer has no issues in you continuing to own the building.
A no-fly zone is something that cannot be in the deal or there is no deal. As an example, imagine that an earnout is something you don’t want. No earnout is now a no-fly zone. Your ideal buyer must accept that you’ll have no earnout.
Your liquidity event is the most important financial decision of a lifetime. You have one chance to get it right, and you better make it count.
When it comes to buyers, you don’t want any buyer. So instead, your mission is to find the ideal buyer for your business.
The statistics are not in your favor as a business owner and seller. Your saving grace is preparation. It’s your preparation that increases enterprise value and helps identify the ideal buyer.
One added benefit of the strategies of preparation is that they are the same for growth. Through preparation, you can keep a thriving and profitable business forever. You can also sell the company tomorrow.
The point is you have a choice, and both options are great ones.
Saying “no” to the 7-figure offer and “yes” to mastering the art and science of a liquidity event started my journey. My journey had me create the 9-step roadmap of preparation.
Through the 9-step roadmap, I not only found the ideal buyer, but I also increased my enterprise value. The result was a 9-figure offer.
Today, I pay it forward and help business owners master the 90-day Deep Wealth Experience. At the heart of the Deep Wealth Experience is the 9-step roadmap.
Five key strategies help you identify the ideal buyer for your business.
Where do you start, and what do you do?
Please start with the first strategy and stay with it until mastered. Once done, move on to the next strategy and do the same. In short order, you’ll have mastered all five strategies.
Do this today, and you’ll thank yourself tomorrow.
You can do it. I know you can.
Here’s to you and your success!
Your Biggest Raving Fan,
When it comes to your liquidity event, are you leaving millions on the deal table? Visit www.deepwealth.com/success to learn more