There are five things nobody tells you about a liquidity event that you should know.
After all, your liquidity event is the most important financial decision of your life.
Yet, up to 90% of liquidity events fail. Of the “successful” liquidity events, most business owners leave 50% to 90% in the buyer’s pocket. Insult to injury, most business owners have no idea how much money they left on the table.
Who am I, and how do I know?
I started my eLearning business after graduating from my MBA program. I had no money, experience, or team. The truth is I had no business being in business.
My saving grace was my grit and determination, which had me welcome success.
With success, I received a 7-figure offer from a bright and experienced buyer.
I said “no” to the 7-figure offer and “yes” to mastering the art and science of a liquidity event. Then, two years later, I said “yes” to a 9-figure offer from a different buyer.
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 that I created for my 9-figure exit.
How did I go from saying “no” to a 7-figure offer and “yes” to a 9-figure deal?
The 9-step roadmap of preparation was my saving grace. Preparation is the key that unlocks deal certainty and enterprise value.
When it comes to your liquidity event, are you ready to learn the five things you should know?
Great, keep reading.
When opportunity comes it is too late to prepare — John Wooden
When it comes to your liquidity event, how can you master something you’ve never done before?
The short answer is you can’t.
What can you do?
The 9-step roadmap of preparation is the key that unlocks enterprise value.
Your future buyer does deals all day. Every day.
As a result, your future buyer is intelligent, sophisticated, and experienced. But, unfortunately, your future buyer is also counting on you to make mistakes.
Every mistake you make lowers your enterprise value. Even if you have the best advisors, they can’t help you if you’re not prepared.
Most business owners sacrifice their health, time, and money from lack of preparation. When you’re not prepared, you are both running the business and the liquidity events.
In short order, you and your team burn out from too many late nights and early mornings. Your stress is through the roof, and your health suffers. At this point, you have no choice but to bring in expensive outside consultants.
The 9-step roadmap saves your health, time, and money but has you do two things.
First, you find and remove skeletons in the closet. Second, uncover your hidden Rembrandts in the attic and put them out for public display.
Plan on two years to prepare for your liquidity event. The added benefit is that the strategies of preparation are the same for growth. As a result, your enterprise value goes up while you prepare.
It doesn’t get any better.
Next up, do you know why enterprise value isn’t a complicated formula in a spread sheet?
Artmaking is making the invisible, visible -Marcel Duchamp
There’s an art to creating the maximum enterprise value for your liquidity event.
Conventional wisdom says enterprise value is all about data and facts. Conventional wisdom is wrong.
People make decisions on emotions first and justify with logic later. Despite what you may year, your future buyer also makes decisions on emotions first.
As the saying goes, beauty is in the eye of the beholder.
Your mission for your liquidity event boils down to one thing. You must prove to your buyer why you solve a painful problem and offer a better tomorrow.
How do you engage buyers with their emotions?
Your narrative must show why there’s a tremendous upside for your future buyer. The upside includes profits as well as how your business helps people.
People, including your buyer, want to be part of something bigger. Your narrative can show how it’s not all about the money.
You’re not the only game in town for your future buyer, as many business opportunities exist. Yes, you are not the only game in town.
Your mission for your liquidity event is to have your buyer excited about your business. Having an auction with many buyers helps your cause.
The combination of excitement for your business and an auction don’t show up in a spreadsheet. But excitement for your business and an auction do show up for a higher enterprise value.
As a result, you create a win-win.
Speaking of a win-win, do you know how and why you must crack the investment banker code?
Light is the task where many share the toil — Homer
For your liquidity event, there are two types of investment bankers.
A transactional investment banker is an industry specialist and gets a quick deal. This is the problem. Transactional investment bankers do a large book of business with the same buyers.
You and your liquidity event are a one-time transaction.
Transactional investment bankers choose the buyer over you. As a result, you don’t get the best deal.
On the flip side are investment bankers who are advocates. An advocate is not an industry specialist. Advocates need more time to identify the buyers. But advocates aren’t likely to do another deal with your buyer. Advocates are loyal to you and seek the best deal instead of any deal.
Now that you found an advocate for your liquidity event and you prepare for an auction, you’re done, right?
Imagine your advocate investment banker has two deals to choose from. One deal is a “sure thing” at a lower value, and the other deal is not guaranteed with a higher value.
Even though the larger deal has a higher commission, it isn’t worth the risk.
What can you do?
Create a “waterfall” compensation system. First, establish a fair market value for your business. Then, create three or four tiers that occur above top value for your business. Each tier pays a higher commission.
You may pay your investment banker 15% in commission for the highest tier. It’s “found money.” Your investment banker has the incentive to get the best deal.
Next, do you know how to think like a buyer?
If you want the highest enterprise value, think like a buyer — Jeffrey Feldberg
If you want the highest enterprise value in your liquidity event, you must think like a buyer.
Where most business owners get it wrong in a liquidity event is to only think of themselves.
How do you think like a buyer?
Let’s tune into your future buyer’s favorite radio station, the WII.FM (What’s In In For Me).
Your future buyer is all about reducing risk. Reducing risks includes that dreaded “e” word, otherwise known as an earnout. Other tactics include a higher escrow and onerous reps and warranties.
Thinking like a buyer has you identify the problem that your business solves for your buyer. Next, create a compelling narrative for your buyer. Finally, your narrative has your buyer excited about a bright and prosperous future.
Your buyer knows what your business did today and yesterday. But, instead, your buyer wants to know what your business will do tomorrow and beyond.
On the art side of a liquidity event is your ability to show and tell your buyer why you’re the only game in town.
You tell through a powerful narrative.
You show through data, facts, and case studies.
The power of the 9-step roadmap is that each step helps you create a narrative that both shows and tells. The exact 9-step roadmap enables you to increase both deal certainty and enterprise value.
When you think like a buyer, your liquidity event ensures you get maximum value.
Speaking of maximum value, do you know the two things you must do before and during your liquidity event?
Art making is making the invisible, visible = Marcel Duchamp
What nobody tells you about your liquidity event is that it’s all about preparation.
The 9-step roadmap of preparation has you do two things before your liquidity event:
Most business owners make the fatal mistake of not preparing in advance of a liquidity event.
The business owners lose, and the buyer wins because costly mistakes occur. Every mistake made lowers enterprise value and deal certainty.
You are removing skeletons before a liquidity event protects enterprise value. You also have a strong reason for not having an earnout.
Identifying and displaying your Rembrandts for public display creates a win-win. Your business benefits today with higher revenues and profits. As a result, your enterprise value benefits tomorrow.
A successful liquidity event where you capture the best deal is a simple story. You excel at removing skeletons and displaying Rembrandts before the liquidity event.
You create a win-win-win in the process. First, the preparation shows the buyer why your business is a must-have deal. The buyer wins.
You win from a higher enterprise value and the best deal.
Stakeholders win from a business that now has access to more talent and capital.
Contrary to popular belief, a liquidity event does not need to be a zero-sum game. Instead, through preparation, your liquidity event creates a win for all involved.
When it comes to your liquidity event, you should know five critical things but don’t.
As surprising as this may sound, it’s not surprising at all.
Your future buyer and most investment bankers are in business to be in business. You can’t master something you haven’t done before.
As a result, what you don’t know can and will hurt both deal certainty and enterprise value. A downside for you and an upside for both buyers and investment bankers.
Does a liquidity event need to be a zero-sum game where only one party wins?
The answer is a resounding “no.”
A liquidity event can be a win-win-win for all involved.
I created the nine-step roadmap in my liquidity event journey after I said “no” to a 7-figure offer. Two years later, I said “yes” to a 9-figure offer due to the 9-step roadmap.
It’s no coincidence that at the heart of the Deep Wealth Experience is the exact 9-step roadmap. Through the 90-day Deep Wealth Experience, I pay it forward and help business owners do two things.
First, protect you from being a statistic. Second, master the strategies that help you capture the maximum enterprise value.
Knowledge is power, but only if you know what to look for and the actions to take.
You now know five of the most important things that nobody talks about for a liquidity event.
Now is the time for you to master each of the five strategies. Start with the first strategy and stay with it until mastered. Once done, move on to the next strategy.
Before you know it, you’ve mastered all five strategies for your liquidity event.
You can do it. I know you can.
Here’s to you and your success!
Your Biggest Raving Fan,