Private Equity Firms use it to:

1. Determine your company’s cash flow potential.
2. Determine and compare the underlying profitability of your company’s operations compared to others in your industry or sector.
3. Decide if your company is worth investment
4. Decide what your company is worth and how much to pay you when you exit.

Selling your business will probably be the most significant financial transaction of your life.

• Please look at all your options don’t depend on Google to find your buyer or a local broker.
• You have to find the perfect buyer for your situation… NOT just any buyer!

1. Entrepreneurs or Financial Buyers are investors interested in the return that they can get by buying a profitable and well-managed company. The scope of their interest is about running and making a profit from your company.
   • Many times they find these deals using Business Brokers. The standard “rule of thumb” for these types of purchases is usually 2-4 times the seller’s discretionary earnings (SDE) or cash flow.

2. Strategic Buyers are also interested in a return on their investment. But they will invest in your company at a much higher multiple because of a “strategic interest” in your business.
Sometimes called “synergy.”

• • What does synergy mean in business? Synergy is the concept that the value and performance of two companies combined will be greater than the sum of the separate individual parts.
  • If two companies can merge to create greater efficiency or scale, the result is what is sometimes called a synergy merge.
  • They want your customer base, technology, territory, brand, patents, intellectual property, etc.
  • A strategic investor is usually a larger company, often in the same industry as your company.
  • They may already own “like-kind businesses” in your industry and could be buying up multiple companies in that niche, to re-sell in the future as a bundle.
  • They pay a lot more, because they have their own bigger exit strategy.

• • Private equity firms are businesses set up to invest in opportunities that generate a return. The firms raise capital from investors and put these investments into “funds”. They use money from these funds to make investments in companies.
  • The common thread with these firms is they are using a combination of investor equity and/or debt to purchase assets that they believe will generate returns.
  • PEFs invest in companies that can increase profits and value through organic growth and/or acquisitions to generate the returns they need.
  • PEFs will invest in purchasing a platform company to build, purchasing add-on acquisitions to build a platform company value, and/or make investments to organically their portfolio.
  • The returns from these investments go back to the PEFs and their investors.

What is “The Second Bite of the Apple?”

• The phrase “second bite at the apple” is commonly used to reference a sale transaction where the business owner retains a minority position in the company after the initial transaction.
• The “second bite” comes when the new majority owner decides to sell, and the original owner cashes out again along with the private equity firm in the second transaction.

The second bite of the apple is BIG!

It can be bigger than the first bite… and it will be, in my case.

But you need two things:

• The right buyer.
• And you have to know how to ask for it.

We’ll help you with both.”

• Have you heard the horror stories about people who have sold their business through a typical business broker, and had to help the new buyer finance the purchase?
• Then end up not getting paid, and having to take back the business.
• It’s a nightmare.
• We won’t let this happen to you.

“I’ve seen it dozens of times. I’ve lived through it myself:

• What typically happens to most founders and entrepreneurs who sell their businesses is they suddenly have this “feeling of emptiness and isolation.”
• They don’t have anyone to talk to, who knows what they are going through.
• You feel alone… like there’s nobody to play with, because unless you’ve lived it – you just can’t understand it.
• Psychologically it can be very challenging for the founder.
• They can get themselves into financial trouble, do dumb things as I did.
• It doesn’t just affect you. It affects your family too. There are a lot of relationships and marriages that end after the big payday if you’re not prepared.

because that old saying, “it’s lonely at the top,” is true!

You have to understand that most Private Equity Investors are on a timeline:

• Many firms have a built-in timeframe. They have multiple investors who expect a return on their investment by X date. On X date, if the funds are liquidated if they are not used.
• They have to move with or without you.

Think about that for a minute.

You thought you had seven figures in the bank, but then it all falls apart. It’s heartbreaking!

Why did Joey lose this first deal?

• He didn’t have his ducks in a row!
• He didn’t have his due diligence ready for examination and confirmation.
• He didn’t have an exit plan in place.
• He was trying to wing it and do it all on his own

Mike explains:

• Many of these investors have deadlines they must meet, so they need to keep moving.
• They are confirming you are what you say you are.
• They’ve got many expensive bean counters and egghead analysts looking at these things. If they can’t confirm the facts with a high confidence level they get nervous.
• At some point, they’re going to cut bait.
• They are constantly thinking, “Here’s my internal budget to do this deal, and if we can’t do it in that amount of time, we’re going to walk.” And they do!

How do you prevent that?

• Get your ducks in a row!
• Not sure how? Let’s talk. We’ve done it and we know how.
• Build your exit plan now for a sale 12-18 months from now.
• Start your due diligence now. (Get your books audited every quarter.)

• Mike has had five multi-million dollar exits, two to publicly traded companies. That is a real due diligence pain in the butt! Mike estimates what he learned on his first deal saved him over $100,000 on his next one. We’ll show you how he did it.
• Joey failed at his first exit because he tried to do it all on his own without a real exit plan or an experienced
  exit team.
• Joey hit a home run when he learned from his mistakes and had a “strategic exit plan” that included what to do
  and what not to do concerning due diligence.

We had already gone through a lot, but one day they said, “We found this $3,000 check you wrote six years ago and we can’t find documentation for it.” I said, “I’m not going to do it.” We’ve been paying $2,000 an hour, and they’re asking about a $3,000 check from six years ago? I said, “No, that’s it. Due diligence is over, and they accepted that.”

Joey’s Top 3:

My first BIG mistake was not realizing I had built something of value others would want to own.

• When I started out, I was just trying to make enough money to pay my mortgage. The company grew. I made a great living, but I NEVER thought of it as something I could sell.
• That’s one of the reasons we created this program. Start thinking about your company’s value and your ability to give your family “generational wealth.”

The second biggest mistake I made was trying to wing it.

• I wasn’t prepared to sell. I didn’t have a plan, and I didn’t have the right team.
• I didn’t have a clue how things work in the mergers and acquisitions space.

My third biggest mistake was that I did not complete due diligence BEFORE selling.

• I left over $3,000,000 on the table because I had not documented key day-to-day processes and procedures in my business. It was just stupid and easily prevented.

Mike’s Top 3:
My first biggest mistake was not realizing how important it is to pick the right buyer.

• My attorney said that there’s a definite chance the first transaction is all you’ll ever get, and they’ll find a way to wiggle out of it even if they agree to something because possession is nine tenths of the law. (But I got stuck in
  the deal.)
• I didn’t realize I could find multiple potential buyers for my business if I had the right team.
• The truth is if you have a profitable business with a great EBITDA.
  You don’t have to accept the first proposal you get.

My second biggest mistake was not understanding how to protect myself if things went wrong.

• One of my deals turned ugly. As soon as the transaction occurred, the buyer got squirrely
  and basically tricked me into leaving some money in an account. They immediately took it after the closing.
  I lost close to $500,000! We won’t let this happen to you.

My third biggest mistake was not having the right mindset after getting the money.

• I had a huge bank account and I spent it like a drunken sailor. I started a TV show, I started investing, and I surrounded myself with people who were very happy to spend my money having big parties on my bill.
• I was not paying attention and I literally burned through $800,000 in a few months. I looked at a statement one day and screamed, “What the hell just happened?”
• I wish I had a mindset coach back then. Joey and I want to help other entrepreneurs prepare for the big transition.

This isn’t a group thing, it’s one-on-one.

• It requires hyper-personalization.
• You and your business will be our team’s entire focus for three days.
• Everything is recorded. You will get the videos and the transcripts.

It’s just you, Mike, Joey, and their support team documenting everything.

• Mike has sold five major businesses, two to public companies.
• Joey not only sold his business for eight figures, but retained a percentage of the ownership. He will get a bigger payday when the company is re-sold by the private equity firm.
• Our job is to share what works and to keep you from making costly mistakes.

Day 1 – Assessment, data gathering, building the spreadsheets, determining what’s salable.
Day 2 – Is about increasing your revenue and preparing you for that due diligence process.
Day 3 – That is where things really get interesting – you’ll be having conversations with buyers.

You’ll walk away with these answers and a whole lot more…

1. What’s your business worth now?
2. What could it be worth in the future or after we’ve tweaked some things?
3. Are you acquirable? That’s a big question that has to be addressed.
4. Do you have the right business model? If not, or if so, what needs to change to get it there?
5. Are you scalable? Private eThey want something scalable so they can increase their return on their investment… that’s how those 10x-20x multiples get paid.
6. What’s your cash flow now?
7. What can it be in the future?
8. What sort of tweaks would be required to get it to where you’d want it to be to get a 10x to 20x EBITDA multiple?
9. How long would it take for you to sell? 
10. What kind of buyer do we need to look for to sell your business?
11. What are the key things that need to occur to get it all in place?