Basically, it’s your revenue broken down this way:

• EBITDA is an acronym used in the Private Equities Industry that stands for:
• Earnings Before Interest, Taxes, Depreciation, and Amortization

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 investing in.
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!

• “One of the things that Joey and I are good at is finding hidden money, finding multiple places to generate more revenue.
• In our three day workshop environment, we’re going to help you find hidden money, find hidden resources, basically rejigger your business model very rapidly, so it increases the value of your business.
• Sometimes just the way you change the presentation of the business to the buyer will dramatically increase the value.
• You’ll shift their thinking about the type of business they’re buying. Which could give you a much larger multiple – I’ve seen that happen.”

• Patents
• Software
• Trade Secrets
• Trademarks / Servicemarks
• Copyrights
• Specialized tooling or proprietary processes

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 at X date. And at X date, if the funds are not used, they get liquidated.
• They have to move – with or without YOU!

Think about that for a minute.

You thought you had $7 figures in the bank, you and your family have already spent the money in your minds… then it all falls apart! It’s heartbreaking!

Why did Joey lose this first deal?

• He didn’t have his ducks in a row!
• What that means is – 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’re grinding away, confirming you are what you say you are.
• They’ve got many expensive bean counters and eggheads analysts looking at these things. If they can’t confirm the facts with a high confidence level they get nervous.
• And at some point, they’re going to cut bait.
• They’re 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 just say goodbye!

How do you prevent that?

• Get your ducks in a row!
• Not sure how – start by talking to us, we’ve got a “Master Checklist.”
• Start building your exit plan now, for a sale 12-18 months from now.
• Start your due diligence now – as an example get your books audited every quarter as a start!

• Mike has had five multi-million dollar exits, two to publicly traded companies. That’s 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.
• Then 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.

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. LOL. 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. So you would start thinking about your company’s value and your ability to give your family “generational wealth.”

Probably 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.

Big mistake number three was not understanding that due diligence is something you need to be doing – BEFORE you think about selling.

• A great example is – 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:
Number one – was that picking the right buyer is super important.

• I can remember my attorney said, there’s a chance, a definite chance that the first transaction is all you’ll ever get, and they’ll find a way to wiggle out of it even if they agreed to something because possession is 9/10s of the law. (But I was 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 – your business is like a beautiful young woman; you have options. You don’t have to take 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 started to screw me.
• They basically tricked me into leaving some money in an account – that they immediately took after the closing was done. I lost close to $500,000! (We won’t let that happen to You.)

My third big mistake was not having the right mindset after I 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. That’s one of the things Joey and I want to help other entrepreneurs with – preparing yourself and your family 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’s recorded – you’ll get the videos and the transcripts.

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

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

Day 1 – Assessment, data gathering, starting to build 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? It’s a big concern for PE. They 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? That’s a very important thing because that’s the big factor of time and money.
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 all that in place?