5 Unbelievably Stupid Exit Team Mistakes That Buyers Want You To Make
Exit team mistakes are like a thief in the night that robs you while you’re sleeping.
If you are selling your business, congratulations. You beat the odds and turned nothing into something. You solved a painful problem and have changed lives for the better.
Your sleepless nights, looking after the small details, and caring made the difference.
You’re now ready to cash in the chips and begin the next chapter in your life.
Think that the buyer is the one you should watch out for?
Think again.
As a seller, your biggest threat to your company value and the deal itself are exit team mistakes.
Who am I, and how do I know?
I was that kid right at a school who started his Edtech with no money, experience, or team. Failure became my new best friend.
It was my grit and passion that kept me in the game long enough to experience success.
The first offer to buy my company came from a sophisticated buyer who was like a wolf in sheep’s clothing.
I said no to it seven-figure offer. I knew I could do better. On the spot, I dedicated myself to mastering the art and science of selling a company.
Two years later, I experienced a nine-figure offer from a different buyer.
What I learned on my exit journey shocked me to the core.
My Rockstar entrepreneur, the system is set up against you from day one.
Five exit team mistakes that will rob your company value, kill your deal, or both.
What are the exit team mistakes, and how do you prevent them?
Keep reading to find out.
Exit Team Mistakes Include Getting The Deal Done At The Expense Of Value
All great achievements require time — Maya Angelou
Exit team mistakes rob you blind of company value and can kill your deal.
Selling your company is a life-changing event. You have one chance to get it right, and you better make it count.
Enter the exit team.
Creating your “dream team” of an exit team is both the most challenging and essential step in the process.
Read and prosper from “Assembling Your Exit Team? How To Crush It And Win.”
Of all the exit team mistakes around, beware of your team’s desire to get the deal done, no matter what.
Your exit team has the best of intentions for you, but also themselves.
A completed deal justifies the cost of your exit team advisors, and at the same time, looks great on them.
Would you sell your company for $19 million on a deal that can happen today or $26 million on a deal that’s likely to happen?
Most entrepreneurs choose the $26 million deal.
Your investment bankers choose the deal worth $19 million. All-day. Everyday.
Why would your investment bankers prefer a smaller commission?
Risk and time.
Investment bankers, like most sales professionals, prefer the “sure thing” that happens today.
The difference in commission on $7 million is a rounding error to your investment bankers, but not to you.
Doing what’s right isn’t easy, and the “sure thing” isn’t usually the “right thing.”
When it comes to exit team mistakes, beware of your team’s desire to get the deal done no matter what.
For ultimate success, do you know the radio station you and your team must listen to?
Keep reading to find out.
Exit Team Mistakes Include Not Putting Your Future Buyer’s Needs Before Yours
The more I help others to succeed, the more I succeed — Ray Kroc
One of the biggest exit team mistakes is not putting your future buyer’s needs before yours.
You built a successful company from your passion to solve a painful problem.
Your customers are only too happy to pay you to take their pain away.
Read and prosper from “Make More Money Now By Solving Massive Problems.”
Exit team mistakes have your team looking to your future buyer as the enemy, not your customer.
Your future buyer has a painful problem and hopes your company can provide pain relief.
On the flip side, your “problem” is finding a way to maximize the value of your company on your exit.
My Rockstar entrepreneur, go back to basics. Your success came from helping enough people get what they want. In time, you were able to get what you want.
Selling your company is no different.
If you’ve done your job right, you’ve created an auction for selling your business.
Create a shortlist of buyers and answer the question:
“What’s the painful problem I can solve for the buyer?”
Share your findings with your exit team and come up with a plan of how you can help each buyer.
By knowing the pain point and motivation of each buyer, you now know how to position your company. Putting the buyer first helps increase your company value.
Exit team mistakes of not putting your buyer’s needs before you is costly and unnecessary.
Now you know.
Speaking of knowing, is your deal at risk by not understanding your exit team’s motivations?
Keep reading to learn more.
Warning: Ignore The True Motivation Of Your Exit Team At Your Own Risk
Show me the incentive and I will show you the outcome — Charlie Munger
Exit team mistakes come from your blind spots.
Every mistake you make lines your future buyer’s pocket with your money.
Read and prosper from, Do You Know The 7 Mistakes Every Buyer Wants You To Make When Selling Your Business?
When it comes to exit team mistakes, most sellers ignore their team’s motivation.
In business and life, perception is the reality.
After the sale, your exit team’s perception is you having a bank account full of zeroes and a bright future.
Some members of your exit team may even believe that your success is because of them.
The key employees on your exit team worry about their future.
Wait a minute, you say, I’m the one who took the risk and made the sacrifice. How could the exit team think and feel these thoughts?
Three words: perception is the reality.
Avoid exit team mistakes by tuning into my favorite radio station, WII.FM, the “What’s In It For Me” radio station.
As the seller, you want your exit team wanting the sale to happen as much as you do.
What can you do?
Offer an exit bonus to your team.
The key employees on your exit team will work harder, knowing they have a bonus for them after the sale. To avoid conflict, inform your buyer about the bonus.
Give your investment bankers a bonus for every dollar over their top value.
Whatever bonus you pay is a rounding error compared to the extra value your team will fight for during the exit.
Your exit team’s excitement has them focused on helping you get the best deal.
Do this today, and you’ll thank me tomorrow.
The One Thing Your Exit Team Should Do But Probably Won’t
Massive success comes from knowing both what to do and not do — Jeffrey Feldberg
Exit team mistakes come from not focusing on one crucial thing that can make or break you.
Ever wonder why the best of intentions can often lead to failure?
The answer is not focusing on the “right” things.
Easier said than done.
One of the first exit team mistakes in this article is your team’s desire to get the deal done no matter what.
Your exit team has the best of intentions, but these intentions, if left unchecked, will cost you.
Selling your business is a zero-sum game between you and your buyer.
The desire for both you and your buyer is to offload as much risk onto each other as possible.
Buyers use their experience, sophistication, and strategies against you.
Read and prosper from Exiting Your Company? Avoid These 5 Costly And Stupid Mistakes.
One of the strategies buyers use is to put a significant number in front of the seller. Most sellers and their exit team melt when they see the money.
Don’t fall for this tactic.
Want to know how you can turn the dream life awaiting you into a nightmare?
Ignore the earn-out, non-compete, and overlook tax implications in your deal.
Most earn-outs have the buyer keep the money. That non-compete you ignored is likely unreasonable at best and draconian at worst. And not paying attention to tax implications is a silent killer of wealth.
In the heat of the transaction, it’s easy for your exit team to overlook the details.
For your future wealth and happiness, say “no” to any earn-out and say “yes” to a reasonable non-compete. Work with your brilliant tax advisor to reduce taxes.
Chases The Vision And Not The Dollars
We are limited, not by our abilities, but by our vision — Khalil Gibran
Last but not least of exit team mistakes focuses on chasing after your vision instead of the dollars.
Buyers place a high value on companies that have a strong vision and a bright future.
Your buyer knows what you’ve done both today and yesterday. What your buyer is counting on is how your company will help tomorrow.
Painting a bold and strong vision of the future for your buyer is key to increasing your company value.
Sellers often focus on educating buyers about the vision at the expense of their exit team.
Don’t make this mistake.
The best outcome you achieve is when everyone understands the big picture.
Ensure your exit team understands your company’s vision.
What does your vision have to do with due diligence questions in the areas of accounting, taxes, and law?
Everything.
Your buyer’s contact with your exit team will be as much or even more than with you.
Count on moments in the process where everyone agrees to disagree.
Your exit team’s understanding of your vision can help overcome challenging situations.
An exit team fueled by your vision reminds buyers of how vital your company is to their future.
Never doubt for a moment how hope for a better tomorrow is the key to getting things done.
You can count on exit team mistakes happening no matter what you do. Don’t let one of those mistakes result from the exit team chasing after the dollars instead of the vision.
You can take that to the bank.
Conclusion
The strength of your exit team is everything when it comes to selling your business.
That said, exit team mistakes are like a thief in the night that robs you of wealth and happiness.
Sellers focus on the buyer being the “enemy,” not realizing that exit teams are as dangerous.
Who am I, and how do I know?
I was that kid who started his EdTech right out of school with no money, experience, or team.
Despite the odds, my EdTech became a success, which resulted in a 9-figure exit.
But the 9-figure fairy tale ending wouldn’t have happened if I said “yes” to the first offer, a 7-figure deal.
When I said “no” to the first offer, on the spot, I made the commitment to master the art and science of selling a company.
What I learned shocked me to the core.
The system is set up against us entrepreneurs right from the start.
In this article, I’ve shared the same strategies I used to catapult my EdTech from a 7-figures to 9-figures.
If I can do it, so can you.
The great news is that you have everything you need. Right now.
Start with the first strategy and stay with it until you master it. When done, move on to the next strategy until you’ve learned all five.
Let my years of heavy-lifting and mistakes work to your advantage. Starting today.
Here’s to you and your success.
Your BIGGEST Raving Fan,
Jeffrey Feldberg
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5 Unbelievably Stupid Exit Team Mistakes That Buyers Want You To Make was originally published on JeffreyFeldberg.com
