Having A Liquidity Event? Here's How To Capture The Best Enterprise Value
When it comes to your liquidity event, do you know how to capture the best enterprise value? Learn 5 powerful strategies that help you win.
When it comes to your liquidity event, do you know how to capture the best enterprise value?
After all, you don’t want any enterprise value. You’ve worked too hard and sacrificed everything. You both want and deserve the best.
But left to your own devices, how can you master something you’ve never done before?
The short answer is that on your own, you can’t. Most business owners make a fatal mistake. Please don’t believe that the skills that built the business are the same ones to sell the business.
Don’t fall for this flawed logic. A case in point is the statistic for liquidity events. Up to 90% of liquidity events fail. Think about your hard-earned money and time wasted. Of “successful” liquidity events, 50% to over 100% of the deal value stays with the buyer.
A successful company is neither enough nor a guarantee for a successful deal.
Who am I, and how do I know?
I said “no” to a 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.
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.
Would you like to learn and master the strategies to have your business thrive and prosper?
Please keep reading.
The ability to ask questions is the greatest resource in learning the truth — Carl Jung
How is the enterprise value of a business calculated?
A simple question, but the answer is anything but simple.
Ask the cast of characters in the wacky and crazy world of Mergers and Acquisitions (M&A), and you’re told one thing. You’re told that enterprise value is a complicated formula in a spreadsheet.
Don’t make another fatal mistake and believe the myth of enterprise value creation.
Read “Actually Useful Advice On How To Find The Ideal Buyer For Your Business.”
In my career, I’ve had the privilege of being a professional salesperson. The fact is that people make decisions based on emotion first and justify them with logic later.
A case in point is my 9-figure liquidity event with my eLearning company Embanet. My liquidity event exceeded all enterprise value projections shown in those fancy spreadsheets.
To the outside observer, my liquidity event may appear to be luck. But my liquidity event was anything but luck. After saying “no” to a 7-figure offer, I mastered the art and science of a liquidity event for two years.
In the process, the Deep Wealth 9-step roadmap emerged. Step 2, X-Factors, focuses on how to create excitement and positive emotion for buyers.
What’s the secret sauce?
A compelling narrative. We’re wired to resonate with stories. A compelling narrative combines hope backed by data and facts. But you won’t find hope and emotion in a complicated spreadsheet.
Indeed, enterprise value is anything but a complicated formula in a spreadsheet.
But even a compelling narrative is not enough.
Do you know the one danger you must avoid at all costs from your advisors?
Please keep reading.
Only changes in mindsets can extend the frontiers of the possible — Winston Churchill
Do you know one downfall of your advisors and how it hurts enterprise value?
The short answer is the “let’s get it done” mindset.
For your advisors, you’re a one-time transaction. Your advisors’ currency is time and not money. As a result, your advisors want to complete your liquidity event as quickly as possible.
Read “How To Unlock The Value Of Your M&A Advisory Team To Get The Best Deal.”
At the same time, your advisors will not risk their reputation. As a result, your advisors have a “let’s get it done” mindset, which gets you a deal but not the best deal.
For your advisors, something of something is better than something of nothing. Your advisors favor lower risk and a lower value than a higher risk, higher value deal.
There are two things you can do that increase enterprise value.
First, understand that your advisors’ currency is not money but trust. You must ensure that your advisors trust you. One way to create trust is through preparation. The Deep Wealth 9-step roadmap helps identify your hidden skeletons in the closet.
Be vulnerable and share your skeletons that you can’t remove. The truth always comes out, and you should lead the charge on disclosure.
Second, create a powerful narrative that excites your advisors and future buyers. Your narrative helps your advisors see the bigger picture. Your narrative encourages your advisors to capture the best deal instead of any deal.
How do you create a narrative that acts like rocket fuel for a higher enterprise value?
Please keep reading.
Don’t let the fear of losing be greater than the excitement of winning — Robert Kiyosaki
How do you create a narrative that excites your advisors to capture the best deal instead of any deal?
Tune in to the world’s favorite radio station WII.FM (What’s In In For Me). Step six of the Deep Wealth 9-step roadmap, Advisory Team, helps you find the best advisors.
During your interview process for your advisors, you’re tuning into WII.FM to find out what moves the dial. When you know what each advisor wants, you create a narrative that speaks to their desires.
Read “The 5 Absolute Best X-Factors That Increase Enterprise Value.”
While money isn’t the only motivation for investment bankers, it is important. In the Deep Wealth 9-step roadmap, you learn how to create a “waterfall” incentive plan. The waterfall incentive plan is not the scope of this article. That said, know that the waterfall incentive plan helps remove the let’s get it done mindset.
For example, suppose that your deal’s index is 100. Your advisors can secure a deal with an index of 80, representing a good deal. But 80 is a good deal and not the best deal.
Suppose there’s a deal that has an index of 110. The differential 110 to 80 is a big deal for you but not your advisors. A larger success fee isn’t on the radar for higher-risk investment bankers. Your other advisors get paid the same amount regardless of an index of 80 or 110.
Your narrative closes the gap and helps you and your advisors capture the best deal instead of any deal.
Speaking of your narrative, there’s one crucial element. Do you know what this element is and how to leverage it?
Please keep reading.
Transform ordinary into extraordinary by sharing the “why” of your actions — Jeffrey Feldberg
For your liquidity event team, to go to the wall and back for you, it’s essential to consider one thing. This one thing helps get the deal done and increases enterprise value.
What’s the one thing?
Perception.
The perception is riding off into the sunset with a bank full of zeroes.
Read “Most Mergers and Acquisitions Fail. Do You Know How To Succeed And Prosper?”
It’s true that you’re paying your advisors. It’s also true that your advisors have choices when selecting clients.
What do you need to do?
First, share what a liquidity event means to you and your family. Chances are that while you’re sharing your “what,” you’ll also start to share your “why.”
Your “why” is where the magic happens.
Share why you will contribute to society. Now’s the time to think about what you will do with your newfound wealth.
Second, ask yourself what you can do to change the social fabric of society?
Will you create a foundation that makes a difference in social problems? Instead, you may decide to support a charity that moves the dial for you.
Whatever you choose, please share your vision with your advisors and key employees.
The third thing to do is to explain the “what” behind what you’ll do after your liquidity event.
Your narrative demonstrates how you’ll be a net positive after your liquidity event. Your net positive help your advisors and employees share your excitement.
What’s a net positive?
Please keep reading.
The wise person doesn’t ask, “What have I achieved?” but rather, “What have I contributed?” — Marianne Williamson
Do you want to capture the best enterprise value?
If you answered “yes,” and I know you did, show how you’ll be a net positive after your liquidity event.
What’s a net positive?
A net positive is someone who helps to change the social fabric of society.
Part of the “why” for your liquidity event is how your wealth allows you to pay it forward.
Read “Do You Want To Crush It An Win? Here Are 5 Traits Of Successful Business Owners.”
A part of your wealth can be set aside to create a foundation, social cause, or charity. Any of these options has your wealth do great things.
The choices are only limited to your imagination. But, whatever you decide, your choice shows one important thing. Your choice reveals that you are not willing to be a wealthy person who only plays in the lapse of luxury.
The above narrative moves the dial for you, your advisors, or your employees. While money does make a difference, money does not buy happiness.
When you commit to being a net positive, you show your advisors why any enterprise value won’t do. Instead, you show why the absolute best enterprise value is acceptable.
After all, the more you have, the more you can change the social fabric of society.
Your advisors and key employees want to be on a winning team. A winning team goes far beyond money. Instead, being on a winning team is knowing that you’re making a difference. It’s knowing that your contribution counts and means something.
The choice is yours. Please choose to be a net positive, and in the process, you set yourself up for more significant success.
To capture the best enterprise value, follow a timeless principle. The timeless principle is that the more you give, the more you receive.
There’s an art and science to capture the best enterprise value. The Deep Wealth 9-step roadmap combines the art and science for the best enterprise value.
You have one chance to get it right with your liquidity event, and you better make it count. But to make it count, you must understand and master five key strategies.
The value of your business is not a complicated formula in a spreadsheet. Your advisors, left alone will get you a deal but neither the best enterprise value nor deal.
When you understand the mindset of your advisors, you can align everyone to be on the same page. And that same page is capturing the best enterprise value.
I should know. 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 different buyer with a 9-figure offer two years later.
Part of the “secret” to my 9-figure deal was crafting the Deep Wealth 9-step roadmap. Through preparation, you leverage time to your business advantage. Your preparation today helps increase enterprise value in the months and years ahead.
What can you do, and where do you start?
Please start with the first strategy revealed in this article. Stay with the first strategy until mastered. Once mastered, move on to the next strategy and follow the same process.
Before you know it, you’ll have mastered all five strategies. As a result, you position yourself for success through a higher enterprise value.
You can do it. I know you can.
Here’s to you and your success.
Your Biggest Raving Fan,
Jeffrey Feldberg
When it comes to your liquidity event, are you leaving millions on the deal table? Visit www.deepwealth.com/success to learn more.
