Thinking of selling your business?
Here's what used to drive me nuts when I looked at deals in private equity:
๐ต ๐ก๐ผ ๐ฏ๐ถ๐ด ๐ฝ๐ถ๐ฐ๐๐๐ฟ๐ฒ ๐ฐ๐น๐ฎ๐ฟ๐ถ๐๐
โช๏ธ Assume that I am 5 years old and please tell me exactly what you do.
โช๏ธ If you "add multi-silo cross functional value via services provided" I have no idea what that means.
โช๏ธ But if you "sell X to Y by doing A, B, & C" that really helps.
โช๏ธ Also, the acronyms you use everyday? Assume I don't know any of them.
๐ค The clearer your explanation, the faster I build trust
(↑ try a 10/20/30 presentation)
๐ต ๐๐ฎ๐ฐ๐ธ ๐ผ๐ณ ๐๐ถ๐๐ถ๐ผ๐ป
โช๏ธ At the end of the day I want to double your business and help the next buyer do the same
โช๏ธ Do you have a vision for the future?
โช๏ธ How exactly can get we get there?
โช๏ธ What's preventing you from accomplishing it today?
๐ค If you show me a roadmap I can help bring resources to the table
๐ต ๐ก๐ผ ๐๐ฒ๐ป๐๐ฒ ๐ผ๐ณ ๐บ๐ฎ๐ฟ๐ธ๐ฒ๐ ๐๐ถ๐๐ฒ
โช๏ธ "We don't measure it"
โช๏ธ "I don't know"
โช๏ธ "400 trillion"
โช๏ธ These aren't overly helpful
๐ค I know it won't be perfect, but please try to tell me TAM, SAM, & SOM
๐ต ๐ฌ๐ผ๐'๐ฟ๐ฒ ๐ฎ๐๐ฒ๐๐ผ๐บ๐ฒ, ๐ฏ๐๐ ๐ฎ๐น๐น ๐๐ผ๐๐ฟ ๐ฐ๐ผ๐บ๐ฝ๐ฒ๐๐ถ๐๐ผ๐ฟ๐ ๐๐๐ฐ๐ธ
โช๏ธ This is my favorite slide from all pitchbooks:
โช๏ธ A matrix showing half-filled circles for all your competitors, but you're 100% awesome in every category
โช๏ธ I guarantee you they do something better than you
โช๏ธ Have you spoken to them? It could be a game changer.
๐ค Let's respect their hard work as well
(↑ btw, I might be thinking of combining the companies, so keep that in mind)
๐ต ๐ก๐ผ๐ ๐๐ป๐ฑ๐ฒ๐ฟ๐๐๐ฎ๐ป๐ฑ๐ถ๐ป๐ด ๐๐ต๐ฒ ๐ณ๐ถ๐ป๐ฎ๐ป๐ฐ๐ถ๐ฎ๐น๐
โช๏ธ You've got rosy financials prepared by a bank, but nobody can explain them
โช๏ธ How can I get comfort with your financials if you don't have any to begin with?
โช๏ธ My ๐ฆ๐ฏ๐ต๐ช๐ณ๐ฆ ๐ช๐ฏ๐ท๐ฆ๐ด๐ต๐ฎ๐ฆ๐ฏ๐ต is contingent upon accuracy here
โช๏ธ Please — know your numbers, and don't just stare at the CFO
๐ค If you need help here we can find resources, but I need to know now
๐ต ๐ง๐ผ๐ผ ๐บ๐ฎ๐ป๐ ๐๐๐๐ง๐๐ ๐ฎ๐ฑ๐ท๐๐๐๐บ๐ฒ๐ป๐๐
โช๏ธ If you add-back everything under the sun but have no cash I will figure it out
โช๏ธ It's completely fine to add ๐ด๐ฐ๐ฎ๐ฆ things back, just be reasonable
โช๏ธ Don't sell me on "Spacetime-Adjusted EBITDA" that pro formas every decision you ever made
๐ค We can work on making your budget better after the deal closes
๐ต ๐ฌ๐ผ๐๐ฟ ๐๐ฒ๐ฎ๐บ ๐ถ๐๐ป'๐ ๐ผ๐ป ๐ฏ๐ผ๐ฎ๐ฟ๐ฑ
โช๏ธ I know you can't tell everyone right away, but bring people in when you can
โช๏ธ Air out any dirty laundry with them now, b/c we all need to be a team after the deal closes
โช๏ธ Don't blame them for your problems, that's a leadership thing
๐ค We don't want to fire anyone, and we'll explain what changes when the deal closes
———
—Chris
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