I sold my business and lost $10,000,000 - What I Learned.

Had someone made this video for me while I was still growing my business today, I'd have $10 million at least. Probably more. I'd have $10 million more than I have right now. There's four things that I wish that I had done differently that would have made me way more money. I didn't know them at the time because nobody was showing me how to maximize my value or why I might not want to sell my business at all. So in this video, I'm gonna give you the four things that I wish I had done differently. And that'll make you way more money than if you ignore them. Pay close attention to tip number three, because this one alone will add at least a million dollars to your negotiations. I guarantee you, or your money back. All right, let's dive in. Hey, everybody. I'm Ryan Daniel Moran from capitalism.com. just your average multimillionaire. I made most of my money building a business and selling it. And that's what I help entrepreneurs do. I help them build. Build businesses that they can sell. And when I was building my business, no one was telling me that one day I would have a huge valuation and somebody else would want to buy it. And I should be thinking about how to maximize that now. But the truth is, I also just regret selling the business overall. And there's a few reasons why. One of them is just that on the other side of the exit, you miss the grind, you miss the excitement, you miss the growth. I miss being proud of those products that I was scaling and selling to customers. Now I have other businesses now replaced that. But that was my baby. And I honestly really miss that. The truth is, I sold that business because I felt like I had exceeded my skillset or bumped up against my skillset. I wish, however, I had taken the time to implement a lot of what could have grown the business, taken the time to become a different leader, a different entrepreneur who was capable of not just having an eight figure company, but a nine figure company. Because once you sell that thing, you're starting over on the next thing. However, even though I did sell, there's four things that I did that left a lot of money on the table. And I mean eight figures amount of money. So I'm gonna go through all four of them right now with you so that you don't make the same mistakes that I did.

The first regret about selling my business is that I regret how I sold the business. There's several different ways that you can sell a business. The two most popular are selling through brokers. Or selling through an M and A firm. Now, I sold my business back in 2017 and e commerce businesses were not being bought and sold at the rate that they are today. So it was a little bit new to think about having an M and A firm come in and professionalize the business. So I went with a broker. That was a mistake. A broker is incentivized to get a deal done. Their job is to go find buyers and to make sure that the deal happens. They work with both parties to ensure that they're all happy and that this deal is gonna happen, and then they get their cut of the deal. Well, they're not incentivized to help you get the most amount of money. They're incentivized to just get the deal done. Brokers are more about volume, whereas M and A firms are about valuation. If you're on the sell side, if you're selling a business, who do you want to partner with? Obviously you want to partner with the person who is going to get you the most money with the best partner for you and your business. But I didn't do that. I went with a broker that was incentivized to get a deal done. And so they did not advise me what I could be doing in the business, how I could show up differently, how I could negotiate a higher valuation. That alone left millions of dollars on the table. So in retrospect, I wish I had taken the time to, to go through the different firms that exist that specialize in helping entrepreneurs prepare and get ready to sell to someone else. But since I didn't do that, I just went to a broker who just started finding deals. They got the deal done, which was their job. But I left millions of dollars on the table by not speaking to a bunch of different professionals and interviewing them because they were representing my business. Shop for different people who will represent you, and if your business is doing at least a million dollars in profit per year, go with an M and a firm rather than a broker. Number two, I regret who I sold to. I remember when I got the loi, the letter of intent for my business, and it was for $16.5 million. So when you show up in that room, that negotiating room, when somebody is dangling a 16 and a half million dollar check, sometimes you can forget, hey, is this the best person for my business? Of course they're dangling a big check. So you're like, this person might be best for my pocketbook, but you're partnering with this person long term. You see, I got a $16.5 million LOI. But I held back equity in the company. I think I still own 20% of the business after we sold, so we didn't get all of that 16 and a half million dollars. We got like I remember the exact percentage, but I ended up holding on to 20% of the business. So that means that that person is in control of the thing that you built. And the hope is that they do a better job than you because they have all this experience and they have all this funding and they know all these people and they have all these opportunities and that business will grow and then you'll sell it again to someone else and that 20% will be worth another few million bucks. That's what's supposed to happen. And if you partner with the right person, that should be what happens. Not this guy. Nope. I was blinded by the 16 and a half million dollar check. I was blinded by the payday that I was about to get. So I did not properly vet the team that bought my business. I also didn't properly vet their plan and their network and their opportunities and where they wanted to go with the business. I should have, but as somebody, I was 29 years old selling, you know, my first meaningful company. I'd sold other businesses in the past, but this was my first life changing amount of money. I didn't even think. I was just like, you know better than me, you've done this before. I haven't. I know how to build an eight figure business with my partner, but I've never done any of this before. And as a result, I did not go into the details of what they wanted to do, how they wanted to do it, what their experience level was. Are there any other people out there that might have more experience and might be a better team to buy and scale my business? The truth is, if I had just kept running the business for the last several years, I would now have as much money in the bank that I do today from selling the business because of what our cash flows were and what our growth rate was and from the skill set that has developed over the last several years. But instead I took the payday, expecting the value to go up over time. But that's not what happened because I did not properly research the team that I was selling to that left millions of dollars on the table. Don't make that mistake. Instead, it may be better for you to keep running the business for a while until you find the right buyer. Tip number three, this is a big one that all of you will benefit from. I regret why I sold. Here's what I mean. I was selling because we had exceeded our capacity and there was a lot of money on the table and we were ready to take some profits after rolling all of our cash into the business for years. But as a result, I sold to the team that was most willing to pay me, not the team that was willing to grow the company. Here's what I should have done instead. I should have showed up to the meeting with a term sheet. I should have showed up to every negotiation that I had with every different buyer and said, here are my terms. Not what does your loi say, not what are you offering me. Here are my terms. We want this valuation. There will be this much consulting time after the exit. We will do this and won't do this. We're looking for a team that prioritizes X, Y and Z. I should have been absolutely clear about what I wanted out of it. So when you are thinking about selling your business, it's important for you to write down what your terms are. You will sell under these conditions. You will sell when the valuation is this. You will sell when your involvement is this. You are willing to hold this much back in equity. Here is what you are willing to do and not do. That puts you in the seat of control. You see, I wish I would have known this. When you are the person selling the business, you're the hot girl at the dance. You're the one everybody wants. I thought that other people coming to me with money made them the hot girl at the dance. They had what I wanted, but that's not true. There are literally people all around the world who wake up every day and say, I wish there was a good company to buy. That's what private equity groups exist to do. That's what big companies like Procter and Gamble and Unilever do. They grow through acquisition. They're hungrily looking for entrepreneurs like you that have good businesses to buy. And they want to buy them and grow them and profit from them or sell them. That's what they're in business to do. You are the person with the control, not the person who shows up with the money. And number four, I regret when I sold, I have to give myself a pass for this one. I didn't know that valuations on businesses were gonna go absurd over the next couple years. I didn't know that more people were gonna come into the market to buy businesses, creating bidding wars on them. I didn't know that there was gonna be a shutdown and a virus and quarantine. Making E commerce the hottest game in town. I didn't know those things were gonna happen, but had I known then, you know, I would have held off for a few years because E commerce businesses are hotter than ever. The valuations are absurd. There's more people now trying to buy them than ever before. There's more buyers than ever before because people are shopping online more than ever. I didn't even think more people could get online to buy things. But with everything that's happened over the last several years, it continues to grow and grow and grow and valuations are starting to reflect that. Valuations are now in the hundreds of millions of dollars for businesses that were, you know, about the same size as mine. Oh, that's so sad. But the valuations on companies continue to skyrocket. We have, we have students and clients who are casting eight and nine figure visions because today it's faster and easier to be able to bring together the pieces to build that seven or eight or even nine figure business. Right now is when the market is really hot for good businesses, especially E commerce businesses. So I regret selling four or five years ago because today is even a better time to be scaling and possibly selling a business. And now that you have the roadmap to be able to negotiate the best terms possible, you know, the deck is stacked for you to have a really massive exit. If you want some help, it's what we do at capitalism.com, we help entrepreneurs build businesses that they can scale and sell. We even invest in a lot of our businesses. The best place for you to get started to be able to surpass that seven figure or eight figure valuation is something called the capitalism incubator. You can find out more in the Description, but it's capitalism.com Inc. And if you found value in this video, please let me know in the comments because I so wish that somebody had told me this when I went to sell my business. If I had, I would be way wealthier than I am today. I did well. I had a great exit. I'm so thankful for the experience. I learned so much. I also learned that people who are rich don't necessarily know better about your business than you do. So it was a great personal experience, learning experience. And yes, I'm much wealthier today as a result of the exit. But I'd be way too more wealthy had I done what you just learned in this video. So let me know in the comments. I'm Ryan Daniel Moran with capitalism.com thank you so much for watching. Hit the subscribe button and I'll see you on the next video. Take care. If you want more content about how we build and structure businesses that you can scale and sell, there's a video that I want you to watch. It's popping up on the screen right now that'll walk you through our model for building seven and eight figure businesses that you can scale and sell. And we do it in a way we call it the owner's model. It keeps keeps you in the owner's seat so that you're not in the weeds on everything. You're actually sitting up overseeing it all so that you can have multiple projects. You can do it while you're working full time, you can do it while you have another business going on. But it's the model that I think will set entrepreneurs free to be able to build a business they can scale and sell.