This is a YouTube video titled "Don't Make this Mistake when Acquiring a Business" created in June 2024. The content is a monologue or presentation focused on advice for business acquisition, specifically emphasizing the importance of carefully managing and double-checking Excel spreadsheets and LOI (Letter of Intent) iterations to avoid costly errors during deal negotiations.
Are you getting close to locking up that deal you've been working on for a few months? If you are, you want to make sure that you do not make this one mistake and it is not something that you're going to think about. It's actually related to Excel. So what is the mistake that you want to avoid? So when you're going through the LOI phase, it can be pretty hectic. Numbers can be flying around back and forth. You may be going through several iterations with your seller on an loi. I know recently I've gone through what's now is four different iterations of the loi. So a couple tips that I have when you're going through the LOI process and some things to avoid when it comes to Excel. If you are going through several iterations of your LOI before you come to a final agreement, make sure that each time you save each iteration separately. That is pretty critical because a key question that may come up later down the road is what was discussed originally? And where did we finally land? Or where do we land in the middle. Right. And that may be something that's fresh in your mind right now, but in three weeks from now or six weeks from now, maybe there's some misunderstanding of someone thought a number was here, but you're really over here. You want to have a transactional history of everything you've done. So every time you make a change, go ahead and save a different version, and that way you have that history to refer back on between your first LOI version and where you actually land it. When it comes to Excel, one thing you want to do as a just fundamental methodology towards viewing numbers in a spreadsheet is just assume everything you're looking at is wrong. When you start getting into really complicated things like sumif formulas and vlookups, it is so easy to make mistakes. I've made so many mistakes. Not intentionally, obviously, over the years. It's so easy to make mistakes. It's so critical that you must double check your math. I can't tell you how many times where I've gone to submit numbers and I've checked it three or four times. I go back and check it a fifth time and then I find a mistake. Right? So always double check your numbers. Recently I was working on loi, and the numbers that I thought I was working off of was like $200,000 off. So that's a pretty big amount. So. And it really resulted in some basic formula errors. So let's say the number was $5 million and I came up with $4.8 million. Well, guess what? When you put in an LOI and that number says $5 million, you're going to have to live with that $5 million. Let's say you wanted the number to be 4.8, but you had an Excel mistake at 5 million. Guess what? The seller doesn't care. They're going to see that 5 million that you put in the LOI, and that is what they're going to expect. So think about that the next time you're drafting an loi. Make sure you are double checking your numbers because cannot explain that away to your seller, you cannot explain that away to your bank. They're going to expect that your numbers are correct in any mistake like that. Although what seems like a small one can really end up being a very, very large deal. So always double check your numbers and assumptions and again, when you think you have them right and you verified them, go back and verify it again because you don't, you don't want to make that mistake when you're locking up a deal. So the moral of the story is, don't be like me. Double check your numbers, make sure your assumptions are right. And I promise you that will set you up for success in locking up your next deal.
