Today's episode of the podcast, Robert Hirsch from Freedom Factory "Seller Beware! The Big Reasons Deals Don't Close"
Listen to the podcast, watch the video, or read the transcript below.
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Transcript of Podcast
Hi everybody. This is Robert from Freedom Factory and I want to talk to you about it a pretty serious topic today, and it's the biggest reason that deals don't close. Now, personally, my close rate on deals has been really strong over the last 10 or 15 years, but I see a lot of people, you know, the industry standard, they close less than 50% of deals.
So, it's almost unbelievable when you think 50% of people that agree to pay a price for a business don't actually buy it. And I want to jump into why that is, and more importantly, how can you can make sure that doesn't happen to you. So first of all, when the biggest reason that I see that deals don't close is usually when the numbers drop off a cliff.
And the reason that happens is because the entrepreneur is trying to do too much. So as running a business as an entrepreneur takes a lot of work, and when we sell a business, we're partners for a short period of time. I talk a lot about our 147-day selling process and a lot of times it works in that time. Sometimes it takes a little bit longer, sometimes or even faster. But the number one thing when we're selling your business is to let us do our job as you have to do your job and make sure the numbers are still going on the same trend line that they were. If you're growing at 3% a month. The this time can be the absolute most important time for you to do it. Not only because you get paid the best. What that means, for example, let's say, you're selling your business on earnings and you're getting a multiple of five times earnings. When you sell it, you're actually getting paid six times on every sale you ever make, which means you're getting paid once in the cash and five times you're earning is when you sell it.
Now, if you were making six times your usual value when you sell a business, do you think you would sell harder? I sure would. And having the right broker and the right partner to be able to sell it for you, we're going to handle the process. We're going to handle the phone calls. We're going to handle the Q and a, the diligence.
We're going to prequalify your buyers. We're going to take all that off of your plate. In fact, until the buyers had been prequalified, and we have an LOI on the table, we don't even put them on the phone with you. We want to preserve your time as much as you can so you can run your business as profitably as we can, and we can do our job.
And again, what we do at Freedom Factory is make sure to build as much deal tension as we can. So that's getting the most people introduced to the business, either through a combination of inbound or outbound and marketing materials going through a Q and A process and getting all the buyers to go to our process, meaning the sellers process.
We do Q and A here. We do prequalification here; we do LOI's here. We start to go through and we get the funnel and we find the perfect buyer and the perfect fit for you. Bottom line is the partnership's pretty simple - for the next year, you run your business, we focus on selling your business.
When you're talking to a broker, you're making the right decision. Try and find somebody that's not just a sales guy or just sells businesses for a living. Find a career entrepreneur; someone that speaks entrepreneur, somebody that understands that. Just because you've built the business and got it to here doesn't mean that you want to run it for the rest of your life.
Sometimes as entrepreneurs, I look at us as the producers or the builders or the contributors, and, and if I'm not on point and on passion in my business, you can feel it. And it's not the same thing. And so if you're an entrepreneur that has a business that you're no longer passionate about, just because you took the train to Chicago, doesn't mean you want to drag the train around with you once you get there. Give us a call and we'll be able to help figure out the best way for you to transition to something you are passionate about so you can build massive, massive value.
One other truth is that time kills all deals. And every deal goes sideways. We have buyer's remorse. People often talk about it's the house as the biggest purchase you ever going to make. Well, that's not true if you're buying or selling a business. Often for me, buying and selling a business is the biggest purchase, or is the biggest purchase or sale that my clients are ever going to make.
And the more time you have, more likely the buyer is to have a little bit of buyer's remorse. Or if one little thing goes wrong, maybe they latch onto that, we have a bad month or bad week, and they use that as an example of why the business isn't as good as they thought they would. So at the best-case scenario, they're going to try and buy it for a little less of a price, which isn't going to feel good to you, the seller, or to me, the broker. And the worst-case scenario is they just back off and they go dark and they don't want to do it and they pull it out of escrow, and then we have to begin the process all over again.
So again, when you, when you look at these types of things, what I've found in 20 years of doing this is every deal is going to go sideways at least once. And that's where my experience comes into play. That's where we can get it through. I've seen deals go sideways for every reason you can think of yet I still get surprised and see new deals go sideways all the time. We'll get you through it. We'll keep a smooth, steady hand. You keep running the business and keep the fundamentals going up and up and up, and we're going to sell your business for more than anybody else in the marketplace.
Now, if you have any questions on selling your business, why deals go sideways or what the process looks like. Why don't you give us a call at freedom factory? We'll talk you through that and any other questions that you might have. Thank you so much for watching. Please like and subscribe and we'll see you soon.
Contact Freedom Factory
Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
https://www.freedomfactory.com/
https://g.page/freedom-factory-denver
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At Freedom Factory®, we have experienced and witnessed the explosive results of entrepreneurs aligning passion and purpose to create extraordinary value. However, most entrepreneurs have no idea how to maximize the value of their business and move on to the next chapter of their lives. That’s where we can help.
Freedom Factory® has radically disrupted the way high-growth, lifestyle companies are bought and sold, which historically was a horribly inefficient market. When I sold my first company in the 1990s, I went to several investment banks and sold my business to one of less than five companies they called. Looking back, I see exactly how much money I left on the table and knew that there had to be a better way. The bottom line is that entrepreneurs don’t speak banker, and bankers sure don’t speak entrepreneur.
https://tylertysdal.academia.edu/
Contact Tyler Tysdal at Freedom Factory
Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
https://freedomfactory.com/about-tyler-tysdal/
Freedom Factory Managing Partners
Tyler Tysdal https://www.linkedin.com/in/tyler-tysdal
Robert Hirsch https://freedomfactory.com/about-robert-hirsch
Who is Tyler Tysdal?
Tyler Tysdal is a lifelong entrepreneur who first discovered the joys and challenges of self-employment at the age of 14. Tyler Tysdal was a collector and trader of baseball cards and his budding entrepreneurial spirit spurred him to create Triple T’s Sports Collectibles, a national mail-order trading card and memorabilia business that found a wide audience through ads in trade magazines. While market inefficiencies were numerous in this pre-internet era, a young Tyler Tysdal experienced his first big business win with $14,000 a month of profit result. A lot of money for 14. It hit him during a ride with his mom to the post office to mail dozens of card shipments: He would likely be an entrepreneur and investor the rest of his career.
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Additional News Sources:
https://sites.google.com/view/howtosellabusiness/sell-your-business
https://www.globenewswire.com/news-release/2021/04/20/2213552/0/en/Award-Winning-Journalist-Natalie-Tysdal-Quits-News-Business.html
https://tricitydaily.com/tyler-tysdals-freedom-factory-teaching-entrepreneurs-secrets-of-selling-their-business-for-maximum-value/
