When John Bowen received a non-binding letter of intent from a global bank to buy his business for $37 million, he thought the offer was too good to be true.
As it turns out, it was.
Bowen had received a non-binding letter of intent from a global bank, who made their bid with no actual intent to buy his business. Bowen came to believe their offer was a decoy designed to disguise their real objective: to understand Bowen’s strategy so they could compete better with him. Bowen got wise to their strategy and ended up selling his business to another buyer, Assante Wealth Management, for $25 million.
Bowen reveals his three strategies for evaluating the authenticity of an offer to buy your business during our interview. Listen here.
Falling prey to a fishing offer is one of the many hazards to avoid when preparing to sell your business. You’ll discover many of the other sleazy tricks buyers and competitors use when you begin to apply The Value Builder System™ to your own business.
About John Bowen
John Bowen founded CEG Worldwide in 2000, with the goal of leveraging the lessons he had learned during his career to the benefit of financial advisors and the institutions that work with advisors. His 26 years as a financial advisor and investment firm CEO taught Bowen that many advisors lack the high-quality empirical data and pragmatic business experience necessary to build hugely successful businesses. Bowen founded CEG Worldwide to fill that void, with the belief that providing advisors and institutions with reliable research about the best practices of top advisors—and the coaching to use these practices effectively—would help them achieve new levels of success.
Click to Tweet: [#Podcast] Is your potential #acquirer really just on a fishing expedition?
Some Highlights Of The Show
Business: CEG Worldwide
2:40: “I wish I had known then what I know now.”
Click to Tweet: [#Podcast] I wish I knew then what I know now… A must listen, cautionary tale via @AESNation on his #businesssale
3:25: “I joined a couple years after they started [the firm].”
4:30: Buying in as a partner.
5:55: “I saw a need for systems—basically two—that I wanted to create: one was nailing the client experience and the second was having that steady stream of pre-qualified, pre-endorsed affluent clients.”
9:00: “Two out of three wanted to do it… We went from raising a little bit of capital to [being] for sale.”
9:35: “We really wanted to go strategic [when raising capital].”
11:22: “At one point they sent over as many attorneys as we had employees.”
12:08: “We were introduced to an investment banker… He looked at it for about fifteen minutes and he said, ‘You are never going to close this deal.’”
Click to Tweet: [#Podcast] You are never going to close this deal – Ep. 41: The Fishing Trip.
13:30: “They have not done the focused due diligence that would end up with a definitive agreement.”
13:50: “They asked good strategic questions but they weren’t looking at all on the financial side, the contract part…”
15:35: The wine and dine.
17:05: “It leaked out and all of a sudden we had a whole bunch of people coming to us to talk. We had at that time professionalized… We got clear on what we thought the valuation was and what it would take to do a deal.”
19:00: Reviewing the acquirer’s business alignment to understand if the offer is legitimate.
19:20: “They ended up paying $25 million. $15 million was upfront and the balance was in the earn-out.”
21:43: “Be careful what financial projections you show… [They are used] to develop the terms and conditions of the deal.”
24:00: Three tips that will help you negotiate your deal terms during acquisition.
24:24: “If you are not sure of your position, it’s an acquisition [not a merger].”
Click to Tweet: [#Podcast] “If you are not sure of your position, it’s an acquisition [not a merger].”
31:00: “Someone had to be in charge of the deal, and it ended up being me as CEO.”
35:20: “There’s a lot of trust involved… [In the] end we were hardly talking to each other… It’s really still not repaired.”
36:20: The State Of The Entrepreneur is available at AESNation.com
Click to Tweet: Is your acquisition offer a fishing trip in disguise? Learn the warning signs via @AESNation.
The Value Builder System™
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