My $100M Mistake + 6 Company Exit F**k Ups To Avoid | My First Million

Intro

In this episode of “My First Million”, hosts Sam and Shaan discuss their $100M mistake and share six company exit f**k ups to avoid. They provide valuable insights and lessons learned from their experiences in selling companies. The episode also covers the benefits of Qualified Small Business Stock (QSBS) for tax savings, negotiation tactics, and the importance of being organized when selling a company.

Main Takeaways

Mistakes in Selling a Company

• Never will I ever make these mistakes while selling my company again
• Mistakes made while selling a company can be costly
• Selling a company can provide valuable lessons for future endeavors
• “We made these mistakes so you don’t have to” – Sam and Shaan

Qualified Small Business Stock (QSBS) Tax Savings

• QSBS (Qualified Small Business Stock) protects up to 10X of your investment for long-term capital gains taxes of $10 million or 10X your initial investment
• QSBS applies to private, C-corp companies valued at $50 million or less
• Hold QSBS for 5 years and save up to $10 million in federal taxes, plus additional state tax savings in some states
• QSBS is not a deferral, but a 100% exclusion on gains up to a certain number, making it better than real estate tax savings
• QSBS can be stacked for multiple family members, creating significant tax savings opportunities

Negotiation Tactics in Selling a Company

• The most important rule of negotiating when selling a company is to be okay if no deal happens
• In any negotiation, the side that cares the least wins
• The best deal is the one that will actually close, not necessarily the highest offer
• Red flags and weird behavior during negotiations should not be overlooked
• Understanding the motivations of the buyer is crucial for successful selling of a company

Importance of Being Organized in Selling a Company

• Being disorganized can cause problems when selling a company, such as not having access to important records
• Keeping track of all necessary documents is crucial when selling a company, and it can take months to organize everything properly
• Failing to file important paperwork, such as the 83P election, can have significant financial consequences
• It’s important to stay on top of manual processes like the 83P election and keep records in case of an audit

Summary

Mistakes in Selling a Company

Sam and Shaan share their personal experiences and mistakes made while selling companies. They highlight the importance of learning from these mistakes and avoiding them in future endeavors. By sharing their lessons, they hope to help others navigate the process of selling a company more successfully.

Qualified Small Business Stock (QSBS) Tax Savings

The hosts explain the benefits of QSBS for tax savings when selling a company. They discuss the eligibility criteria and the potential savings that QSBS can offer. They emphasize the importance of understanding and utilizing QSBS to maximize tax benefits.

Negotiation Tactics in Selling a Company

Sam and Shaan delve into negotiation tactics for selling a company. They stress the importance of being prepared to walk away from a deal and not appearing desperate. They also emphasize the significance of understanding the motivations of the buyer and evaluating offers beyond just the monetary value.

Importance of Being Organized in Selling a Company

The hosts highlight the importance of being organized when selling a company. They discuss the potential consequences of being disorganized, such as missing important records or failing to file necessary paperwork. They emphasize the need to stay on top of manual processes and maintain proper documentation throughout the selling process.

Conclusion

This episode of “My First Million” provides valuable insights and lessons on selling a company. Sam and Shaan share their personal experiences and offer practical advice to help listeners avoid common mistakes and navigate the process more successfully. Whether it’s understanding tax savings opportunities, negotiation tactics, or the importance of organization, this episode offers a wealth of information for entrepreneurs and business owners.