How to get a $25m+ exit

Here’s the truth about selling to private equity

If you’re growing a company and are looking for a $25m+ exit, keep going … but know that the odds are stacked against you.

For example, this chart shows a pretty typical outcome after 5 years of hard labor. You keep 16.5% of $30M – which is a mere $4.95m before taxes and fees – after a few rounds of capital dilution:

That’s losing the baby with the bathwater!

But what if you happen to be a founder-led company that hasn’t taken ANY outside funding yet? What are your chances of making a $25m+ exit?

Statistically speaking, these companies have always represented the bulk of the M&A market and are now in even greater demand.

Why? Because market headwinds have caused deal sizes to shrink because EVERYTHING IS SHRINKING.

You must already know: financing big deals has become tougher, which is pushing PE firms and corporations further down-market.

When PE firms enter YOUR market, they are going to run their Secret PE Company Crushing Playbook , which I’m going to describe to you in a minute.

But first, the numbers: according to Pitchbook, the vast majority of non-backed companies sell at a steep discount to corporate-backed deals (eg. deals with professional money in them)… and do so for <$25m!

And even though you might think you’ve got an excellent business that took a lot of time, energy, and money to build…

Here’s the dirty secret about Private Equity and middle market M&A.

I started my career in capital markets in 2005. Since then, I’ve touched dozens of $100m+ transactions, both on the buy side and the sell side…

And dozens more in the <$100m category as well.

Even though you probably hear about the eyepopping numbers companies sell for…

Very rarely is it the FOUNDER of that company that got rich from that transaction.

In fact, chances are, 12-18 months after the founder took in outside money, they were either:

  1. Fired for not hitting the absurd growth targets required for the “sexy” valuation / exit price they thought they so expertly negotiated, only to find out the reason the PE firm agreed to that number was to install control features that allow them to force the founder out and take control of the asset.

    or ….

  2. Shoved into some ceremonial role with no direct reports (and they work from home).

Who actually made all the money in that transaction?

You guessed it. The PE firm who bought their business. 

You might think these PE shops are the elite of the investing elite who have some magic fairy dust they sprinkle on deals that makes money fall out of the sky…

Truth is, they’re doing the same thing as 5th graders who go to garage sales on the weekend looking for easy stuff to flip on eBay.

And for all you founders who wind up with what you think is a pretty sweet 7-figure exit…

Here’s what actually happened.

“You did literally all of the hard work, took all of the financial risk, and left basically all of the upside on the table. “

No joke, whoever bought your business is going to go for a 5X win over what he paid you, and do it in the next 3 years…

Here’s the basic math:

  • You work your ass off for 5-10 years to build a company you finally sell for $25m.

  • You walk away with $4.3M after fees, taxes, and dumb stuff you bought – queue Aston Martin, Jordan Rookie Card, and … whatever.

  • THEN, the PE guy who bought your company moves some numbers around on a spreadsheet, maybe raises a little bit more capital, and three years later winds up making $100M.

$4.3 vs. $100M ….

Wait a ‘Sec Oren, How do I avoid this disaster scenario?

Answer: You need a “Map to Money” and you’ll be fine

Here’s the thing you need to understand about the Game of Money.

To YOU, the game feels like “Chutes & Ladders” …

When it’s your turn, you spin the dial, move ahead 4 spaces, and find out whether you stay there or … move backwards. Then you wait your turn for another spin.

Yeah, when I see companies trying to grow-and-sell, It really is this clumsy and clunky to watch, beacuse most founders just don’t have the experience to do it right, as they might sell one company in their lifetime, if they’re lucky.

For most PE firms, they are buying and selling dozens of companies every single year.

They know exactly where to go to get all the money they need to make this business work…

And chances are, they’ve already done business with all the buyers in the market who could purchase for $100m+.

More importantly, they understand what that deal has to look like in order to unload it to the next buyer in the cycle.

Here’s what an actual Map to Money looks like from one of our working sessions last Thursday. Yes, this is a real deal valued at >$200M.

But if it’s really that easy to turn your ~$25m deal into a $100m deal… why would you sell too early and let the PE firm have all the upside?

What if you could simply “Copy and Paste” the PE firms playbook, stay in control, and wind up making way more money on your exit?

Now you can.

All you need to do is sign up for my new 90-day group coaching program I call…

The Map to Money Bootcamp

The purpose of this group coaching program is simple. We want to help founder-led companies looking to make a “sexy exit” in the next 3-5 years.

That means either selling the company in a $100m+ M&A transaction…

Or taking the company public at AT LEAST a $250m market cap (which would officially make you a “small cap” public company).

Regardless of the path you take, chances are, you’re going to need to raise several rounds of capital over the next few years to generate the result you’re looking for.

But here’s the thing about raising capital most people simply don’t understand.

The #1 thing you DO NOT want is to have a “stale listing.”

The longer it takes you to complete your round, the harder it gets.

Why? Because investors are far more motivated by FOMO than you think. If other people are putting money into it, they want to put money in to.

I call this “Capital Velocity” – the faster you raise money, the faster money comes in.

Here’s a real world example from LAST WEEK:

Here’s what you get when you sign up today

Just in case you’re wondering, this is not a course. This is a small working group of founder-led companies who are intensely serious about raising capital and making a “sexy exit.”

This means people who join this pilot group understand that they will need to do some work to achieve results, under my direction.

To be clear, yes, there is plenty of content you’ll have access to that covers all three major phases of your capital raise: Origination, Pitching, and Closing.

But there’s literally no point in having you go talk to investors until you’ve built your Map to Money, which is a collection of three things:

  • Strategy: Most people want to go after big-check writers way too soon in the process. That’s why I almost always have founders start with a <$1m friends and family round, then a $1-5m retail round, and THEN consider going after institutional investors once you’ve got traction in your business and experience pitching your deal

  • Positioning: In addition to knowing WHO to raise money from, you also need to know what narrative structures work for each type of investor (and what types of bonafides they need to see in order to do business with you)

  • Offer: Remember that you are selling a financial product called a “security” that has certain terms, features, and expected rates of return. It’s critical to your raise that you understand what your investors are expecting to earn… and if you can deliver on those expectations.

Seriously, if you don’t have a Map to Money, stop talking about your deal to investors – especially the “good ones.”

Sign up for our 90-day program where you’ll work directly with me – and our team of coaches – to help you build out your Map to Money and get you set up for success.

Not only will you have access to AT LEAST two live group coaching calls per week with me and my team of coaches. (Calls are on Thursday @ 10am Pacific, Friday @ noon Pacific time).

You’ll also get access to all of our core training programs like:

  • Velocity Live Recordings ($2,997 value) - Gain instant access to transformative content from Velocity Live, including keynote presentations, real-time feedback on pitches, and valuable templates for your pitch deck. (Currently Available)

  • Pitch Mastery 2.0 ($1,997 value) - Whether you're familiar with 'Pitch Anything' or not, our S.T.R.O.N.G. Method empowers you to present compelling ideas and close more deals, enhancing your business interactions and even making them enjoyable. (I’m currently uploading this my membership site.)

  • Cold Email Outreach ($997 value) - Overcome the intimidation of cold outreach with our specially designed program, guiding you in catching attention, crafting compelling emails, bypassing gatekeepers, and effectively emailing investors. (I’m currently uploading this my membership site.)

I’ll spare you the price-stack build-up and any form of trial close.

Right now, you can get 90-days access to the Map to Money Bootcamp with me, full participation with me on weekly live calls, and all of our best courses designed specifically for founder-led companies raising capital…

All for $497.

But fair warning. I fully plan on raising the price of this 90-day program to $3k (or $1k/month) because of how valuable this Map to Money has been for other founders.

You have until this Friday at 9 pm PDT / Midnight EDT to sign up to lock in this heavily discounted rate.

Next week, the price goes up to $797 for the quarter, and then to $1,000 for the quarter.

Go here to secure your spot in the Map to Money Bootcamp before the price increases.

-Oren Klaff

P.S. for those of you who want to work with me one-on-one on your capital raise, I am completely booked out right now.

At any given time, I’ve got ~5-6 companies we’re working with at Intersection Capital, and the vast majority of companies I work with are founders who’ve read my books and come to our live events. In other words, the companies I’m helping now, including a $400M manufacturing firm, started in a program just like this.

It’s a great way for us to build a relationship in a low-cost, low-risk environment before we even talk about partnering.

That’s why I’m launching this Map to Money Bootcamp as a way for us to start a business relationship and see if we’re in alignment.

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