That’s a hot headline right now. Why?
Well, because it sounds surprising and enticing.
The Wall Street Journal released an article on the topic. The Morning Brew reposted to their daily newsletter and blog. And it seems like thousands of contractors couldn’t wait to hit “share” to their social media pages.
However, this news is not surprising. In fact, it’s not very accurate either.
Plumbers and HVAC business owners have been making millions long before Private Equity got in the game. Hell, I know a plumber in Abilene Texas that was able to buy a bank with the earnings from his plumbing company! (Howdy David!)
And let’s not forget our roofers, electricians, garage door service shops, septic systems, and other trades owners. They too have enjoyed wealth long before Private Equity came on the scene.
You should be a Net Worth Millionaire First, and Only Then Consider Selling
Being a millionaire can happen way before you sell your business. Frankly it should happen way before you sell your business.
Selling your Business before you’re a Net Worth Multi-Millionaire Means:
- Your ratio of debt to value is lopsided.
- You’ll sell too cheaply.
- Your earnings after debt payments will leave you needing a job.
- You haven’t master money discipline.
- You’ll be desperate and at a huge disadvantage to sharp negotiators.
Here’s the bottom-line:
You’ll be much better prepared to handle the money and maximize the opportunity if you’ve already acquired a sizable amount of net worth fueled from your business before you sell!
Be rich before you sell.
It’ll teach you discipline and give you a better seat at the negotiating table.
Let’s give credit where credit is due:
And before I go, a part of the story is missing, and the gap needs to be filled.
Private Equity did not make millionaires of the business owners. They made millionaires of themselves by building a company that was worth buying.
The put in the hard work and the sacrifice to make their dreams come true and build a service business of value.
Along the way, they got some help. In most cases, a lot of help.
So, allow me to give considerable credit to the mentors, groups, and trainers out there providing wisdom, guidance, and Service Excellence for decades.
