The secrets of multimillion-dollar transactions (ranging from 7 to 9 figures) from someone who’s been a buyer, advisor, & seller.
From my Wall Street career to my entrepreneurial one and my own personal real estate and investing endeavors, I’ve had the privilege of being a part of diverse transactions ranging from 7 to 9 figures. While each deal has been unique, I’ve noticed a few eccentricities specific to these larger transactions that provide valuable lessons in what to do, as well as what not to do, as an entrepreneur and a businessperson.
Whether you’re planning on selling a company (or other large property), buying one, or building your own product or service involving high-dollar transactions, these takeaways may be more relevant and surprising than you’d expect.
I cringed as the words left my fiancé’s lips: “Hey Greg — are you free to hang out?”
This wasn’t a friend, a colleague, or anyone we’d ever hung out or done business with. Greg was — and is — a local 9-figure serial entrepreneur famous for everything from selling oil and gas companies to funding some of our county’s biggest multifamily real estate developments. We hadn’t signed a contract with him and he didn’t owe us anything, yet he took my fiancé’s 8:30 am Saturday morning call and hopped in his pickup truck to help us scout lots and properties for a new investment.
We ended up working with Greg for about six weeks on a multi-7-figure deal, during which he dealt with a number of other pressing obligations:
Planning his daughter’s destination weddingCommuting back and forth to LA for a new business ventureBidding, buying, and breaking ground on a new $50M developmentFacilitating simultaneous time-sensitive 7 and 8-figure transactions
Based on those four bullets, you’d probably assume Greg was hard to reach and minimally involved in our deal. The reality was starkly the opposite: We were shocked as each of his tangential (and often much larger) tandem obligations were revealed since he consistently made us feel like we were his one and only client.
If you’re chalking that up to the commission he stood to earn or the possibility that he was drowning in debt to cover all these moving pieces, you’d be wrong. The commission he’d earn from our deal was a rounding error to him, and a minor piece in the puzzle of his finances and career.
Greg didn’t give us the highly-responsive, undivided attention, “white glove treatment” because he felt like he needed to; he did so because he enjoyed the deal process that much and cared to uphold his reputation. He was hoping for great testimonials and referrals for the rest of his team (which of course, we gave).
From every interaction with Greg, it was clear why and how he’d built the impressive entrepreneurial, networking, and sales record he had. It wasn’t about slick-talking salesmanship or a high IQ; it was about treating every single client, deal, and relationship like it was the only and highest priority of the moment.
Having worked with and observed a variety of salespeople and advisors (and having been one myself, while juggling multiple large-scale transactions), I can guarantee you Greg’s strategy isn’t necessarily common, but it is effective. As your personal net worth, success, and priorities change, the temptation to discount smaller deals and temporary clients can creep in. Just remember that with every transaction, your reputation is on the line, and there are billionaires out there hustling at 100% effort to make their clients feel like “the only one” just for kicks.
Who do you think gets the subsequent referrals and glowing reviews? Exactly.
I think we can all agree, some jobs are grossly overpaid for the actual work involved. Other jobs, however, may entail significant work and complexity, yet, when it comes to higher-dollar transactions, those “weeds” of the project may be kept far at bay from the paying clients.
Back when I worked in finance, I can’t tell you how many times a managing director tossed me a very complex project somewhere between 10 pm and 2 am, expecting it client-ready the next morning. Slaving away on a potential all-nighter, my managing director would present the client with the presentation-ready version at 9 am, as if it were no sweat.
While one could make the case that as a well-paid advisor to complex transactions, part of your role is to shield clients from the weeds and minutiae that make the job difficult. However, there comes an issue — and one that I’ve witnessed being on the receiving end of these transactions, as the paying client myself: If a client doesn’t know what actual work you’re doing (or how difficult, tedious, or complex it is), how can they feel you’re worth what they’re paying you?
A major con of competence is the ability (or purposeful decision) to make hard things look easy. The issue arises when these highly-compensated hard things appear so fast, seamless, and easy to clients who are paying you 5, 6, or even 7+ figures in an advisory role to facilitate these transactions.
As someone who’s been on both the buy-side and sell-side personally, as well as in an advisory role, I can tell you that I’d much rather know just how hard my lawyer, advisor, or other transaction facilitator is working on a deal for which I’m giving them a major cut. Maybe some clients don’t want to hear the hiccups and minutiae, but I’d suggest at least giving them a glimpse into the battles you’re fighting if you want them to feel good about the value you’re adding (and the price tag attached to it).
This one might sound obvious, but until you’ve experienced both scenarios (a cash deal, versus one comprised of a combination including some stock, debt, or more complex financing), you don’t realize just how much simpler, faster, and more powerful a cash offer can be.
Whether you’re buying a company, a car, a property, or really almost anything, cash is going to come with some significant perks, and while it won’t always be an available (or the best) option, it’s helpful to know why it is “king”.
Fewer cooks: A cash deal can cut out most of the tangential cooks in the kitchen, minimizing time delays, negotiating hiccups, and an array of fees for those other meddlers (“deal facilitators”).Faster: Per the above, deals that involve a combination of financing and/or an issuing or transfer of stock can require multiple parties’ sign-off, plus involve enough moving pieces to delay the transaction’s close.Stable: One of the best perks of a cash offer is the fact that it isn’t at risk of fluctuating due to a volatile stock price or changing interest rates that impact debt financing (and the ability for the deal to go through at all).
Whether you’re the buyer, seller, or advisor (or other facilitator) in a future deal, I’d keep in mind just how much of an advantage cash can bring.
Believe it or not, the “vibe” (and by vibe, I really mean “trust level”) of a deal matters — a lot. While I’m not suggesting most 7, 8, or 9-figure deals are as simple as a handshake agreement (they’re not), those that involve two happy, trusting parties acting mutually kind and generous actually do exist, and they go a lot smoother than the rest with sparring counterparties.
It shouldn’t be a surprise that going into a deal with an enemy or someone you distrust (or feel the need to “beat”) is a recipe for a very rocky road (and not one filled with chocolate and marshmallows). I’ve been involved in a handful of transactions (often as either the buyer or seller, less often as the advisor) in which the trust was there from the get-go. Though thorough due diligence and a sensible offer were made, these deals felt so much more seamless, less risky, and ultimately more successful for both parties because they were happily working towards a common goal and finish line.
On the flip side, I’ve also witnessed and been a part of (more so as an advisor) transactions involving two sparring parties or ones in which each side felt the need to dig in and tear down or one-up the other with another jab. By jab, I don’t mean insult, I mean an unnecessary delay as a frustrating negotiating tactic, due diligence requests and inquiries that wouldn’t end, simply to drag out the closing and beat down the seller, and so on.
The more contentious and distrustful a deal starts, the more contentious and distrustful it’s likely to continue, and while there’s a time and place to negotiate and ask questions (or hold your ground), there is a line past which it’s only to your detriment.
If you think the secret to a seamless deal is to sell a great asset (like a highly desirable and scarce piece of property or a very profitable and growing company), you’d be wrong. The secret to a seamless deal is to find a scenario in which both parties have different, but mutually beneficial priorities.
For example:
One party wants a fast, clean deal, and the other values the asset enough that they’re willing to accelerate their timelines, cut down on due diligence, and bend to the seller’s other needs
In other words, a seamless deal isn’t necessarily about the highest offer price. Sometimes, when the highest offer comes with enough contingencies and due diligence sticklers dragging out the process and down the price (along with the likelihood of a successful close), it’s more of a pain and a risk than the “higher price” is worth.
Facilitating a great deal — and being a part of one — requires having an accurate and robust understanding of each party’s priorities and determining how well they can be aligned for mutual gain.
In some cases, the phrase “ignorance is bliss” can be true; when it comes to transactions, it can actually be a legally sound strategy. Let me explain:
The most common concern from sellers pertains to the unknown skeletons that might be uncovered from the depths of their closets.
The fear is: Do I need to start digging or covering up those skeletons?
The answer is simple: No; do neither.
From a legal standpoint, yes, if there are skeletons hidden in your asset’s closet to which you’re privy, you are legally obligated to disclose those, and covering them up would be a major no-no (as would omitting them from disclosures). That said, if you simply fear that new skeletons may emerge in due diligence, it may be in your best interest to stay dumb (not play dumb, but actually stay dumb, meaning remain oblivious) until that due diligence happens.
If those skeletons emerge during due diligence and become an interested buyer’s bargaining chip to lower their offer — or back out altogether — so be it. However, if you go digging up those skeletons yourself ahead of a sale, you’re only working against yourself before negotiations even begin.
Lastly, and perhaps most surprisingly, is the fact that large, multi-million-dollar transactions aren’t always as complex as you might assume. Of course, the more cooks in the kitchen, assets bundled into the deal, and complex or volatile financing involved, the more complicated a deal will be, even regardless of size. That said, sometimes, once trust has been established and a mutually beneficial agreement is initiated, a major transaction may really be as simple as one or two wire transfers (though an escrow company is typically involved).