Exits: Buyers Run Diligence To Cut The Price | Dave Guttman

A buyer is not trying to work out what a brand is worth. He is trying to find a reason to pay less for it. That is the half of due diligence nobody explains, and it is where most founders lose money they had already earned. Dave Guttman has bought, run and sold companies for most of his career. He was President of First Stop Health, a telemedicine company that made the Inc. 500 in back-to-back years — No. 276 in 2018 and No. 375 in 2019 — and he now mentors founders through their own exits. This one is for operators who have ever thought "I'd sell at the right number." Andrej and Dave get into what an acquirer is actually doing during diligence, the three numbers that set a multiple, why polishing every last opportunity before a sale costs you money rather than making you more, and the one deal Dave says he should never have done. In this episode: • The second reason buyers run due diligence, and how it shows up in the final price • The three numbers an acquirer checks before bidding, and the floor Dave puts on each • Why maxing out every opportunity attracts a worse buyer, not a better one • How being the face of the brand quietly caps what it is worth • The handshake rule he learned across 18 months of depositions • Why he walked from a deal with 70% of revenue in a single client • The timing move he credits for holding his price through the 2008 crash • What he does first with a struggling $5M brand and 90 days Chapters: 00:00 The half of due diligence nobody explains 04:59 The first meeting, and what drops his offer 05:29 Lifestyle business or exit business, pick one 07:12 Make every month they wait cost them more 09:31 Being the face of the brand makes it hard to sell 14:02 Diligence exists to cut the price, not to check it 14:46 He timed the exit to his three best months ever 19:47 A big cash payment at close spooks buyers 22:54 Stop looking at CAC and LTV blended 25:05 The three numbers that set the multiple 27:42 The cold plunge brand that added a subscription 29:30 Two identical $3M brands, 4x versus 7x 30:09 Leave the acquirer some low-hanging fruit 31:53 Max out the upside and you attract a worse buyer 34:23 Start planning the sale 18 to 36 months out 35:43 The deal he should never have done 38:05 70% of revenue from one client, and he walked 41:59 What an acquirer wants the key employees paid 45:27 A struggling $5M brand and 90 days Dave Guttman: https://www.guttmanmedia.com/ https://www.linkedin.com/in/drguttman/ https://www.instagram.com/realdaveguttman/ Ecom Growth Insider is hosted by Andrej Tumachowitsch. Watch every episode on YouTube: https://www.youtube.com/playlist?list=PL785J5b\_VfDG4PrhJ0OVdkDlUioSkb-tf Running a DTC brand between $100K and $1M a month and want the profit side looked at properly, not the traffic side? https://hologrowth.com/apply/