12 Lessons I Learned From SELLING my Businesses for $50,000,000 at age 29

Summary

• Recognize that when you sell your business, you're packaging it as a product for potential buyers. Understand the type of buyer—strategic or financial—and tailor your sales preparation accordingly.
• The best terms you get will likely be at the beginning of the selling process unless your business booms during that time. It's challenging to improve terms as due diligence often reveals more issues.
• Pay attention to dilution clauses and your voting rights if you're not selling 100% of your business. Protect your interests by negotiating for anti-dilution and ensuring you have enough voting rights to influence decisions.
• Carefully define the boundaries of your non-compete agreement to ensure that it's appropriately restrictive without unnecessarily limiting your future entrepreneurial endeavors.
• Expect the selling process to take much longer than initially estimated due to various parties involved and unforeseen delays. Don't plan important events around the estimated closing time.
• Selling a business can be slow and monotonous until the very end when it becomes a whirlwind of activity. Stay focused and keep your calendar clear around the expected close of the sale.
• You are the key decision-maker in the selling process. Lawyers and advisors provide counsel, but you have the best understanding of the business and your goals.
• Avoid getting bogged down in minor details; concentrate on the major terms that affect the main reason and objectives for selling the business.
• Don't inform your team about the sale too early; it creates uncertainty and stress. Wait until the sale is confirmed to communicate with them.
• Ensure you know what the new owners will offer your team in terms of positions, responsibilities, and benefits, so you can assist with a smooth transition.
• There’s a significant difference between a bank-led sale and a founder-led sale. If your transaction is substantial and you lack a strong financial team, consider using a reputable banker to assist with the process.
• An LOI (Letter of Intent) is not a guarantee of a sale. It's an initial commitment but far from the final purchase agreement. Don't consider your business sold until the purchase agreement is signed.

Video

How To Take Action

Let's start with the juicy bits that can quickly make a difference:

• Know Your Buyer: Figure out if the person interested in your business is more of a strategic or a financial buyer. A strategic buyer might want to merge your business with theirs, while a financial buyer is looking for a good investment. This helps you prepare your business to look its best for what they're hunting for.

• Stick to Big Terms Early On: In the beginning, try to nail down the most important parts of the sale – like price and conditions. Later on, it's harder to change these, unless your business is doing way better than before.

• Protect Your Future Business: Think about where you want to be after the sale. Make sure your non-compete agreement is sharp and only stops you from doing things that really compete with your old business.

• Understand Your Rights in the Sale: If you keep a part of the company, make sure you don’t get less than you bargained for later. You might need to ask for something called an anti-dilution clause to make sure your share stays the same, even if new people come in.

• Keep Time in Mind: Remember that selling can take a lot longer than everyone thinks. Don't plan big trips or events around when you expect things to finish.

• Avoid Distractions: When things are wrapping up, they will get crazy fast. Keep your calendar clear so you can focus on the final steps without pulling your hair out.

• Decide for Yourself: Listen to your lawyers and advisors, but remember, you're in charge. They don't know your business like you do. You get the last word.

• Don't Sweat the Small Stuff: Don't get hung up on tiny details. Keep your eye on the real reasons you're selling.

• Be Careful When You Share News: Don’t tell your team about the sale until it's for sure. Telling them too early can freak everyone out and nothing is sure until all the papers are signed.

• Help Your Team Move On: Get the scoop from the new bosses about what’s in store for your team. It's your job to help everyone feel okay about the change.

• Get Help if You Need It: If there's a lot of money on the line and you're not a numbers whiz, think about getting a banker to help you out. Just make sure they're good at what they do.

• Letters Don't Mean It's Done: An LOI, or Letter of Intent, is just a maybe. Your business isn't really sold until the final sales agreement is signed.

Stick with this plan to keep things smooth and smart during the sale. Remember, patience and a clear head will be your best buddies during this process.

Quotes by Leila Hormozi

"The terms that you get in the beginning are the best they are ever going to get"

– Leila Hormozi

"Make sure the non-compete doesn't [explicit] you"

– Leila Hormozi

"Expect the process to take two to three times as long as anyone says"

– Leila Hormozi

"Selling a business is actually quite boring, until it's not"

– Leila Hormozi

"Don't tell your team too early"

– Leila Hormozi

Full Transcript

co-ceo of acquisition.com which is a portfolio of companies that does about 85 million per year in revenue i don't do coaching courses masterminds i don't have any of that crap i just make these videos because i enjoy doing so and part of our mission at acquisition.com is to just document and share the process of building a great business and this is a unique video today in which i'm really breaking down like the hard process of selling a business and it's really my top lessons from the process itself i'm not talking about why we sold the business i'm not talking about you know how to find somebody to buy your business but i'm talking about what does it actually look like during those six months when somebody's buying it and when you're selling it and what is it like what happens what did i learn from that process and i learned a lot of stuff that i think is very useful and it's things that i hadn't heard before and so i tried to only distill it down to information that i hadn't heard anywhere else in the internet and so with that i hope you enjoy and find it valuable in this video what i'm going to break down are the 12 lessons that i've learned from selling three businesses in the last year and these lessons are really focused on the process itself and so i think a lot of the times there's you know how do you get your business for sale how how do you decide if you want to sell your business i can talk about those but what i really want to talk about was the stuff that i wish i had known which was like what are the important lessons that you learn you know while going through that process and like what's important and what isn't because i think that a lot of the reason that people have a hard time selling their business or it's a stressful event for people which i know for myself i can say that it was more stressful than i anticipated at times it's because it's so unknown i think i just want to kind of like take the veil off and so i had a notepad with like 45 different lessons that i learned and i kind of distilled it down to these 12. and i have more than i'm going to do in later videos but those are more lessons around why to sell and how to put your business on the market this is really the process of selling what is it like and what are the lessons that i learned from the actual process itself right like so once you decide you're going to sell your business you engage with a banker you go to market what did i learn and that's what i'm going to talk about in this video the first and the most important thing and i think this is like a huge mindset shift for people is that you need to know what you're selling and what they're buying and so what i mean by that is yes your business sells products and services but your business is a product and a service to somebody else and so when you're selling your business your business is literally a product that you're packaging to sell to somebody and i know that and it sounds like duh but i don't think that many people have that perspective about their business they think of their business as their business and they're so enmeshed with it it's almost like it's part of them whereas your business is a product that you are selling to a firm or to a strategic buyer or to a banker who whoever may it be what you need to know is who's buying your business and why are they buying it right so i'll give you the examples like you know with our business we sold to in one of the businesses it was a strategic buyer and then the other one it was a strategic slash of financial and so i'll explain the difference so a strategic buyer is someone who is buying your business because if they typically have another business that if they add it to if they add it in if they take pieces from it it will add more value to the whole entity right and so they know that they can combine your business with something else that they already have to make it more valuable that's typically what strategic buyers doing so say that you are a software for gyms you know someone that might buy you that would be strategic would be a payment processor and the reason they would want to buy you is because they want to take your software input their payment processing and then get all your clients on their payment processing that would be a strategic acquisition now a financial buyer is usually somebody who wants to get the returns from your business and so a financial buyer is looking for financial stability so another example of a financial buyer might be a family office because people that have family offices are typically very wealthy they're not looking for more operational overhead they're not looking to have a business they're looking to have something that creates returns on their cash and so that's what a financial buyer is looking for they're looking more at just the numbers it's not like a business to them they don't want to have any hands in the pot and most of the times they're not going to do much to it right and that's kind of the second piece this is a strategic buyer is probably going to have their playbook try and run some strategy through your business they might alter things they might impli their growth playbooks etc etc versus a financial buyer for the most part isn't going to do as much of that they might do some of it this is not like a black and white thing but they're not going to do nearly as much most of the times they want something that's going to get them return on their cash because their main game is the cash strategic buyer's main game is the business and so it's really important that you know what you're selling because if you want to package your business the best to be sold you have to know what they're buying it for and so you have to know what kind of buyer is it why are they buying your business and then okay according to that i can focus on these things if i'm focusing on a strategic acquisition it's a strategic buyer that's going to buy it i'm going to research each one of those buyers and figure out why do they like my business so much i'm going to focus on those areas if it's a financial buyer i'm going to focus on purely the financials which is like cut all the overhead you possibly can increase the margins as much as possible and then the things that you can't control in the short term which are just do you have consistent retention right because if you have a ton of turn they're gonna say this isn't a good return because if you lose all your customers because if some you know covet or something again right um impacts your business then i'm not gonna get my returns in three years and so that's the difference is you have to understand who it is what kind of buyer and then how that influences what you do with the business through the sales process the second thing that i learned and this is not true for every business so i will tell you that out of the three businesses that we sold one of them went against this but i can tell you that for 99 of people and for most instances the terms that you get in the beginning are the best they are ever going to get and the only instance in which this is untrue is if your business starts booming during the process because most of the time what happens is it's a strategy it's we're going to buy the business and so you know we're going to say it's these terms and as people do diligence typically what happens is they figure out the business isn't quite as good as the person who presented to them versus the one percent of people who someone presents terms someone starts doing diligence and then those people doing diligence actually realize oh this business is better than we realized and then say it's growing et cetera et cetera those would be uh situations in which your business might actually get better terms but that's not most businesses right and so most people especially a ceo if it's just one person right i can't imagine having done this by myself you know then god me and alex split the role but if it's one person running it people are usually so fixated on selling the business they're not actually able to even think about growing it and so if they don't have a team in place that's able to do that it's very difficult for them to make the terms any better throughout the process because usually they drop the ball in a few things and so generally speaking not all the time there are edge case scenarios terms at the start are the best we're ever going to get and so for me i can tell you that there was a situation in which the terms got better and there was a situation in which the terms got worse and so i've experienced both the third thing is that this is something that you know when you're going through all of the paperwork of selling your business and there's a ton of paperwork and there's a ton of legalese and it's really annoying and you're just listening to your lawyers and listening your advisors and you're like what is important because there's so much this is one thing that you really want to pay attention to which is you really want to understand two things you want to understand the dilution clauses in the new business and your voting rights so this is applicable if you're not selling 100 of the business if you sell absolutely 100 business and don't roll any into the new business disregard this point but if you do roll even five percent into the new business this is something you really want to think about and this is something that took me you know a year and a half of going through these processes to understand is actually very important so the first time i went through it i didn't realize this was something to pay attention to and it kind of uh me and the second time i went through it i was like i need to pay attention to this and i'm glad i did and what this really means is that if you're rolling in equity or you're putting in money into the new business right someone's acquiring your business and what they usually do is they're going to create a new llc a new s corp a new c corp that they're going to put your business in typically if you roll if you are not selling absolutely 100 outright partial part of your equity rolls into that and so then technically you have equity in the new company right not the old company or old llc rolls into the new one and in that one they write all new agreements and in those agreements they're going to have clauses which is say you roll in 10 a lot of the times what they do is they say yes you have 10 new company but what they don't tell you is you don't have any anti-dilution clauses and so when they bring in more people who they give more percentages of the business to as many people who are strategic buyers do um your 10 dilutes and so what could happen is that you start off with 10 and by the time they flip your business sell your business you know you get any return on your capital you're at like four percent because they brought in all these new people and they give them pieces of equity and there's no anti-dilution and so that is something that depending on what kind of purchase it is and depending on the state of your business you can't ask for an anti-dilution clause so that that 10 always remains 10 but it's not the norm right and so you'd have to fight for it now going hand in hand with that this is fascinating is that voting rights if you are rolling a percentage into the new company typically you're going to be like on the board of that new company right um or involved to some extent they're going to have you as some kind of personnel to a degree right board advisor whatever and usually the thing is is that they could say we've got an anti-dilution clause and they could say that we put that in for you but then they could say that this clause or it doesn't even say this clause at the contract it could say that any clause in the contract if voted by the board can be disputed or can be changed and if you're not part of the board or you don't have a large percentage of the voting hand then you actually cannot change if they want to change the contract and so they could give you anti-dilution but then you don't have enough voting rights to veto people if they say hey we actually do want to dilute her and so the two really go hand in hand it's you could get anti-dilution but if you don't have any voting rights and if they're going to outvote you anytime then it doesn't really matter it's just like they're outsmarting you um but if you have voting rights and you get anti-dilution then it's like you can protect yourself and so i know it sounds a little complicated if you're going through an actual business sale it's something that's applicable the uh fourth piece is make sure the non-compete doesn't you and so i can tell you that in the business sales that we've had the biggest piece that we have to pay the most attention to is the non-compete and the reason that you have to pay so much attention to the non-compete is language and that's what we really have realized is that you know it's very easy to be vague in a non-compete say that you're selling a pastry business right they could say something to the extent of you know agrees not to compete in the uh food and beverage industry for the next four or four or five years and you're like okay and then you're like wait food and beverage industry you're like but i'm in the pastry industry well what if i want to do lobster and steak that doesn't really affect the pastries and so then you really have to nail in what do you consider to be food and beverage let's not call it food and beverage let's call it the pastry industry specifically and actually you know what these are brick and mortar pastries what if we said it has to only be brick and mortar pastry stores that i cannot compete with you in because what's wrong if i want to sell candy online that's not competing because that's not part of your strategy and so are you telling me that i can't sell candy online just because i sold you this pastry store that's brick and mortar that you have no plans to ever bring online and so it's really important that you get the non-compete as specific as possible because you also want to know as a founder when opportunities are presented to you when you're deciding what your next business is is this going to be something that's going to get me in trouble and i know from alex and myself we always want to be in line with our ethics right like if we sign a piece of paper if we sign a contract we're not going against it we're never going to do anything out of line and we also would never want to do anything to harm any of our existing companies and so our intention is already behind that like we wouldn't support somebody who's technically competing with any of them right we wouldn't work with them at acquisition.com but we also want to make sure that nuance is in there right what happens if we invest in a company and then eventually you know it starts to share a little bit of similarities like what do we do then and so these are all the things that we had to consider when we were building out the non-compete and we talked through with the buyer and we said here's our concerns how do we write this into the non-compete and those are things that you want to discuss with the buyer and that's why i think it's good that you have open dialogue and you can develop trust with them so you can say hey this is what i'm looking at you know can we get on the same page here the fifth one is expect the process to take two to three times as long as anyone says you know it's funny because all these timelines were set in both all the processes i had been through it's never due to somebody's fault right it's never like one person's fault but the thing is that when you're going through a sale it's if it's of substantial size there are so many parties involved and there are so many things that happen it's like oh the guy at the audit firm got sick and so now they're short of staff oh the person over here that's doing the inventory regulation check you know their kid is sick and they're out for a week and it happens on every part of the companies because you're using so many vendors to do diligence on a company and you want to get through all the diligence you can get to the actual closing of the sale but you rely on vendors to do all the diligence that's typically what firms do they have a vendor for customer service they've got a vendor for uh auditing they've got a vendor for supply chain they've got a vendor for everything and the thing is it's not their fault that their vendors have these things happen it's not their fault either but if you've got one week from one vendor one week from another one week from another it honestly for both times one of the times it took three times as long as i was told and then the other time it took about twice as long and again like i said that's no fault to any person that's just there's so many parties involved with so many competing priorities and so many other things on their on their plates it's just really hard to get things done now caveat is if you have a very small sale this usually can go faster and then on the other side a very huge sale sometimes also goes faster because people they're a top priority for everybody right like a billion dollar sale and so i've seen both of those and then i've experienced for myself what the middle is like i think um one thing i learned from this was do not plan your post sale vacation uh for even a month after because alex and i actually ended up going to mexico uh in the last three weeks of the sale because we couldn't not go we couldn't move it and we were like well the sale's not done yet and so we ended up being in mexico during the last most rigorous part of the sales process uh which was funny but it was not ideal and then the next lesson is really that you know selling a business is actually quite boring um until it's not and so what i mean by that is the entire process felt much slower than i thought it was going to feel and it was much more boring than i thought it was going to be right it's a lot of the same questions over and over and over by different people it's a lot of answering the same things a lot of filling out the same documents in different ways answering the same question in five different ways etc i want to say that about 80 of the process was quite slow and quite boring and then at the very end the last 25 it was chaos it felt like everything was flying everywhere there was so much to do not bored at all for sure slightly pretty stressed um trying to get everything done you know last minute negotiations what about this what about that things that pop up out of nowhere it was like everything that could pop up did pop up and that's what i've been told by every mentor that i had but i was like okay well i'm you know i'm like well i'm super prepared and organized it's not gonna happen to us right like our team is on it uh no it does and so that's something that i realized too is i would highly suggest not planning anything around the close like the month before and the month after because you don't know when it's actually going to close you can set a date that's just like a guess um so i would say those eight weeks surrounding that sale don't plan anything because i wish that i remember the first time with our first sale it was like we had had plans to like fly somewhere and has some event and it landed the same time that we ended up pushing the clothes to and i was just like stressed out in my mind and so um remember that the last part of the sale is not boring at all and don't play anything around it the rest of it is actually pretty chill so this lesson was one that took me i think a year and a half to realize the lesson is that you have to remember that you are the decision maker your lawyers and advisors are there to advise you they're not there to make decisions for you and they can't and they shouldn't you have more information this took me a while to understand because i kind of felt like a puppy dog like a gold new trooper puppy like what do i do i don't know anything i'm just like new and shaking out here in the cold and that's how i felt when we were going through the process and so i would just go to my lawyers and go to my advisors and what do i do what do i do you know it's kind of embarrassing to admit but it's just the truth like i didn't want to it up i didn't want to seem like an idiot and i was intimidated because the people that were buying the businesses were way more uh sophisticated than i was you know i'm like i'm just an entrepreneur that like starts businesses and builds them i don't know about this financial pe right at least i didn't then i relied a lot on outside sources and it was in one situation specifically when you know i realized that i was letting too many people influence what i was asking for and what i was saying to the buyers and didn't feel right to me and that was when i realized to myself i was like everyone's here to advise me they're not here to make my decisions for me just like in any other area of life i would never have that happen i would never ask anyone to do that and so if you're going through this process just remember these people are there to help you they're there to advise you to provide you information but they're not the decision maker you are and so you have to at the end of the day i think you have to trust your gut a little bit more because i think that it's such a new process and it's so much new stimulus coming at you that you don't want to you lean the other way but instead you have to remember that you are the one that knows the most about the business you know why you're selling this business you know what's best for you nobody else can tell you that and i wish that i had had that a little bit more forefront of mind when i was going through the process so this lesson is don't major in the minors and the reason i put this on here is there are a lot of people during the sales process that i feel like nitpick there's certain firms that are going to be on a buyer's side that they're going to have to nitpick because their firm is known for nitpicking and their boss is telling them they have to nitpick and they just happen to be the vendor that's doing diligence on your business and so you can't control what other people do but you can control what you do which is i would focus on the main major terms of the deal i would not focus on line by line by line items like do i get to keep this are they going to reimburse me for this five thousand dollar purchase are they gonna let me keep my company blank it's like shut the up you know like don't focus on that focus on why am i selling this business why do i want to sell this business what do i need to get from the sale why am i doing this and only focus on the things that affect that because there's so much going into this it's not worth majoring in the minors and i've seen a lot of entrepreneurs do this and i'm glad i didn't because there were people involved in the sales process doing it way too much around me and it gave me like an it just made me want to vomit it was just like why do you care about this thing and it's i'm telling you this of people i've seen selling their businesses and people that i see that are buying businesses like arguing around thousand dollar transactions when you know you're doing a you know uh i don't even know an eight or a nine figure transaction in general and so you're nitpicking a thousand dollars of something and it's just not worth it and so it'll make you look like a pain in the ass to the people buying your business and it'll be a pain in the ass to literally everyone else on the deal and so focus on the big items the things that make the biggest difference to your life and the rest if it's not going to matter in a few months forget about it so this lesson don't tell your team too early i learned this the hard way the first business that we sold i said i'm gonna do this differently than everyone else stupid and i'm going to give my team as much time as possible so that they can you know help with the transition they can understand everything that's going on they ask all the questions and blah blah and i thought it would be better for them and i thought they would like it more and i thought it would be a smoother process and so i told my team about two weeks before it was supposed to close it ended up getting pushed about six weeks so my team knew for two months and it was very uncomfortable they were very uncomfortable and i knew that they were gonna be very uncomfortable i thought two weeks you know it's fine but that's what happens the clothes gets pushed and so now my team knows for two months and so what's happening is they're sitting in this valley of uncertainty which is like i'm not on this side and i'm not yet on this side you know they're not going to be my bosses anymore but i don't really understand or know what's going on in the new company with the new bosses and you know they say i'm keeping my job but then they're asking me all these weird questions and it's just like a mess you know unfortunately you know i had a lot of teammates come to me very upset and very concerned pretty much all of them in the company that i told to early and it made me realize that i should have taken advice from you know pretty much everyone else that had told me you know you want to wait until it's done and i thought that i was being a better boss by being i thought i was being transparent and honest as early as possible but that's not the case you know it just creates a lot of uncertainty for people and if you don't have all the answers of what it's going to look like after the sale is closed it's just really uncomfortable for them and they all freak out and they're like i'm gonna go look for another job and pretty much i think everyone was looking for another job and it was just not a good time and obviously everything's settled and it's all good now but it was really uncomfortable and i feel like i made the wrong decision as a leader by doing that and so if you're selling your business i would say the second time around i did this i told the team after it happened i was like this has occurred and that was 200 times better so you know don't learn the hard way like i did which is uh you know by not taking people's advice you know take the advice because it's there for a reason and kind of going with that lesson is knowing what the new officers are going to offer your team and officers are just owners of the company right executives etc that is really important and the reason that that's so important is your team is not yet going to be fully trusting of them and they're going to be double checking everything the new owners are saying with you and so if you don't understand what kind of benefits they're going to have what their pay is going to be if they're moving them changing their title are they going to have the same responsibilities you know are they looking at eliminating their role if you don't know those things then you can't support the new team in the transition and so one thing that i really paid attention to with the second sale that we had was how do i make sure i have great communication with the buyers so that i can relate to my team what's going on at any point in time and telling them hey us and the buyers are on the same page and like this is the plan we have for you guys and for the whole team and doing that the second time around was really really beneficial and i actually felt really good about the transition with the team because you know we had so many meetings about the team and about what we're going to offer them about everything and how it's all going to look like that i felt comfortable with it and the team anytime they came to me with questions there was no uncertainty kind of going with that is you know once you tell the team make sure you have an idea of what you're going to talk to each person about when you hop on with them because most likely you're going to meet with your teammates after the sale and explain how that affects each of their jobs and one of the last lessons that i have is understanding the difference between a bank for lead sale and a founder led sale and so i can tell you that we actually did one sale without a banker and we did one sale with banker this is what i would say is that there's a couple different levels which is if you have a really strong like cfo or controller on your team they're gonna quarterback a lot of stuff because so much of it is financial and you know data systems and all that and so it's not going to be as much from you as you think and if you have outsourced a lot of stuff you actually might not be the best person to answer a lot of the questions that the buyers are asking you have to delegate it to other people on the team who are really running the day-to-day however if it's just you and you don't have a strong financial right hand i don't know how someone would get through that without a banker i think that they could i know that people have it just sounds like a nightmare um and the reason for that is like if you go if i were to show you our vault with all of our diligence i mean there's a thousand documents in there not even there's probably more than that there's probably 2 000 documents in there all those documents are cleansed and updated and made sure that they have all the right you know information on them and so that's a lot of stuff to do i think having a good banker to help you with that i think that would be beneficial like if you don't have a strong finance person if it's a transaction that's like you know over 5 million and you don't have a strong finance person i would get a bank or hire a finance person uh i think i would just say get help versus if it's really just like a couple million dollars i think you can get by with advisors a good lawyer and a good like cpa or accountant that's outsourced like i think you could get by that would be tough you could get by anything bigger than that you know like our transaction that was larger we had an in-house you know finance and we had a banker and it was still a lot of stuff going on and i honestly don't think that it would have been good for us if we hadn't had that help because we had to make a lot of tough decisions and if we had just been like piles and paperwork and doing spreadsheets and data i don't know how we would have done that and so if you have a larger transaction i would say get a banker and make sure you have a strong finance person on your team the caveat to that of course is that some bankers suck ass and some are amazing and i know a lot of them and there are a lot of different kinds of anchors and so make sure you go with one that is someone that's reputable and has a good reputation and can do what you are looking for them to do because some bakers are more hands-off they're like i'll go get you you know the person that's gonna buy your business and then i'm done after that and then some are really hands on where they're gonna go help find the person's buying your business negotiate all the terms you know really advocate for you and then honestly help with a ton of the diligence you know like they're gonna go collect all the diligence items on your behalf and so you really just want to make sure that if you're looking to use a banker that you are asking those questions and understanding what they're going to do for you because if you don't have help and they're not going to help you with the diligence that i wouldn't do it and then my last lesson that is one that you know i've heard of in the past but i think that a lot of people don't understand this is an loi does not mean that you have a sale an loi is a letter of intent it's not like a purchase agreement okay first you have an ioi that is indication of interest and that means somebody's interested in your business and so they they are interested in submitting an loi an loi is once they've done more diligence they've met with more people it's a letter of interest basically saying we intend to buy the business and then a lot of times they'll ask for like exclusivity in that period of time and say oh we want to make sure you don't talk to anybody else we're the only person with this letter of intent and the last document is a purchase agreement a purchase agreement is the real thing where you sell your business like that once you sign the dotted line is what sells your business and a lot of the times that i've noticed is like people have gone through this process and i heard this happening and i didn't experience it myself but once you get into it i see how it could be misunderstood is that an loi does not mean you have sale very often people back out when they after an loi and most the time if you are a seller of a business you're going to get a lot of lois and then you're going to reject a bunch of them and then you'll accept one and so what i have heard a lot of people like when i've talked to like founders that are selling their business for the first time they're like oh well i've got the loi like we're good we're good i'm like holy you're not good you're not good at all that's like the first date right it's like they you owe the first date they're like hey i like you and then you're like we're married that's kind of like what that's saying it's a letter of intent it's a commitment to the process but it's not saying that you're for sure going to sell the business and they're not for sure that they're going to buy the business and so until the purchase agreement is signed your business is not sold and so i hope that that video was useful for you these are just my lessons that i have of the like hard cold process of selling the business they're the top things that i learned and i wish i had known before because they seem simple now looking back on them and honestly now i'm like wow i feel like i was such an idiot in the beginning but i just didn't know i'd never gone through it myself and you know you can hear it as many times you want from mentors and advisors and other people like myself but until you go through it there's certain things that you just don't know and so i hope if you're interested in selling your business or you're just curious what it's like or you want to be prepared if someone ever you know gives you a good offer these are the things you want to look at and so with that i hope you have a good rest of your day