A Q&A session in which Paul Giannamore answers questions from business owners about selling to private equity and strategic buyers. Topics include handling a valuation drop in diligence, rolling equity (common vs. preferred shares), responding to exclusivity extension requests, talking to other buyers after signing an LOI, defining a post-sale role with private equity, spotting non-serious buyers, emotional pitfalls for sellers, staying composed through lowball offers, and focusing on process over outcome. Timestamps are provided in the original description. # Video Identity Observations: "Q&A with Paul Giannamore: Surviving Buyer Games, Emotional Traps & PE Retrades | M&A Masterclass" ## Intended Audience The video targets **business owners/sellers navigating private equity M&A**, spanning several sub-audiences: - **Sellers actively in deal processes** — questions about retrades, exclusivity extensions, and LOIs ("the PE firm just retraded on me. They dropped valuation $5 million in diligence"). - **Founders considering equity rollover** — questions about preferred shares, cap tables, and post-close governance ("They want me to roll 20% into preferred shares, but they won't share the details until later"). - **Advisors and intermediaries** — "This next question is from an attorney who said he's really enjoyed our videos." - **Aspiring dealmakers** — "This next question is from one of our young budding junior dealmakers who has sent me a ton of questions on LinkedIn." - **Current clients and prospects** — "This next question actually comes from a current client. It's a guy who I've known for eight years." ## Claimed Scope The channel presents itself as a source of **advanced, practitioner-level M&A advice** — the title self-labels it an "**M&A Masterclass**": - Deal mechanics: LOI terms, no-shop/go-shop provisions, exclusivity, walk-away provisions, HSR review. - Negotiation psychology: "Silence is power... calm is leverage," "falling in love with the buyer too early" as an emotional trap, "detach from the outcome but attach to the process." - Buyer evaluation: "the investment principle" — whether buyers spend real time, money, and effort signals seriousness. - Private equity terms: liquidation preferences, ratchets, cap tables, board control. ## Self-Description Evidence - **Personal advisory practice**: Giannamore describes advising an actual seller: "I actually said call me... as it turns out, the retrade was likely for an invalid reason... He's now out of exclusivity and has the ability to go back out into the market." - **Content franchise framing**: He promises deeper material — "I'm going to film a 2-hour session on all these emotional traps for sellers" — and references prior content ("what I've discussed in the psychology behind selling a business"). - **Channel growth call to action**: "If you're new to the channel, please like and subscribe and feel free to leave a question below. I'm Paul Giannamore and I'll see you on the next one." - **Audience-originated content model**: Questions come from LinkedIn DMs, YouTube comments, and clients — "we got a lot of questions over the last month or so, and as promised, I'm here to answer as many of those as I can." ## Observable Presentation Patterns - **Q&A format as the core structure** — the entire video is answers to audience-submitted questions, positioning the channel as responsive and community-driven. - **Opinionated, rules-based teaching style** — repeated maxims: "buyers have to earn exclusivity," "if you want to stay, you structure it. If you want to go, you price it." - **Named-host branding** — the host introduces himself by name at the close, consistent with an expert-led personal-brand channel. - **Referral of audience toward direct contact** — accepting questions via LinkedIn and commenting that "I don't have time to respond individually to all the messages I get on LinkedIn," implying a professional services funnel alongside the content. ## Notes on Distinguishing Claims vs. Demonstrated Patterns - The **"Masterclass" label and success-story teaser** ("hopefully... a seller turn around and end up getting an additional $10 million") are creator claims about positioning; the transcript does demonstrate practitioner experience through specific, detailed deal anecdotes (client with a buyside-broker-sourced retrade, PE firm negotiation he walked away from last year). - No broader channel-wide claims (subscriber count, full content catalog, credentials) are verifiable from this single video. # Delivery Observation: Q&A with Paul Giannamore — M&A Masterclass ## Format & Structure - **Q&A driven format.** The entire video is structured around reader-submitted questions, introduced with consistent verbal signposts: > "Next question." (used repeatedly at [233], [278], [423], [435], [902]) > "This next question is from an attorney..." / "from one of our young budding junior dealmakers" / "from a current client" - **Short answer openings.** Several answers begin with blunt, near-monosyllabic verdicts before elaboration: > "Nope. It's not normal." [233–244] > "Nope." [436] - **Direct address to the audience.** Heavy use of "you" and "your" throughout; also self-reference as a channel host: > "I'm Paul Giannamore and I'll see you on the next one." [1437] ## Recurring Phrases & Verbal Habits - **"Calm, cool, and collected"** appears three times ([47], [147], [1229]) as his signature prescription for emotional dealing. - **"Do the opposite" / "Don't react"** as a repeated counterintuitive tactic: > "Folks that get retraded on typically want to react. And I think the best course of action is do the opposite." [40–47] > "You want to naturally react to a low ball. Do the opposite." [1221–1229] - **Binary diagnostic formula:** "they're either hiding something or they're amateurs" — used twice, nearly verbatim [266], [604]. - **Earn-it framing:** "don't give exclusivity to buyers who haven't earned it... They need to earn it on the upfront with their offer" [378–391], echoed later at [933–945]: "buyers have to earn exclusivity." - **Colloquial gambling/leverage metaphors:** > "You're not rolling equity here. You're rolling the dice." [244] > "It's not going to throw put you on tilt." [1236–1241] ## Teaching Habits - **Anecdote-backed answers.** He frequently grounds generic advice in a real case: the retraded seller he told to "Call me" [102–113], the eight-year client struggling with the urge to win [1252–1272]. - **Extended hypothetical illustration.** The memorable "12-year-old niece with a crayon" example [842–902] is used to show how cheap an LOI is to produce. - **External reference.** Cites James Clear's *Atomic Habits* to frame "detach from the outcome but attach to the process" [1357–1369]. - **Checklist-style questioning.** Rapid-fire rhetorical questions model what sellers should ask: > "Am I rolling into common or preferred? Is there a liquidation preference? Are they any ratchets that kick in? What's the control structure look like post?" [248–254] - **Rule-of-thumb distillations:** > "If you want to stay, you structure it. If you want to go, you price it." [774–784] > "The LOI is a power document. It is not a placeholder." [543–546] ## Tone - **Blunt and conversational**, with mild profanity-adjacent directness ("jerk him around" [201], "messing around with you" [81]) and humor ("dazzles them and dines them" [1053]). - **Advisory rather than lecturing** in the emotional-trap segments: "your title means absolutely nothing" [719] delivered matter-of-factly, followed by concrete mechanics (board control, veto rights). ## Stable Patterns vs. Isolated Moments **Stable (multiple occurrences):** "calm, cool, and collected"; "hide something or they're amateurs"; earn-exclusivity doctrine; the "don't react / do the opposite" counsel; "Next question" transitions. **Isolated (single appearance, low confidence as a pattern):** the fitness/Atomic Habits analogy [1369–1391]; the niece hypothetical [842]; explicit audience-growth outro (like/subscribe) [1437]. One video is insufficient to confirm these as habitual teaching devices. # Video Observation Record: Q&A with Paul Giannamore — Surviving Buyer Games, Emotional Traps & PE Retrades **Speaker:** Paul Giannamore (self-identified, closes with "I'm Paul Jammore [Giannamore]"). Format: a host answering viewer-submitted questions on sell-side M&A. No other named speakers; all positions below are his unless noted as quoted questions. --- ## 1. PE Retrade of $5M in Diligence **Claim:** Under exclusivity, the seller has "already given away your most important piece of leverage, which is competition" — but is not powerless. **Stated reasoning:** - Standard advice: slow the process down; "be calm, cool, and collected. Let the buyer fuel the pain of breaking trust." Reacting is the typical mistake. - Distinguish **valid vs. invalid retrades**: a valid retrade (e.g., misstated numbers, newly discovered DD risk) may require adjustment if the seller wants the deal. **Case-specific outcome (his direct experience):** - This was a LinkedIn question; he told the seller to "call me." After reviewing the numbers, he concluded the retrade was invalid ("a price grant") and that the PE firm was "probably about $10 million off in total value." - The seller had **no formal process** — he came in via a buyside broker email, never had full price discovery, and "is leaving money on the table. He now realizes it." - Outcome so far: seller let exclusivity lapse and plans to return to market. Giannamore frames this as prospective, not settled: "hopefully at some point later this year, I'll be able to tell you a success story" — explicitly a prediction, not a result. ## 2. Rolling 20% into Preferred Shares Without Terms **Claim:** "Nope. It's not normal… You're not rolling equity here. You're rolling the dice." **Stated reasoning:** - Must know upfront: common vs. preferred, liquidation preference, ratchets, post-close control structure. - A PE firm unwilling to discuss these is "either hiding something or they're amateurs." - Signing an LOI without understanding these is "not a partnership. That's blind trust." ## 3. Buyer Demands 90-Day Exclusivity Extension **Claim:** Legitimate extensions happen "multiple times per year," but are usually shorter (a week to 30 days) — e.g., **HSR/Hart-Scott-Rodino** issues or lender matters. He concedes he "doesn't really know what's going on behind the scenes." **Stated remedies:** - Negotiate **mutual walk-away provisions**. - **Tie exclusivity to milestones** and drop-dead dates. **His personal rule:** "Don't give exclusivity to buyers who haven't earned it" — earned via the upfront offer and vetting; extensions must likewise be earned through demonstrated good faith. ## 4. Another Buyer Surfacing Post-LOI **Claim:** Generally no — almost all LOIs have a **no-shop provision**, and talking to other buyers during exclusivity can create **liability** (buyer's wasted DD costs, e.g., "$500,000 on diligencing"), depending on jurisdiction. **Qualification:** You *can* talk if the LOI lacks a no-shop provision or contains a **go-shop**. **Key assertion:** "The LOI is a power document. It is not a placeholder." ## 5. Defining Role with a PE Buyer **Claim:** Define role, title, governance, and comp **before** signing an LOI. Selling to PE with rollover equity means "entering into a partnership," not just exiting. **Repeated heuristic:** firms not open about these terms are "either hiding something or they're amateurs." **Warning:** without defining role/control, "you might find yourself in a position where you really don't like your life post closing." ## 6. Vague Equity Rollover Terms + CEO Title Without Board Control **Claim:** "Alignment without total transparency is manipulation to a certain degree." **What to demand:** cap table, proceeds waterfall, dilution risk from management, forward acquisition plans. **Qualifications he offers:** - Vagueness is often just seller unfamiliarity; in his experience PE firms are "super excited" to walk through cap tables. - Not controlling the board "is pretty standard" depending on ownership stake — he reads this as a **control purchase**. **His rule of thumb:** *"If you want to stay, you structure it. If you want to go, you price it."* **On the CEO title:** "Your title means absolutely nothing" — the CEO reports to the board, which controls hiring/firing. What matters: who controls the board, budget, comp, and whether the seller has veto rights. ## 7. Is the Buyer Serious? **Claim:** Use the **investment principle** — assess actual investment of time, money, and effort (flying in, dinners, outside advisors, real IOIs/LOIs). **Illustration:** "I give my 12-year-old niece a crayon and a piece of paper, and she can put together an LOI" — an LOI is a non-binding offer and proves nothing by itself. ## 8. Going Exclusive with One Liked Buyer vs. Running a Process **Claim:** "I don't imagine a scenario where anyone should just pick the buyer that they'd like to go exclusive with." Exclusivity is "trading something of value" that must be earned through competition. **Qualification:** **Preemptive offers** occasionally justify skipping a process — "They happen but they are rare" — "99 times out of 100 probably more than that, you have to make them fight for it." **Note:** He voices suspicion the question may not be genuine ("I was pretty certain somebody was messing with me"). ## 9. Most Common Emotional Trap for Sellers **Claim:** "Falling in love with the buyer too early" — idealizing one buyer "at the expense of all other buyers." **Qualification:** "It might not be the most dangerous emotional trap, but it's certainly a common one." He notes he could "go on and on" and plans a 2-hour session on seller emotional traps — i.e., this is a partial answer. **Duty framing:** it is the advisor's job "to protect your clients and inoculate them from feeling that emotional rush." ## 10. Handling Lowball Offers **Claim:** Buyers lowball for multiple reasons — sincere valuation belief, lack of information, signaling weakness, or testing whether they're "the only game in town." **Epistemic position:** "In a vacuum, we don't know what that information is" — the seller must infer from other buyer behavior. **Prescription:** "Silence is power… and calm is leverage." Do the opposite of your instinct: don't react, "make the other side wonder." ## 11. The Need to "Win" Every Negotiation Point **Claim (about a client of eight years):** the compulsion stems from **identity** — founders tie identity to the business and are unaccustomed to being judged, dissected, and measured. **Prescriptive stance:** "You're not trying to dominate in a negotiation. Really, what you're trying to do is design a future that you really want to live in." Sellers should self-examine when they're winning "just for winning sake." ## 12. Emotional Attachment to Outcome **Claim:** "Detach from the outcome but attach to the process." **Cited analogy:** James Clear's *Atomic Habits* — weight-loss goal vs. daily process habits (explicitly attributed in the transcript). **Conditional framing:** "If you've got a good business and you're in a good market and you run a tight process, then… the outcome will take care of itself." --- ## Cross-Cutting Themes and Recurring Positions - **Calm as strategy:** "slow it down," "silence is power," "don't react" recur across the retrade, lowball, and exclusivity answers. - **Earned exclusivity:** appears in answers 1, 3, and 8 as a personal rule. - **Repeated litmus test:** an untransparent buyer is "either hiding something or they're amateurs" (answers 2 and 5, verbatim repetition). - **Process over outcome:** competitive processes and procedural discipline as the seller's structural protection against both buyer games and seller emotion. ## Open / Unresolved Items in the Record - The retrade case's "$10 million" upside outcome is **prospective and unverified** by the speaker himself. - The 90-day extension question is answered generically; he explicitly declines to diagnose the buyer's motives without context. - The identity/ego discussion (answers 11–12) is based on one client conversation and framed as his interpretation ("a lot of this I think comes down to"). # Video Attribution & Provenance Record **Video ID:** `01a168c7-0f35-7825-8706-2e1ad8f50462` **Title:** Q&A with Paul Giannamore: Surviving Buyer Games, Emotional Traps & PE Retrades | M&A Masterclass --- ## Speaker Identification | Speaker | Role | Evidence | |---|---|---| | **Paul Giannamore** | Creator / host / sole on-camera speaker; answers viewer questions in his capacity as an M&A advisor | Stated: "I'm Paul Jammore and I'll see you on the next one" (transcript spelling "Jammore" is likely a transcription variant of the title's "Giannamore") | | Question submitters | Unnamed third parties | Questions received via **YouTube comments** and **LinkedIn messages**; not present as speakers | | A seller (unnamed) | Third-party case study subject | Described by Giannamore; not a speaker | | A current client (unnamed, 8-year relationship) | Third-party case study subject | Described by Giannamore; not a speaker | | An attorney (unnamed) | Question submitter | Described as "an attorney who said he's really enjoyed our videos" | | A "junior dealmaker" (unnamed) | Question submitter via LinkedIn | Acknowledged by name-role only | | **James Clear** | Referenced author, not a speaker | Cited for *Atomic Habits* and the "detach from the outcome, attach to the process" framing | > All answers are spoken by Giannamore alone; question text is read aloud by him. --- ## Referenced Sources & Third-Party Claims - **James Clear, *Atomic Habits*** — cited as the source of the outcome-vs.-process principle (weight-loss analogy). - **LinkedIn and YouTube** — named as question intake channels; Giannamore states he does not respond individually to all LinkedIn messages. - **HSR / Hart-Scott-Rodino antitrust review** — referenced as a common reason for exclusivity extensions. - **Case study claims (unverifiable from the video):** - A seller who was retraded by $5M; Giannamore claims the PE firm was "probably about $10 million off in total value"; seller allowed exclusivity to lapse. Giannamore notes: "I haven't had a conversation with the private equity firm yet." - Client questions about identity-driven negotiation tension and emotional attachment to outcomes. - **Anecdotes presented as personal experience:** hypothetical $500K buyer diligence spend; "12-year-old niece" LOI analogy; "multiple times per year" exclusivity-extension pattern. --- ## Promotional Elements - **Channel promotion:** Closing call to action — like, subscribe, leave questions in comments ("if you're new to the channel"). - **Advisory-services visibility:** Multiple anecdotes depict Giannamore advising sellers directly ("I actually said call me"; "he's now out of exclusivity and has the ability to go back out into the market"; references to "my clients"), functioning as soft promotion of his advisory practice. No explicit paid-product offer stated. - **Teased future content:** Promised "2-hour session on all these emotional traps for sellers"; teased future follow-up on the retrade case ("hopefully at some point later this year, I'll be able to tell you a success story"). --- ## Availability & Limits - **Comments:** Open — viewers explicitly invited to leave questions in YouTube comments; prior comments/LinkedIn messages served as this video's source material. - **No curated metadata supplied** beyond the transcript; question submitter identities, case-study specifics, and any credentials are **not independently verifiable** from the source material. - No external documents, cap tables, or deal records were provided; all deal facts are Giannamore's verbal accounts. All right, we got a lot of questions over the last month or so, and as promised, I'm here to answer as many of those as I can. So, I'll just dive right into it. First one, the PE firm just retraded on me. They dropped valuation $5 million in diligence. Should I walk, renegotiate, or call their bluff? Now, this can happen. And if you're under exclusivity, you've already given away your most important piece of leverage, which is competition. It doesn't mean you're powerless. It just means that things are a little bit different now because you're under exclusivity. So the standard course of action here would be to slow it down. Folks that get retraded on typically want to react. And I think the best course of action is do the opposite. Slow this thing down. Be calm, cool, and collected. Let the buyer fuel the pain of breaking trust. Now, they're either retrading for a valid reason or an invalid reason. And here's what I mean by that. You mentioned they dropped valuation and diligence. So, if they drop valuation and diligence, it's possible they found something that would require them to retrade. Maybe you misstated your numbers up front. Maybe they identified some risk in DD that wasn't apparent to them when they signed the LOI. But if there's a valid reason, then you're going to potentially have to adjust if you want to do a deal with them. But if you don't believe it's a valid reason and you think they're messing around with you, then the best course of action here is to slow it down, remain calm, cool, and collected, and if all else fails, could take the business back out to market. Now, that's how I would typically answer that question generically. Uh in this particular case though, I didn't answer this exact question in this manner. I actually said call me. This was a question I received on LinkedIn and I said, "Call me." And I had a chat with the seller. And as it turns out, the retrade was likely for an invalid reason. It was a price grant on behalf of the private equity firm. Um got to chatting with the owner who was very interested in doing a transaction. he had watched some of the videos here and asked me a lot of questions and I was happy to chat with him. Um, ultimately when we took a look at his numbers, I believe that the private equity firm not only was trying to retrade by 5 million bucks, but they were probably about $10 million off in total value. So in this particular case, the seller allowed exclusivity to lapse. I suggested that he remain calm, cool, and collected. Don't react. Don't do anything. and just let this the shot clock run out, which is what he did. He's now out of exclusivity and has the ability to go back into out into the market. The private equity firm has already spent a lot of money. I haven't had a conversation with the private equity firm yet, but what I likely see happening is um now that he's got an adviser who's going to run a formal process, he didn't do that. He received an email from a buyside broker saying that we have a firm that's interested in buying businesses in your industry, your geography. The buyside broker set him up with a private equity firm. He spent a few months talking to the private equity firm. They put an offer on the table. Next thing you know, he finds he's in diligence, super excited to get a deal done. Then they somewhat jerk him around. Um, he didn't get full price discovery. He didn't run a competitive process. He actually is leaving money on the table. He now realizes it. So hopefully at some point later this year, I'll be able to tell you a success story of a private equity firm attempting to retrade by $5 million, ultimately getting knocked out of a process, and have a seller turn around and end up getting an additional $10 million for his business as he should have from the beginning. Next question. They want me to roll 20% into preferred shares, but they won't share the details until later. Is this normal? Nope. It's not normal. You're not rolling equity here. You're rolling the dice. Um, you need to clearly understand from the upfront. Am I rolling into common or preferred? Is there a liquidation preference? Are they any ratchets that kick in? What's the control structure look like post? These questions should be very clear and the private equity firm should be very willing, in fact, excited to talk to you about it. And if they're not, they're either hiding something or they're amateurs. Never enter into an LOI unless you understand those things because that's not a partnership. That's blind trust. Next question. We agreed on an LOI and now they want an additional 90 days of exclusivity and are dragging their feet. What do I do? Now, it's hard to answer this question without understanding the full context of the transaction, but it goes to show you how important a letter of intent is. The letter of intent lays out the exclusivity terms. Now, it could be that the buyer is diligently working towards getting a transaction done and they just need more time. They might need some approvals from a regulatory agency or there's a variety of things which would require the extension of exclusivity. And I see it happen multiple times per year. It's typically not 90 days. typically like, hey, we need another week or two weeks or we need 30 days because something's not going right with HSR review or Hartscott Rodino antitrust review. There's a variety of reasons why a buyer would want exclusivity to be extended. Maybe dealing with a a funding source, right? A lender. There's a lot of reasons. when you add dragging their feet in there. Um, yeah, I I I don't really know what's going on behind the scenes, but some ways to handle that is you can um you can negotiate mutual walkways, right? So, if you're not happy, if they're dragging their feet, you're in exclusivity. There might be a walk away provision in there. Um, you can tie exclusivity to specific milestones. So, it puts them in a position where they're not dragging their feet. you would have drop dead dates like you need to do X Y and Z by such and such a date. If you don't do that, we're free to walk away. My exclusivity is terminated. The rule that I follow personally is don't give exclusivity to buyers who haven't earned it. They need to earn it on the upfront with their offer. Right? That's they've earned the opportunity to get the exclusivity. They've built trust. They've done all the right things. They put the right offer on the table. We vetted them. they've earned that exclusivity. Now, as the diligence period progresses or as the exclusivity period progresses and there's a need for an extension, the buyer has to have earned that extension. They have to be moving in good faith in being able to demonstrate to you that they're moving in good faith in order for you to extend exclusivity. That puts you in a position where they're not dragging their feet. So again, buyers get exclusivity, but only give exclusivity to buyers who've earned it. Next question. Oo, this is always an interesting one. Another buyer has surfaced after I signed an LOI. Can I talk to them? Nope. You can talk to them if your LOI does not have a no shop provision. Although almost all LOIs will have a no shop provision. There's an exclusivity period. So in a letter of intent, a buyer is going to spend a lot of money on due diligence, hiring advisors, dealing with lenders, flying around. There's a lot of there's a lot of costs in terms of time and resources and money that go into doing a deal. So any buyer who's really going to dig in is going to want exclusivity. And by definition, exclusivity means you cannot talk to other buyers. In fact, it's likely prohibited directly and explicitly in the LOI. And if you start talking to other buyers during an exclusivity period, it can really open you up for liability. I mean, like, for example, if if I'm a buyer and I just spent $500,000 on diligencing your business. I've got my EMY accounting guys. I've got my lawyers. I've got environmental consultants. I've got all these people. I'm spending money left and right. And I'm driving towards transaction. And another buyer comes out of the blue. You get an email or a phone call. And you start wheeling and dealing with another buyer who says, "I'm going to pay you a little bit more money than the money you have on the table." Well, now that might be enticing to you, but now I have sustained losses. You have agreed with me to be exclusive. You've violated that. I have sustained losses. Now you, the seller, potentially liable for that depending upon the jurisdiction in which you reside. So keep in mind the LOI is a power document. It is not a placeholder. And if you want the ability to shop a deal post signing an LOI, you need to really make sure that there is a go shop provision in there or at least a the absence of a no shop provision. I've been dealing with a private equity firm that I really like, but I'm not sure I want a boss. How do I define my role now? Now I don't know where this individual is in the deal process but um assuming a letter of intent has not been signed you want to figure out role title governance comp rights whole 9 yards prior to the transaction. Like when you sell a business to private equity typically if you're rolling equity you're not selling the business and staying on you're entering into a partnership. So, most private equity firms are going to want to get that out of the way up front themselves. They're going to want to say, "Here's your role, here's your comp, here's the board structure, so on and so forth." Um, I always say if they're not open with that sort of stuff, they're either hiding something or they're amateurs. Um, but in this case, you might not necessarily be asking the right question. So, you need to define your role and you should define it right now. Uh, and you should understand how much control you have over the board going forward because if you don't, you might find yourself in a position where you really don't like your life post closing. Last year, I was dealing with a private equity firm that I didn't move forward with. I felt uncomfortable because they asked me to roll equity in order to align incentives, but the terms were vague. What should I have expected? Well, you know, when you think about it, alignment without total transparency is manipulation to a certain degree. And I think what you have to ask for is the cap table. So, what's the cap table of new code look like? What's the waterfall of the proceeds going to look like when there's a payout? Um, questions like, will your equity be diluted by management? Understanding what they're going to do from an acquisition perspective going forward, you really need to ask these sorts of questions upfront. Um, oftentimes I find that sellers find these terms to be vague just because they're not used to dealing with them. Now, if you've got a private equity firm that's saying, "Hey, don't worry. We'll take care of it. Just roll this equity. Roll 20%. You'll get paid. It's fine." That's a serious problem. But more times than not, I mean, in my experience, private equity firms are super excited to say, "Hey, this is the cap table. This is what this looks like. This is how you would or wouldn't be diluted." they want to have that alignment because no one wants to have these sorts of problems postclosing. The continuation of that question was they said they would like for me to be CEO after the deal, but I won't control the board should I care. Well, I mean your title means absolutely nothing, right? So just because you're CEO, you know, a CEO under kind of standard board governance means the CEO reports to the board of directors. And if the board of directors has hiring and firing decisions, they can fire you. So you can be CEO. I think what you need to really understand is who controls the board, who controls the budget, who controls the comp, who sits on the board, right? Do you have veto rights? There's a lot of things that go into understanding how much control you'll have postc closing. Now, from earlier in your question, you said they wanted you to roll equity, but they were vague. then they want you to stay on as CEO, but say you won't control the board. I would say that that's pretty standard that you're not going to control the board depending upon how much equity they're going to actually own in the business. To me, it sounds like this is a control purchase by a private equity firm, meaning they'll control the board numerically. Um, you know, a quick rule of thumb here is, you know, it's like if you want to stay, you structure it. If you want to go, you price it. Meaning if you want to stay, you really need to think about board governance. You really need to think about this account structure. You really need to think about the alignments with the role equity, so on and so forth. And if you don't, you just price the deal to be outdoor. This next question is from an attorney who said he's really enjoyed our videos and he said, "How do I tell if a buyer is really serious or just wasting time?" He goes on to talk about over the years he's had a lot of clients that have dealt with buyers that just tend to be time wasters. And for me, this goes back to what I've discussed in the psychology behind selling a business is the investment principle, right? Is a buyer investing? Have they flown in? Are they spending money on dinners? Are they hiring outside advisors? Have they put together real IOI and LOI? like what sort of investment of time, money, and effort is a buyer doing? Because anyone, you know, I give my 12-year-old niece a crayon and a piece of paper, and she can put together an LOI. She can take a picture of it on her iPhone, email it off to a seller, and say, "Hey, here's an offer on your business." Right? I mean, that's how easy it is. It's a non-binding offer. Seriously. So, but I wouldn't say she's particularly serious about a $50 million acquisition. Um, and I also don't see her getting on a plane and whining indicting you. But if there is a sophisticated buyer or any buyer who is putting an offer down, spending money again, t flying in, flying out, flying you in, spending a lot of time, money, and effort. That effort shows that they're serious because people don't do that when they're not as serious. People do what my 12-year-old niece would do, which is take a picture of an alot and send it off. So, I think those are pretty good proxies for whether or not they're serious. It's like if they haven't spent money, they haven't really made a commitment. You know, this next question, I was pretty certain somebody was messing with me, and I actually hope that they are because when I read it to you, you will instantly know how I feel about it. Paul, should I really talk to multiple buyers, or can I just go exclusive with the one that I like the best? Now, I feel like sometimes I'm a broken record when I talk about running tight, quiet, confidential processes. I don't imagine a scenario where anyone should just pick the buyer that they'd like to go exclusive with. And like I just said a few minutes ago, buyers have to earn exclusivity. Giving somebody exclusivity, you're trading something of value. You don't give that away for free, right? They have to earn that. And the best way to earn that is to make them compete for that. Now there is a world and I have seen it where preemptive offers come in that make you say it's not worth going to process. These do happen. They happen but they are rare. Usually you have to make them I mean 99 times out of 100 probably more than that you have to make them fight for it. So I can't imagine a scenario I guess if this actually is a real question where I would answer you just yeah just choose the one you like. Give it to them for free. Don't make them compete. Who cares? I don't know what else to say. This next question is from one of our young budding junior dealmakers who has sent me a ton of questions on LinkedIn. And I do appreciate your questions. And I told you I would answer as many of those as I can on Q&A sessions because I think other people would benefit from them. And I don't have time to respond individually to all the messages I get in LinkedIn, but I do appreciate them. So, thank you. What is the most common emotional traps for sellers? Now, I had to think about this for a second because there are scores of emotional traps for sellers. And I can go on and on and as a matter of fact, one of these days I will go on and on. I'm going to film a 2-hour session on all these emotional traps for for sellers. But I would say probably the one that just hit me right off the bat when I thought about it was the act of falling in love with the buyer too early, right? They idealize their relationship with one particular buyer at the expense of all other buyers in their mind. They've bought the second home. They're buying the boat. They just get too deep in in love with one particular buyer who dazzles them and dines them and super sweet to them and they think this is the perfect home for my business and they're going to pay good money for it and I have eyes for no one else. That's probably the most common emotional trap. It might not be the most dangerous emotional trap, but it's certainly a common one and I see it all the time. And it's my job and now junior dealmaker here. It is your job to protect your clients and inoculate them from feeling that emotional rush. This next question is an interesting one and I actually really appreciate it. It says, "Paul, how do you keep your clients from overreacting when a buyer lowballs them?" Um, and I think buyers lowball for a variety of reasons, right? So, one reason a buyer might lowball is that's really what they think it's worth, right? So, it's not really a low ball. That's a legitimate business decision. That that's what this business is worth to us. That's what we're paying. Another reason, if it's a legitimate lowball, might be that they lack information, right? So if a buyer is in a position to make an offer um they might they might not understand the industry or the fundamentals or the dynamics or the comparable acquisition statistics in a particular space and so it might just be that they lack information. Um it could be that they're signaling weakness, right? That's one option. Um another one is like they're testing you, right? They're trying to figure out if they're the only game in town because how you react to a low ball sends information, right? The low ball often in and of itself sends information. Now, in a vacuum, we don't know what that information is, right? I don't know if that's really all the money the buyer has. I don't know if the buyer just doesn't have enough data to make an appropriate offer. I don't know if the buyer's testing the market. But what I do know is it's one of those sorts of things. And so I have to infer from a variety of other activities what that low ball offer is telling me. Now on the other side of the table, the buyer is trying to understand how you're going to react to that and what sort of information you're going to convey. And so I always tell all of my clients and folks who aren't my clients and now I'm telling you that you get a low ball offer. Silence is power in this particular case and and calm his leverage. You want to naturally react to a low ball. Do the opposite. Don't react to it. Be silent. Be very calm, cool, and collected. Make the other side wonder. If you don't react to a low ball offer, it's not going to throw put you on tilt. It's not going to throw you off. Um, I would say just practice calmness. This next question actually comes from a current client. It's a guy who I've known for eight years. Um, I think very, very highly of him. He's a brilliant businessman. He's built a great business. And said to me, Paul, why do I feel the need to win this negotiation even though I like the buyer? like why do I feel like I have to power through and win at every point? And a lot of this I think comes down to the fact that his identity is on the line. You know, a lot of guys their identity is tied to the business and you know, founders are used to being in control and now in an M&A deal, they're being judged. They're being dissected. They're being just measured. And I think it's very, very difficult. And I always say it's obviously important to get the absolute most you can from a transaction, but you know, you're not trying to dominate in a negotiation. Really, what you're trying to do is design a future that you really want to live in. So, you don't have to win every single point. And you need to be very self-aware and ask yourself, when am I trying to win just for winning sake? and when is this getting in the way of my best interest for the future I'm trying to design for my family and myself. That's what I think it is in a nutshell. You know, in closing, that same client asked me and he has a lot of great questions. He said, "How do I protect myself from getting emotionally attached to the outcome?" So, he's dealing with like he's got to win at every turn and always being dissecting the deal and but he's focused on this outcome, right? is gets attached to it. Um, and usually when clients have this sort of feeling, I'm always like, you know what, detach from the outcome but attach to the process. So, James Clear wrote that book Atomic Habits and he talked about, you know, if you want to lose weight, you can say, you know, 90 days from now, I'm going to lose like 5 kilos or make up whatever the number is. And when you're always focused on that particular goal and the outcome, you're actually not focused on the process itself. And the process is like I got to get up and eat a healthy breakfast. I have to get up and go to the gym. I have to do all these sorts of things. And a sellside process is very much like that. You can attach to the process and make sure that you're doing everything correctly or the best way in the process and then the outcome will kind of take care of itself. If you've got a good business and you're in a good market and you run a tight process, then if you follow that script of being attached to the process, making sure you're doing the process right, don't get skewed or don't get pushed away from don't get attached to somebody else. Don't get emotionally involved with the buyer. Just focus on the process. Let the process do what it's supposed to do. That outcome will take care of itself. Thank you for joining me today. I appreciate the comments on YouTube. I appreciate the messages that I get on LinkedIn. And if you're new to the channel, please like and subscribe and feel free to leave a question below. I'm Paul Jammore and I'll see you on the next one.