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What is the Second Bite of the Apple and Is This Exit Strategy for Me?

It’s important to note that there are many ways you can exit your business, all at once, or in phases.

We support you to determine the best plan

and the best partner to make that happen. 

We see business owners choose to -

Sell the entirety of your business outright

“Keep some chips on the table”

Often, we recommend owners sell only part of their business, retain some equity, and then sell the rest of their rolled equity through a new liquidity event, after they’ve maximized the company’s growth together.

With the right fit, this can maximize your overall capital gains.

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We call this taking two bites of the apple

The plan is often that the second buy-out is even better than the first.

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Is the Second Bite of the Apple for you?

PEGs wants the business owners to have “skin in the game” after the transaction because the business owner is going to be the one leading the business post-transaction.

For Example -

This might mean that Charlie owned 100% of his successful accounting company.
Let’s say he sold his business for $10M.
He sold 80% of his company and rolled 20% in equity.
This means he might receive $8M cash at close.

A lot of times, business owners will write off that 20% – they’ll just count on the $8M (in the example) that Charlie got upfront.

But the reality is, when business owners cash-out their rolled equity, it can approximate or even exceed, the cash they received upfront.

In Charlie’s example, after his $8M cash at close, he stayed on for 5 years to build his accounting firm with his new partner. During this time, he received his regular salary, and he cashed-out his last 20% for $8M. 

Ultimately, this means he sold his business for $16M (+ his salary over that time).

This is why the second bite of the apple ends up being even more profitable (fruitful) to a business owner where the rolled equity portion is even more than the first.

In this deal, if Charlie sold 100% of his business at the beginning, he would have received $10M, not $16M. 

In some cases, receiving maximum liquidity upfront is what’s best for you. And sometimes it’s not. There is no right way to sell your business. It’s our goal to ensure we’re setting you up for the best possible exit that meets all your goals.

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Cut through the M&A Jargon and Know Your Best Path

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