Plan — Hire solid professionals who will support your exit strategies and support you in maximizing the value of your company. The sooner you hire professionals, the better to plan your exit. The investment you make in hiring the right professional team should come back to you many times over. I made the mistake during my first exit of doing it myself and to this day regret how much money I left on the table due to the lack of knowledge I had when selling a company I worked so hard to create.
As a part of our series about “Five Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit, I had the pleasure of interviewing Peter Goldstein, Founder and CEO, Exchange Listing.
Peter Goldstein, is Founder and CEO of Exchange Listing, a firm that guides high growth companies in emerging markets to list or uplist on global senior stock exchanges such as Nasdaq or NYSE. An expert in navigating the ever changing climate of Wall Street, Goldstein has emerged as an international voice for the evolving industry and has successfully launched several highly innovative companies amidst today’s disruption and shifting investment practices. He is a member of the Forbes Finance Council.
Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
Born and raised in Rockland County, New York, I grew up in a small middle class, close knit family with two older sisters. Neither one of my parents were entrepreneurs, but both instilled in me a strong work ethic and values. At a young age, I knew he wanted to be in business and so started early juggling a newspaper route and local odd jobs.
Early on, I discovered a penchant for entrepreneurship and travel. With an interest in cultures and international living, I studied international business at the University of Miami where I also earned my MBA.
Budding Entrepreneur With Big Dreams…First Exit
On my 24th birthday, I got my first official business license at New York’s City Hall and started a specialty food company. It was during this experience that I got a sense of what it was like being a company founder and principal. Importantly, I learned firsthand what it takes to drive a company forward, and how to create an exit strategy and liquidity event for myself, which I did by age 30.
My first exit was the sale of a private Company to a strategic buyer who was in the same industry and wanted access to my product line and client base. I spent six years building that business from scratch and after reaching certain financial and business goals, I realized that I wanted to pursue other goals and objectives professionally and personally. While I made many mistakes in this first exit, it propelled me towards building my career in finance, Mergers & Acquisitions, Investment Banking and my passion of building companies for exit through the Capital Markets. I have since been involved in many Mergers & Acquisitions and public listings with companies based around the globe. Currently my business and expertise is working with emerging growth companies creating liquidity events by becoming publicly traded Companies.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
“Managing and operating my specialty food business forced me to navigate through the ups and downs of running a company. I learned it all first hand by experiencing hardships and developed best practices along the way.”
“When I had my first exit I had no one guiding me — no proper lawyer, no one experienced in mergers and acquisitions, nobody with perspective or business acumen and no tax expert. I definitely made mistakes including leaving a lot of money on the table, but that’s how I learned the right strategy, processes and procedures we use today. At that time, I didn’t have the knowledge on the transactional of the exit, but then post-exit and how to maintain a piece of a revenue stream or return on investment on what I’d worked so hard to create.”
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
My favorite Life Lesson Quote is “Rejection is one step closer to success.”
Some of the biggest and proudest accomplishments I have had in my life started with overcoming challenges that came with a “No, you can not do this” or receiving a rejection. Whether hearing no during a sales call or faced with another form of rejection, I take a “NO” as a challenge, which pushes me forward to getting one step closer to a “YES” by persistence and hard work. I have been driven by my belief that there is a solution to every problem which I utilize every day in my personal life and in business transactions.
Ok super. Thank you for all of that. Let’s now shift to the main part of our discussion. Can you tell us a story about how you were able to build a business from scratch, scale and sell it to a bigger firm?
In creating a business to scale and exit, I work differently now then I did when I was younger. Like many entrepreneurs, in my first business, I created scale through hard work. I built my business step by step to capture the most market share I could, without thinking about the exit. As an example, I started my first business, a food distribution Company from scratch, working on my own and from my home. As soon as I had enough business, I rented a warehouse space and began hiring employees. As soon as the business grew, I added more employees and resources to service our customers, only looking to scale and grow, not with an exit in mind. After reaching an entrepreneurial plateau after several years, I then started to look at selling my company. Now I approach business the opposite way, where I consider my exit first and then reverse engineer the business accordingly. The approach of designing your business with the exit in mind is one I encourage more entrepreneurs to take, and believe they will benefit from greatly. This is also why I built Exchange Listing, to assist entrepreneurs and companies going through the IPO route.
Based on your experience, can you share with our readers the “Five Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit”. Please give a story or example for each.
- Build — build your market share to demonstrate the acceptance of your business model. I have seen many startups and pre revenue companies placing high valuations without proof that there is a market for their product or service.
- Scale — Scale your business rapidly with a focus on Key Performance Indicators (KPIs) that can show the execution of your assumptions. To maximize the value of your company you will want to show that your business can scale and grow in the future. It is critical to show the assumptions you use in forecasting can be supported by real world results. I recently guided a Company through an IPO and was able to attract investors at a very high valuation by showing them assumptions we created were based on actual results to support revenue and growth in the future.
- Prepare — Organize the financial reporting and tracking of key metrics in your business. I can not stress enough the importance of current and quality Financial reporting. This is often overlooked by entrepreneurs and critical when preparing for an exit. It is very hard to position a business without the quality financials and reporting metrics. In preparing a distribution company for an IPO we shifted business development efforts to focus on the most profitable division of the company to increase the valuation.
- Manage — Develop your human resources with an understanding that you need a team to devote energy to the exit. Recently working with a client through an exit, the Company was understaffed and the human resources were not available to both run the business and manage the exit. Our team provided additional resources to allow the CEO to focus on his core operations and offload the exit related activities.
- Plan — Hire solid professionals who will support your exit strategies and support you in maximizing the value of your company. The sooner you hire professionals, the better to plan your exit. The investment you make in hiring the right professional team should come back to you many times over. I made the mistake during my first exit of doing it myself and to this day regret how much money I left on the table due to the lack of knowledge I had when selling a company I worked so hard to create.
In your experience, is there a difference in approach for building a service based business versus a product based business when you have the intent to eventually sell the business. Can you explain?
A different approach is most definitely required. A sale of a service based business versus a product based business have very different measures for the valuation. In either case, the metrics that are used for valuation must be determined and studied to understand what a buyer will be focused on. For example, with a product based business, the levels of inventory, product turnover and cash flow are critical factors that impact the P&L and balance sheet and the overall approach to how you position a company for a sale or merger.
How does one go about the process of finding a buyer?
Start with identifying a professional to assist you in the process. There are specialized business brokers and M&A professionals who can market your business to potential buyers. I am a big advocate for utilizing a team of professionals to prepare, market and assist in the process of finding a buyer and through the closing of a transaction. Additionally, I recommend doing your own marketing to strategic buyers within my industry that would find value in merging or acquiring your Company.
How can one decide if it is better to build a business in order to exit, or if it is better to stick around for the long term and let the company bring in residual income, or if it is better to go public?
Whether you plan to exit sooner or later, I believe it is best to build your business with the plan to create an exit. There is no perfect answer here as it largely depends on personal goals, but in my experience the highest valuations and ROI for your business come with going public. I have had exits in both private and public companies and focus on the public listing strategy and advise entrepreneurs on going public and listing via IPO. This approach allows you to continue to build income and increase the valuation while you can still have the option to sell or merge with another Company.
Can you share a few ways that are used to determine a good selling price for the business?
The preferred method for valuing a company is based on a discounted cash flow model. This method allows you to forecast the company’s growth and factor the potential of the future into the selling price. It is also important to look at comparable companies for the market valuation and metrics used to determine the valuation. It is important to compare companies that are in a similar industry sector, size and private.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I believe that business can make a social impact and make a great contribution to society beyond economic value. If more companies could find a way to contribute to those in need, we can collectively bring about a better world. Many small to medium sized companies can contribute services, products, human resources, free cash flow or even equity to others. Upon creating an exit for your company, equity can be contributed to organizations as another form of currency. For example, in a project I am currently planning, I will contribute shares of common stock to non profit organizations dedicated to assisting US military veterans. Taking a percentage of my shares and dedicating them to those who served our country provides me with a bigger purpose in creating value beyond profit.
How can our readers follow you on social media?
I’m quite active on Linkedin and am always interested in making new business connections.
My profile is https://www.linkedin.com/in/peter-goldstein-exchangelisting/.
Thank you so much for joining us. This was very inspirational.