Damon Pistulka – Be Careful of Concentration Risk

BIO: Damon Pistulka earned a Mechanical Engineering degree in college, then worked in technical and managerial roles, including designing, building, and operating facilities.STORY: Damon’s company focused on building a client’s business for sale. The client pulled out of a great offer at the last minute.LEARNING: Always have a contract in place and ensure it has an exit clause that protects you. Diversify to avoid concentration risk. “Always have an exit clause when leveraging your time against future value with clients.”Damon Pistulka Guest profileDamon Pistulka earned a Mechanical Engineering degree in college, then worked in technical and managerial roles, including designing, building, and operating facilities. Over the decades, he has led various businesses. Now, he helps owners build valuable businesses that they can sell when they want to.Worst investment everWhen Damon started his current company, it had what would have been considered a dream client. Damon and his team allowed that client to take up all their focus. The company got the client through the Exit Your Way process in the hope of exiting them with a very nice return.After about 24 months of work, the client just decided to stop. Damon and the client were sitting at the table one day with a buyer willing to pay them $10 million more than they’d initially asked for. The client just said no to the offer and insisted the business was worth more than that.Damon and his team had invested a lot of time into the sale. They had focused entirely on this client and had not built other clients up. Damon’s company was to be compensated with a portion of the exit proceeds from the sale. After the client refused the offer, Damon had to start his business over. It took him almost 12 months to get back after that.Lessons learnedAlways have a contract in place and ensure it has an exit clause that protects you.Help your clients understand what it means to have life-changing money in front of them and turn it down.Andrew’s takeawaysDiversify to avoid concentration risk.You’re going to have losses in the beginning.Don’t be overconfident when you get a good deal on the table; take it.Consider when it’s best to get compensated in the percentage of a transaction or the percentage of shares in a company.Actionable adviceMake sure you have an out clause in case someone wants to say no so that your business stays safe.Damon’s recommendationsDamon recommends checking out exityourway.com, where you’ll find many guides and videos.No.1 goal for the next 12 monthsDamon’s number one goal for the next 12 months is to see through a significant marketing content development project the company has been working on. He believes this project is going to transform the way that he does business.Parting words “Thank you for having me, Andrew.”Damon Pistulka [spp-transcript] Connect with Damon PistulkaLinkedInTwitterFacebookYouTubeWebsiteAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassThe Become a Better Investor CommunityHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleFVMR Investing: Quantamental Investing Across the WorldBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsAchieve Your GoalsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast