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Episode Summary
A broker drops an LOI in your inbox. The number looks bigger than you expected. You sign it, you get marched through the cavity search of due diligence, and somewhere in month four you realize you’re answering their questions when you should have been writing your own. Ryan Moran sold his supplement company Sheer Strength for around a $15M valuation in 2017 and figures he left a million and a half to two million bucks on the table because he showed up to his own deal as the seller instead of the prize. We got into how he built the brand from a 2013 first sale to a four-year exit, why he reinvested side-by-side with the PE group instead of cashing out fully, the difference between operating a business and being the business, and the hardest line of the conversation: when somebody finally writes the check, the entrepreneur becomes the dancer and the buyer becomes the prize. That’s backwards. Cash flow is the asset. You are the prize. Ryan just had to lose seven figures to fully believe it.
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## Top 10 Takeaways- You are the prize. Cash flow is the most valuable asset on the table, not the buyer’s check.
- Sign the LOI without your own terms ready and you’ll spend the next four months on defense.
- Show up with a growth plan, your EBITDA, your terms, and your buyer criteria. Make them meet you.
- Don’t try to make investing your business or your business investing. Keep the operator and investor seats separate.
- Brokers bring buyers. They rarely bring strategy. The prep work is yours to do, not theirs.
- Internet brands peak around $10M when scrappy operators run out of professional skill. Old money buys the gap.
- Hiring a 25-person team before the revenue justifies it doesn’t accelerate growth. It breaks the company.
- Burn out before the close and the wire transfer doesn’t feel like a finish line. It feels like Monday.
- An eight-figure check doesn’t mean you’re a great entrepreneur. It means you had a great go.
- Long-term habits compound. Short-term wins don’t. The boring dividend always outlasts the exciting trade.
Sound Bites
“You are the one with the cash flow and you are the prize. And so often as entrepreneurs who got into this game because they wanted a better life, they wanted quote passive income, somebody shows up with a check and now they’re the prize. The check becomes the prize.” (@25:06) — Ryan Moran
“We left almost a million and a half to two million bucks net on the table through the lack of creativity on the deal structure.” (@28:53) — Ryan Moran
“You think you’re on Cloud9 when you’ve got an eight figure check in your history, but that doesn’t mean you’re a good entrepreneur. It means that you had a good go.” (@44:32) — Ryan Moran
“If you play the game for the long term you end up winning and you end up beating the people who are playing this game short-term to short-term win.” (@48:47) — Ryan Moran
About This Episode
Ryan Moran is the founder of capitalism.com and host of the Freedom Fast Lane podcast. He built and sold multiple e-commerce brands, most notably Sheer Strength Labs, a supplements company pacing roughly $10M a year with $3-4M of EBITDA before he sold a majority stake to a private equity group in June 2017 at a $15M valuation. An early Amazon operator and now an investor in physical products brands, Ryan teaches owners how to think about ownership, audience, and capitalism itself. This is one of the more honest exit conversations in the early iBD archive: Ryan walks through what he’d do differently, what he left on the table, and why he never got the celebration most owners imagine.
Resources Mentioned
- capitalism.com — Ryan’s company and content platform. — capitalism.com
- Freedom Fast Lane Podcast — Ryan’s show on iTunes, Stitcher, and Spotify.
- Rich Dad Poor Dad by Robert Kiyosaki — The book a Dunkin’ Donuts customer gave Ryan that reframed how he thought about wealth.
- Sheer Strength Labs — The supplements brand Ryan built and sold.
- Instagram: @ryandanielmoran — Ryan’s preferred contact channel.
Connections
Phase + Module:
- Module 9 — Operator Transition — The exit Ryan went through and what he wishes he’d done before signing the LOI
- Module 3 — Owner’s Playbook — The growth plan, terms, and buyer criteria that should have been ready before the broker showed up
Milestones:
- Milestone 6 — Transaction Value — The number on the wire and what gets left on the table without prep
- Milestone 13 — Strategic Plan — The growth narrative Ryan should have written before the LOI, not during diligence
- Milestone 25 — Operator Transition Plan — Reinvesting side-by-side and staying involved as a board member
Concepts referenced:
- The Owner-Operator Trap™ — Ryan was the business until a mentor called him on it. The pivot to building something sellable
- Normalized EBITDA — $3-4M EBITDA, addbacks, and how the multiple gets debated
- Value Gap — The seven figures left on the table because the prep work happened in reverse
- Three Lenses of Value — Transaction value vs. what the operator thinks the business is worth
- Capital Allocator — Selling for liquidity to participate in scale Ryan didn’t know how to run himself