Why Exited Founders Lose Money Investing – with Justin Donald, The Lifestyle Investor
About This Episode
The traits that make someone a great entrepreneur are the same ones that get them into trouble once they sell. Optimism, conviction, the belief that any problem can be solved with enough effort. Those instincts build a company. Pointed at an investment, they lose money.
Justin Donald has seen it happen to exited founders again and again. Justin built a mobile home park portfolio that covered his cost of living by 34, wrote the Wall Street Journal bestseller The Lifestyle Investor, and now studies how single family offices allocate serious money.
He joins John Warrillow for the latest After the Deal episode of Built to Sell Radio, the series about making the most of life after a sale while avoiding the biggest mistakes founders make once the money lands.
John asks Justin what he’d tell a founder who has reinvested everything for twenty years and is about to get a $10 million check, and you discover how to:
Catch the one habit that builds a business but wrecks an investor (Justin calls it starting from yes)
Avoid the mistake that cost him $1 million in a deal his own lawyer told him to walk away from
Write your investment criteria before the money lands, so decisions are easy when the pressure arrives
Allocate like a billionaire’s family office, which typically holds only 15 to 30 percent in public stocks
Understand why the wealthy make their money through concentration but keep it through diversification
Compare a 20 percent return on a deal you run yourself against a 17 percent return where you’re not on the hook
Recognize the single word in an investment pitch that should end the conversation
If you’re preparing for a sale and want to avoid the money mistakes founders usually make in the first few years after an exit, listen now.
About The Guest
Justin Donald
Justin Donald is a bestselling author, entrepreneur, investor, and lifestyle investing expert known as the “Warren Buffett of Lifestyle Investing.” He is the author of The Lifestyle Investor: The 10 Commandments of Cash Flow Investing for Passive Income and Financial Freedom, a Wall Street Journal bestseller.
After achieving financial independence in his 30s, Justin shifted his focus to helping entrepreneurs and business owners build wealth beyond their businesses. Through his investing strategies, coaching, and The Lifestyle Investor community, he teaches others how to generate passive income, preserve wealth, and design a life with greater freedom and purpose.
Justin is passionate about helping successful entrepreneurs transition from actively earning money to making their money work for them, so they can spend more time doing what matters most.
Definition of Terms
Due-Diligence: This is a comprehensive appraisal of a business or investment undertaken before a merger, acquisition, or investment. It seeks to validate the information provided and uncover any potential risks or liabilities.
Earn-out: This is a financing arrangement for the purchase of a business, where the seller must meet certain performance goals before receiving the full purchase price. It reduces the buyer’s risk and aligns the interests of both parties post-acquisition.
Roll Over Investor: A rollover investor, in the context of selling a business, refers to an individual or entity that rolls some of their proceeds from the sale with the buyer. This strategy allows the seller to defer capital gains taxes and potentially leverage their expertise or resources in a new venture.
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