Why 90% of Your Net Worth in One Company Is a Problem
By Armando J. Perez-Carreno · Featuring Steven Pivnik
I talked with Steven Pivnik from AIP Advisory about why most founders have nearly all their wealth locked in one illiquid asset, the 10-to-15-year window to start planning an exit, and how cutting founder dependency raises what your company is worth.
If you own a company that's doing well, there's a good chance 90 to 100% of your net worth is tied up in it. That's a single illiquid asset, and it carries a lot of risk no matter how strong the business looks today. Steven Pivnik built and sold a tech company over 26 years, and his advice is to look into an exit long before you think you need one, so you're never trapped in one position.
In this episode, I talked with Steven Pivnik from AIP Advisory. He grew a technology company to over 200 employees across 12 countries and served around 90% of the Global 5000 before he sold it. Now he advises founders of middle market companies on how to plan for and execute an exit. He calls it paying it forward, and after going through several deals of his own, he gets to live the journey again through other founders.
The first idea worth sitting with is timing. Steven says the right moment is different for everybody, but if he had to pick, it's the 10 to 15 year mark. By then you've built serious enterprise value and put in a lot of blood, sweat, and tears, so it makes sense to at least get a benchmark for what you could achieve. You don't have to sell. You look into it, and if the stars align you pursue it, and if they don't you keep going for another few years. The point is that having 100% of your net worth in one illiquid asset is risky even when the company is healthy, because there are no guarantees and the next downturn could be around the corner.
He also taught me a phrase I hadn't heard before, the second bite of the apple. Say an investor buys a majority of your company and you roll some equity forward. That private equity partner will almost always sell the company again later, and when they do, you get a second payday. Steven pointed out something that surprises people. That second check is often bigger than the first, even when it represents a smaller percentage, because the new partners bring a network, capital, and experience that grow the company.
Now here's the part every founder should hear. Founder dependency is what Steven calls a valuation killer. If a buyer finds out the company leans heavily on you, the valuation gets discounted, because you walking away is a real risk. So his advice is to stay involved while making sure the company can run without you. The test he gives is simple. Take a three-month sabbatical and see what happens. If you come back and the company is in the same shape or better, you've done a great job. If you come back to a mess, you've got work to do. Steven did this himself by bringing in a professional CEO three years before his exit, so by the time due diligence came around, it was clear he wasn't part of day-to-day operations.
My favorite moment was a negotiation story. Steven told a buyer up front that if they tried to reprice the deal, they should walk away. They went into due diligence, and after three weeks the buyer came back and said the number didn't work, so they walked. Fine. Three years later they came back and paid 50% more. The lesson is to put your non-negotiable terms on the table from the start and hold firm when you have the data to back it up. A lot of founders skip this, get worn down through a long process, and finish the deal looking gray and burnt out.
We also got into the numbers people hear but don't always understand. Steven defines middle market as roughly $20 million to $500 million in annual revenue. Enterprise value is what your company is worth to a buyer, and it usually gets calculated one of two ways. A SaaS company doing $10 million a year might be valued at four to seven times revenue, and something in a hot AI space could hit 10 or 20 times. Most other businesses get valued on profitability, around four to 12 times earnings. That's why a company that makes $3 million can be worth far more than $3 million. Buyers are paying for future earning potential.
At the end of the day, the through-line here is reducing risk before you ever sit at the table. Get your wealth out of one asset. Build a team and a brand that can run without you. Decide what you want from a deal early so you don't get emotionally attached to one outcome. For Steven, that work shows up in an exit readiness assessment he built, three short questionnaires that score your company, your psychological readiness, and how financially dependent you are on the business. Whether you're 10 years in or thinking about it for the first time, knowing your numbers beats finding out the hard way.