Wednesday, April 13, 2005

This is a page from my book, “How I Sold My Business: A Personal Diary”

We met again at the business broker's office downtown, and he presented his proposal to us. Steve's first option was that they could consult with us for a surprisingly large fee on how to grow our business. I went in expecting the might want $150 or more per hour for consulting services, but he presented a five-figure consulting contract, with no specifics about what they would actually offer, and who would perform the services. We discussed this for quite some time, and despite our questions, we couldn't get any specific answers. So that five-figure "consulting" deal isn't going anywhere.

The second option was that they could provide a valuation of our company for a fee of $5,000. That caught me a little by surprise. First, Marty gave us his "opinion" for free, so I was surprised that someone who might want to sell our company would want to charge us for the right to sell the company. Second, after our previous meeting I didn't think they had any professional business valuators on staff, and after asking, indeed they don't. Finally, I reminded him that since he mentioned at our last meeting that our company was probably worth $2M but not $3M, I thought we already had his valuation. He said that was just a ballpark figure, so I told him we were fine with that.

The third option he offered was an agreement similar to Marty's. With no money down, he wanted 10-12% of the sale, depending on the final price. He had checked around, and there was one man in town who was interested in consolidating several computer service firms into one full-service firm, and while they had other firms that were interested in a merger, they didn't have anyone that specialized in an area like we did. He didn't mention the gentleman's name, other than to say he was an older gentleman who had worked in the area before, and he had a good reputation in town. When Steve had his back turned to us, Jack wrote a name on a piece of paper, and slid it over to me. It was the name of the man who Jack guessed Steve was talking about, someone we both knew.

At the end of the meeting I thought anything that didn't involve sitting still sounded interesting to me, so I was open to the last possibility. I told Steve that Jack and I would discuss this with the other partners, but I didn't see the logic in pursuing his first two offerings. Shoot, we've already met with our closest competitors and another guy that turned out to be a huge asshole, how much worse could it get?

Before leaving I gave Steve another chance to provide details on the first option, but again he refused to get into specifics. I'm not one to give anyone much money at all without knowing the specifics of what I'm getting in return, so that option is dead.

books i’ve written