Friday, August 26, 2005 (Part 2)

I was clearly upset about this when I got back to work today, and when I ran into David he asked what was going on. We closed the door to our working area at our client site, and I told him about what happened at lunch. He didn't get a chance to say much though, because some customers came by, and we had to quit talking about this, but he quickly suggested I get out of there, which I did.

It's late at night now, I'm still very upset, and I wrote my friend about this. He wrote back:

Is this the guy you mentioned that constantly checks on his investments during the day? Here's how I see it: He sees the end of the gravy train, and he wants to bail out before you do. How much revenue do you think you generate for the company? 20%? 50%? Whatever it is, he sees much less revenue when you leave.

Also, he may be trying to set you up to reduce your asking price.

I'm so pissed right now it's ridiculous. It's hard to believe we have been "business partners".

For the record, "book value" is an incredibly misleading number for a transaction like this. Book value can fluctuate wildly, depending on how much cash you have in the bank. We've got $500K in cash in the bank right now, but let's say we take a $300K distribution. Book value was $500K, but now it's $200K. That's just a meaningless number to me.

I've read four books on selling a business in the last several years, and they all stress that "book value" is "fire sale value", meaning that you're going out of business and just trying to dump the company. Our business isn't anything like that, in fact everyone that sees the financial reports calls it a "cash cow".

Earlier this afternoon I sent Jack an email -- copying David -- summarizing that he won't agree to buy my interest when acting on behalf of the company, and that he's also interested in selling his shares to the company. I'm trying to keep things legal, so I feel like I need something in writing, essentially leaving a paper trail with emails. So I sent him this email, which he hasn't replied to yet.

Assuming he replies that he won't agree to buy my shares while acting on behalf of the company, I then have to make an offer to these same two guys acting individually. Assuming they won't want to buy my shares individually, and also assuming Jack won't also try to sell his shares at the same time, I can then make an offer to George and Cooper, the Class B partners. To keep everything rolling along I'd like to be able to do that tomorrow, but depending on how much of a jerk Jack wants to be, he can technically delay the company's decision thirty days, and then delay his Class A partner decision thirty days, but I don't think he'd dare do that. If he did that, David will know immediately what has happened, and Cooper and George will also know in sixty days, and he'll look like a fool, at best.

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