This is a page from my book, “How I Sold My Business: A Personal Diary”
Late this afternoon the same group of people met at the CPA's office to listen to an offer for our company. The two financial men tell us they're willing to offer a total of $1.4M, mostly paid out from our earnings over a period of thirty-six months. Jack and I would have to stay at the company during that entire time, and they make it clear this is as high as they can go, this isn't a negotiation.
At the meeting Bob smiles, but says very little; things are clearly out of his hands now. The owner of the CPA firm gives most of the presentation, with Marty, Jack, and I asking many questions as we go along. A few things stand out for me:
- We'd have to guarantee that we'd stay at the company for the entire three years. This seems like a very long time to stay with people that I don't even know if I'll like. I can take a beating from someone for a while, maybe a year, but three years, guaranteed?
- Our salaries would be $80K per year, so the total compensation during this time would be that salary and our shares of the $1.4M.
- Calculating the numbers in my head, this didn't seem like much of a "deal" to me. If I just worked at the company for three more years and then just handed the keys to someone and walked away, I'd be making nearly as much money.
I'd normally be a little upset about something like this, whether I'd show it or not, but in this case I'm more confused than upset. Maybe this is a good offer and there's something I don't understand?
At the end of the meeting Jack and I thanked them for their time and consideration, and we told them we'll think about this, but that it's significantly lower than what we had in mind as our minimum asking price. I shook Rob's hand with the feeling that I'm not going to see him again, which is a big disappointment.
After the meeting Jack, Marty, and I talked in the parking lot for a while. I asked Marty several times if there was something I was missing, if their offer was somehow better than us just walking away in three years without selling, and he said no, that seemed about right to him. He said accountants are notoriously conservative, and he felt this was a lowball offer, and he was disappointed they wouldn't share it with him over the phone, because he could have saved everyone a lot of time. He also added that having to stay for the full thirty-six months was also unusual, that very few owners stay on 12-18 months after a business sale.
Jack and I quickly agreed we wouldn't accept this offer, and told Marty that if they wanted to increase their offer to our minimum amount or higher, we'd be glad to meet with them again, but seeing that they made it clear this was their best offer, we all assumed we'd be moving on. While it's nice to hear an offer to buy our company this fast, this was also a big disappointment.
I called David on the way home and told him the news. He agreed that we shouldn't accept the offer, and he thought it was strange that they would even bother making it. I also told my wife about it when we got home, and with no other prospects on the table, it seems like business life is going to go back to normal for a while.
The only positive things I can find in this experience are that we've been down this road now and heard one offer, and it gave us a chance to meet Rob, and maybe our paths will cross again one day.