Jack and I exchanged some brief emails with David over the weekend, telling him that we wanted to meet with him, and with everyone anxious to discuss the valuation, the three of us met for lunch and to discuss our business valuations, and selling the business.
My business valuation efforts sounded more detailed than theirs, so I made photocopies of Marty's business valuation and copies of my best valuations, and presented everything as well as I understood it. David and Jack agreed with some of my assumptions, and disagreed with some others, but we were all more or less in the same ballpark.
The business valuation numbers weren't the major issue at our lunch meeting; we all agreed we wanted to pursue this. For me, it was the most interesting thing to happen with the company in a while, and it revived my spirits. I can't speak for Jack and David, but they certainly seemed very interested in the discussion and curious about the entire process.
The most interesting discussion revolved around our Class B partners, with the questions being:
- Should we tell the Class B partners what we were doing?
- If so, when should we tell them? Now, before we signed Marty's papers? Right when we were ready to sell to an actual party? Or some time in between?
We debated a number of approaches, but we decided to tell the Class B partners immediately, for the following reasons:
- We were looking at converting George and Cooper to Class A partners very soon.
- We wanted them to trust us, and putting the company for sale without telling them would be a big blow to this trust.
- We needed their buy-in on selling the business. If they weren't willing to stay with the company after the sale, the company would be worth significantly less.
- If the company is really worth $2M, each of their shares in the company would be worth $20K. I hoped they would see this as a nice payback on their investments in the company.
Having agreed to this, we just had to figure out a time to tell them. I didn't want to make it on a weekend, because they would have to tell their wives they "had to go into work" on a Saturday, and I assumed their wives would ask more questions about why they had to go in. We agreed to make it seem like a more casual meeting, so I sent out an email tonight to see what afternoon they could meet this week.