This is a page from my book, “How I Sold My Business: A Personal Diary”
Jack officially rejected my offer to sell the company yesterday, followed by David. While things seemed to be moving on the fast track in a positive way, this morning began with George threatening to quit.
He said all this stress was too much for him, that he could just quit the company, start consulting on his own, and make almost as much money as he could being a business owner. He thought my offer was unreasonable, and he felt like the company was about to explode. As I spoke to him he was visibly upset, even shaking. I realized now that I had probably pushed him too hard; I thought he could handle this, but it looks like he can't, not right now. I briefly thought about taking the tact of reminding him about the non-compete agreement, but if you know tech people at all, you know that would have been a disaster.
As much to stall for time as anything, I asked David how he felt. He said he didn't want to do anything that drastic, but yes, he agreed, this was extremely stressful, and wanted to see it end soon. He also said that he worked through the numbers himself, and thought my asking price was too high. He said a lot of bad things could happen after I left, and if they paid me up front (which was all we had talked about to date) that I would win, and they would lose, and he needed something that was more of a win-win situation.
I was pleasantly surprised at his research and thought process, and I decided to come clean and tell them more of the truth, things I had hinted at on Sunday.
My selling price
Getting Jack out of the picture officially, I told them, was part of my plan, and that part succeeded when he signed the rejection of my offer yesterday. I told them my asking price was intentionally too high because of two factors. First, I wanted to make sure Jack rejected it, both from a Company standpoint and then from a Class A standpoint. Second, it was my understanding that I legally had to keep the offer to the Class A partners the same as the offer to the Company, and I would also have to legally make the same offer to the Class B partners. Once everyone rejected the offer, I thought that legally I could now negotiate with anyone.
I told them I agreed that my offer was too high, but I hoped they could see why I didn't say anything before this. (Shoot, I thought to myself, the Class B partners haven't even rejected my offer yet, and here I am telling them I know my asking price is too high. In most negotiations that would be a pretty dumb tactic, but it seems necessary here.)
I just asked them to trust me again, that if everyone will just reject my current offer I'll be glad to talk to whatever group of employees they want to put together to buy my shares -- as long as that group doesn't include Jack. I even put it in writing, saying that if the Class B members will reject my offer today or tomorrow that I'll be glad to meet with them later the same day or the next day to talk turkey.
Once again I reiterated that I wanted them to own the company, though I avoided mentioning that I would take my offer to outside investors if I was forced to. Truth be told, I felt like it would take a long time to negotiate with anyone outside of the company, and the existing partners would have to agree to work with that outside entity, and all of that could be very difficult to make work.
By the end of the meeting George had calmed down, and was no longer threatening to sell his shares back to me or the company. I again apologized for putting them through this, but I asked them to look at it from my standpoint, and know that I am trying to keep everything legal as we go through this process. I also tried to get them to imagine a world where they owned the company by the end of October, and I would be around until next summer to mentor them in any way I could.
New business attorney candidates
By the end of the meeting things had stabilized enough that they told me they really had only two candidates for a new company attorney, and they gave me their contact information. I told them I'd meet them this week if possible, and encouraged them to join me on the visits. If I had my way, I told them, this was going to be their company, and they might as well get used to these things, and they should be involved in this decision.
Finally, things had also stabilized enough that they suggested we all meet again Saturday morning to have the Class B partners reject my offer, and then discuss other offers. We all had a lot of work to do this week, and nobody really wanted to meet during the week again, or even Friday night, when we'd all be tired.
They also suggested Saturday morning might be inconvenient for Jack, and he might skip it altogether, at which point I laughed. "Don't let me corrupt you on Jack," I told them, "other than the part where I won't sell my shares to him. You're going to have to work together in the future, unless you already have some plan you're not telling me. In either case, just insist on hiring a great salesperson, and you'll be fine."