This is a page from my book, “How I Sold My Business: A Personal Diary”
As the last few days progressed, we all realized we'd be in no shape to have a serious discussion about selling my shares to the LLC partners. Some emergency issues came up at work, and we were all tired, but David, George, and Cooper still wanted to meet for about ninety minutes.
We met at the office at 10 a.m., and I began by telling them that just a little while ago Rob looked like he might come back on the scene with a higher offer than what he came up with a long time ago, but then he took a completely different tact and agreed to a transfer out of the country.
LLC Class B partners discuss my sell offer
Then we got into the purpose of the meeting, at least from the perspective of my business partners. With Jack out of the picture at least for now, the Class B partners had a lot of questions they wanted to ask before rejecting my offer officially, including:
- What is the health of the company? (Do you know something we don't know?)
- Why was the offer rejected by the Company and Class A partners?
- Can one of us buy your shares, or do we all have to buy?
- If we don't buy, do you have people lined up to buy outside of the company?
- Who will take over all the roles you currently play?
The most interesting question I hadn't even considered was, "Why don't I just open a new office of our company in my hometown?" For a brief moment this was intriguiging, but really, I am so set on taking a very long vacation that it was just a passing thought. Really, why start a new branch of the company that would benefit Jack in any way, when I could just start a new company if I really wanted to (and right now I really don't want to)?
I told them that besides the desire to move I was also burned out, and didn't know if I wanted to continue in this industry any more. I told them I was working on various vacation plans for next summer, and that's why I put in my Offer Letter that I wanted to leave by April 30th.
The second most interesting question was why the Company and Class A partners rejected my offer. I told them I assumed they thought it was too expensive, and I turned the question over to David. The idea of leaving the room briefly occurred to me, but there was no need for privacy just yet.
David said that Jack just wouldn't go along with either approach, and without Jack the Company definitely couldn't make an offer, and by himself he didn't have enough money to buy my interest. He also added that the share price was too high for him.
LLC business partners open up
At this point everyone seemed to open up, and everyone shared their real concerns. They were concerned about income falling off when I left, and concerned about future sales with me gone. They also assumed that my former wife would leave the company when I left, and several salaries would have to be adjusted. I was pleased with their analysis, if not their assumptions. They had clearly put some time into it, and it was thorough.
I just let everyone talk, only chiming in at one point to say that we have been told by several parties during the sales process that buyers typically look at breaking even somewhere down the road between two years and five years. I also added that if the sale happened today, I'd still be with the company for seven months of that time.
After everyone aired what they were thinking, I made an effort to resolve some of their concerns. I said David was in excellent shape to replace me at several accounts, that George was an excellent "Sales Engineer", and everyone else in the room now had at least five years experience in doing what we do, and this was an opportunity for everyone to step up, an opportunity I was sure several of them were looking for.
I told them I knew this was a lot of money we were talking about, but if they looked at what each of them had paid for their shares, they knew there was a lot of value in the company, and buying those shares was probably one of the best deals they'd made in their lives. And if no one or two individuals could afford to buy my shares by themselves, well, a larger group of partners possibly could.
Another great question came up during our discussion: Could the Class B partners have their shares converted to Class A shares during the purchase process? I have to admit, this was something I hadn't even thought about. Yes, I told them, that was possible, but the other Class A members would probably have to sign off on that. If I stayed with the company of course I could do that, but because I wanted to leave, and we were talking about doing this as part of the sales process, that was probably something the remaining Class A partners would have to agree to.
That was the last major question I can recall. After that there was some idle chit-chat, with the partners asking "Are you sure?", and saying things like they would miss me, they were sorry about my divorce, and asked about my vacation plans. One partner asked if the reason I was in a bad mood one particular day recently had anything to do with this, and I laughed and said yes, it did. I told them this has been stressful on all of us, and I apologized for that.
With all of us having other commitments after a long week, we didn't have much time to talk about a real asking price.