This is a page from my book, “How I Sold My Business: A Personal Diary”
The partners and I arranged for another meeting, and met tonight at the office. With the vacations starting to affect our schedule on Saturday, we all thought it was best to meet again.
I asked if they had come up with anything different since our last meeting, and they said no, they thought the ball was in my court, and they wanted to see what I came up with. I said that was true, and that I'd put a lot of time into this, and began to explain what I had.
Explaining my ROI spreadsheets
Playing the role of a guy selling my business, I first asked, "Do you think it would be reasonable for you to get a 100% ROI on your invest in 24 months? That is, if the sale happened today, I'd stay here almost eight more months, and then 16 months after that you'd have all your money back?" Unfortunately they didn't all say "Yes," and generally just said "It depends," and so I explained everything I could about my cash flow analysis: How we agreed many months ago that 24 months seemed like a very viable buyout period, and all the other factors I had put into the spreadsheets, including all the partners taking a common salary.
By the end of the meeting I could tell that they still thought my asking price was too high, but they couldn't explain any logical reasoning behind it. They thought my numbers looked real, and I wasn't playing games, but they also argued that the company revenue would surely go down. I asked why they thought that, and tried to get them to explain their reasoning, and reiterated that they already knew what I knew, now the just had to go out there and do it. I told them my understanding was that Jack would continue to stay at the business, and that he and George would be just fine in the business sales process.
I'm not sure how to exactly describe my feeling about the meeting, other than to say it felt uneven, and that the partners seem stressed again, unhappy with my offer, and also unhappy that these vacations are coming up. Other than the tax implications, I thought I had done a lot of work for them, and tried to make this as easy as possible for them, so this feeling was a disappointment.
I asked about the upcoming vacations, and what they thought we should do, and they said we should all keep our current plans. I told them that even though I was going out west again that they should be able to contact me at any time, and assuming I had internet access, I'd be glad to work out details with them.
"Book value" thoughts
The meeting ended with no promises. I can tell that my asking price is still too high for them, and that whoever sold them on that idea of "book value" has done us a big disservice. There's a big difference between book value and what I just laid out on the table, and while it seems reasonable (except for perhaps that tax argument), once you've been told you can get something for a very low price, it probably takes a while to realize that a much higher price is reasonable. I wasn't expecting a "Yes, we'll take it" today, but I was hoping for a much more positive response.
In other news, the partners won't tell me how they plan to split up my shares. They told me that they're trying to work that out between themselves, and the only thing I had to worry about is that they would buy it all. They didn't say this in a mean-spirited way, just in a matter-of-fact way.
I agreed to send them my spreadsheets by email, and we didn't agree on a date to meet next. It sounded like George and David might tentatively represent the group while all the vacations were happening, but David was scheduled for a few days off himself, so it's not clear when we'll meet again. I can tell they need time to digest this.