What Works for Navy Seals Might Kill Your Business

Navy Seals know a thing or two about building productive teams. A key principle of their productivity is the “buddy system”. But what works for our Navy Seals can cause problems in a business setting. Mike (not his real name) and I had been buddies for about ten years. Close friends. He graduated from pharmacy school the same year I graduated from law school. Though we were taking different career paths, we wanted Read More

The Paradox That Blocks Escape From Corporate Prison

“I’m tired of my corporate job at ______, I want to be an entrepreneur, be my own boss, how do I buy a business?” I get this question about once a week. The ensuing conversation often feels more like a counseling session than a business conversation. In most cases, the individual doesn't really want to be an entrepreneur; they are unhappy with their job and just want to fantasize about doing something different. I Read More

She Has Potential, A Dangerous Way to Find a Date or Sell a Business

Though happily married for 32 years, I have distant memories of my dating experiences.  I’d occasionally have friends tell me, “I have somebody you should meet.” To which I’d always say, “Well, tell me about her.”  If the response was “she has potential,” I’d politely decline the opportunity – run for the hills, actually. Potential is a dangerous word to use when describing a potential date, and it’s a terrible Read More

The Horror of Selling a Business

John (not his real name) called me the day before Christmas to tell me he was interested in selling his manufacturing company. We met a few days later and he gave me a tour of his plant. His company produced a high-margin product that provided a mission-critical function for the customers they supplied. As I walked through the plant I thought about several private equity firms that would love to buy the company. Read More

Business Valuation = Tangible Assets + Goodwill

Valuation of a business (large or small) comes down to forecasting its future cash flow. When the business is sold, the seller and buyer have to agree to how to allocate the valuation between tangible asset value and goodwill (intangible asset value).   Since goodwill is subjective, there is a risk of overvaluing or even undervaluing a company’s goodwill. Therefore, it is a mistake to try to value goodwill. Read More

Friends Don’t Let Friends Go Into Business Together

“Good grief, I’m an attorney, I should have known better.” Paul (not his real name) is a successful mid-40s year old lawyer with one of Knoxville’s preeminent law firms. Based on what I’m about to tell you, your first instinct will be to agree with Paul, he should have known better. Thirty years of handling business transactions have taught me a lot about human behavior. There are some mistakes I see over and Read More

Lessons Learned in 2017 and How They Signal a Fantastic 2018

2018 is going to be a fantastic year for those of us in the business of helping others buy and sell businesses. In fact, I expect activity levels and valuations to be through the roof. Why do I speak with such confidence you ask? Simple, the lessons of 2017 tell me exactly what to expect going into 2018. Lesson #1 - Owners of strong businesses were reluctant to put their business on the market in 2017. I think Read More

Selling Your Business, Part 3: Getting a Head Start on the Due Diligence Process

Due diligence is the process a potential buyer goes through prior to closing on an acquisition. The process might uncover problems or challenges in the business, but at the very least it helps the potential buyer know that all representations made by the seller during the selling process are accurate. The Importance of Due Diligence The seller of a business can improve his chances of a deal going through if he Read More

“H___ No!” or Just Ignore Them?

“These guys made a ridiculously low offer for our company. Should we say ‘h— no’, counter, or just ignore it altogether?” Rob and Sally (not their real names) have been in business together for almost 20 years, even before they were married. Now in their mid-60s, they want to move to Texas to be near Sally’s grandchildren. Rob is excited about the move, too. He has his eye on building a home on one of the area’s Read More

The Syndrome Known as “This Is How We Do It In Our Industry”

“You have to understand, Jim, people in this industry have a real attachment to their business. It might just be a thing to you, but for us, it’s our life.” Randy (not his real name) and I recently met at a conference. He came up to me after the session I led on preparing to sell a business and told me he had just started to think about the process. He didn’t tell me his age but I assumed he was past 70, though he Read More