FREE TRAINING: 3 Keys to Sell Your Business with Confidence

The Confusing Logic of the Wisdom of Overpaying

We had met through a mutual friend who knew Robert and his wife were looking to leave corporate life and buy a business they could run together.

He soon began to dig behind the numbers, he and his wife visited with the owners, and it wasn’t long before he had hired an attorney to write the Letter of Intent.

It looked like this was a match made in heaven. We expected an LOI very soon.

At that point, Robert was convinced my client had over-priced his business, so he and his wife decided to buy a similar business in Texas.

I tell them Robert should have bought my client’s business, even if it was over-priced relative to comparables:

Leaving corporate life to become an entrepreneur, you know a lot less about running a business than you think you do.

Being an entrepreneur is more glamorous on the outside looking in, and it can be exceedingly disruptive on your personal life.

Having a long view is key to entrepreneurial success. Realize that getting a “fair price” is less important than having the right business.

But the company he ended up buying in Texas was “a better deal” because he could have it paid off within four to five years

I wasn’t a math major in college, but I think owning a business in seven to eight years that makes $1,000,000 per year is better than owning a business in four to five years than makes $500,000 per year.

But there are other factors that an entrepreneur should consider that just might make the over-priced deal the right deal.

The Confusing Logic of the Wisdom of Overpaying

When he walked into Starbucks with a big red notebook under his arm, I figured the meeting might not go as planned. I had worked with Robert (not his real name) for almost four months. We had met through a mutual friend who knew Robert and his wife were looking to leave corporate life and buy a business they could run together. Robert had contacted me to see if I had any companies he might be interested in buying. I Read More

The Right Buyer?

“We make pretty good money here but it’s time for me to sell. But understand this, if a buyer won’t commit to preserve my culture, I’m not interested at any price.” I met Mason (not his real name) at a luncheon in Clarksville sponsored by a local ministry with which we were both involved. I wasn’t there soliciting business and he was not there to talk about selling his. But as we casually talked over lunch, he asked Read More

An Empty Basket Case

Image of an empty basketA couple years ago my wife Emily and I were preparing for a covered-dish dinner with friends from church.  As she was pulling the casserole out of the oven, she said, “Can you bring me the Longaberger basket in the cabinet above the refrigerator?” I pulled the basket out, thinking the last time I had seen it was about the same time last year. She carefully placed the hot casserole dish into Read More

Be Ready Even If You Aren’t Ready

“I’ve got to get out of Dodge before it’s too late.” Joey (not his real name) had already met with his financial advisor to plan for allocation of the money he would receive when he sold his company. The Letter of Intent was signed three weeks earlier, and the buyer had started due diligence. Everything looked like we were on track to a successful closing in seven to eight weeks. “We have a problem,” I said to Joey, Read More

Why NPV Matters, Sometimes

“What do you mean you don’t want to sell my business? I thought that’s what you did for a living?” Reggie (not his real name) would have been the ideal client. His business was growing and extremely profitable, EBITDA of $3.57 million last year and forecasted to be $4.25 million this year. Reggie called me a couple months ago after returning from an industry conference in Orlando where he met several private equity Read More

The Thin Line Between Warm & Fuzzy and Hot & Messy

“My partner and I have grown apart. He isn’t the same guy today that he was when I offered him a full partnership in 2007. His arrogance has created a toxic environment. He plays favorites with the employees, and he comes and goes as he pleases. I’m afraid it’s going to affect the company’s survival. Can you help?” Archie (not his real name) asked me to meet he and his wife at their home to assure full confidence in Read More

The Danger of the Second Act

  Randy (not his real name) and I were sitting in a coffee shop across the street from his office. As soon as we sat down to enjoy our overpriced lattes, he got right to the point, “My exit from the tech company was way beyond my expectations, but I’m getting anxious to get back in the game. Do you know of any businesses that would appeal to me?” I had heard rumors about the successful sale of Randy’s business (hey, Read More

Beware the Pig-in-a-Poke Valuation

“Jim, I decided to go with another advisory firm. They say they can get more for my company than you think it’s worth.” This recent comment from Tracy (not her real name) was the first time in fifteen years I have lost an engagement because the business owner was picking another intermediary. It seems the other broker convinced Tracy that he could get her a higher price for her company. I had told her the business Read More

You May Not Be As Popular As You Think

“I get calls, emails and letters all the time from people telling me they want to buy my company, or that they represent someone who wants to buy my company. How can I know who’s for real or not? I’d like to sell my company, but I also have to keep running it and I can’t afford to waste time on somebody's wild goose chase.” Felix (not his real name) heard me speak at a recent conference and came up to me afterwards. Read More

What Works for Navy Seals May Not Work in Business

An image of two Navy Seals standing in water with guns in hands.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 good buddies since high school. He graduated from pharmacy school the same year I graduated from law school. Read More