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Sometimes You Just Gotta Let It Go

“After 15 years of work, I just wanted to leave something for my kids and grandkids. But it sounds like that isn’t possible.” 

Sandra (not her real name) was not in good health. We met at her house because getting to the office was difficult for her. But what she lacked in physical mobility, she more than made up for with mental mobility and attitude. Sandra had a big smile on her face when I walked in, and she seemed quite sharp. There was no question I asked for which she didn’t have a confident answer. 

Sandra told me she had hoped her son would take the business. But he recently got married and moved to Texas because his wife received a too-good-to-refuse job offer from a national accounting firm. Now Sandra was left without an exit plan for her business, but she needed one fast. She told me she has a troubling diagnosis from her oncologist. “I might not be here in a year,” she said, “can you work that fast?

But it didn’t take long in our discussion for me to realize Sandra would likely not be able to sell her business. In 2015, the business generated EBITDA of $750,000 but it had gone down every year since. In 2019, EBITDA was only $45,000. She explained, “You know, dealing with all this medical stuff has weighed me down, I just haven’t had time or energy to turn things around.”

Sandra’s attitude about selling the business and her valuation expectation was based on what the business had achieved in the past. “I bet you know a ton of people who’d like to buy a business that can do $750,000 a year,” she said confidently. This is the part of my work where I feel more like a pastor or grief counselor than a business advisor. “Businesses aren’t valued on what they once did, they’re valued on current performance,” I said gingerly, “and since revenue and profits are on a steady decline, I don’t see why anyone would buy it now for more than the asset value.”

So I’m left holding an empty bag?” she replied, to which I said, “I’m afraid so, with the recent history of declining profits, there isn’t a plausible turnaround story.”

Sandra looked at me for what seemed like several minutes. It was probably only about 15 seconds when she then said, “I thought that’s what you’d say, that’s what my son told me too. I have other retirement assets, I’ll be ok and my family will be ok, I just wanted to get a professional opinion before I shut it down.”

At that point Sandra‘s husband came in with a pitcher of iced tea and they started to show me their collection of silver coins. What started as an awkward meeting about Sandra’s business ended up being a fun conversation about American history and rare coins. She won’t have a bag full of money from the sale of her business assets, but she is wealthy in her attitude about life. I pray her doctors are wrong about her prognosis, the world needs people like Sandra.

JC note: this article was originally published in early 2020. I am sad to report that Sandra passed about in mid-2021.

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Tennessee Valley Group

Jim is an attorney (non-resident status with the Missouri Bar) and though he no longer practices law, he has read and negotiated enough legal documents to fill a cargo tanker. He has an MBA from Harvard Business School and knows how Wall Street and private equity operates. Jim is a Tennessee Supreme Court Rule 31 listed general civil mediator with tons of experience helping business owners (large and small) work through sensitive problems to achieve winning results. He is the author of "Home Run, A Pro's Guide to Selling Your Business, Seven Principles to Make Your Company Irresistible."

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