“I haven’t had a real vacation since my son graduated from the military academy. That was a proud day for his Mom and me, but I worried the whole week I was gone.”
I have known Fred (not his real name) for about forty years, we went to law school together. I knew he had a successful law practice, but I didn’t know how successful until he asked me to evaluate his financials and determine a selling price once he decided to sell it. Fred has six employees, but they all support him. He is, by his own admission, the rainmaker and the front man. “My staff is excellent and well paid, but the clients come to the firm because of my reputation.”
Fred wasn’t bragging, he is indeed the face and brains behind his incredibly successful law firm. You see, Fred is one of the best medical malpractice plaintiff lawyers in the South. He has won many impressive cases against some really big names. But his inability to build a business model that is sustainable without him renders the value of his law firm almost zero.
“Honestly, Jim, I knew before I called you what you were going to tell me. I have a great staff of support lawyers and paralegals, but without a system to generate clients, there’s not much to keep them busy. About the only system we have is my reputation.”
Fred is incredibly smart, and his record of multi-million legal victories is a testament to his lawyering skills. Too bad he and I didn’t start this conversation about five years ago. He’s ready to sell his practice and relocate to the coast of north Florida to be near his son and his family. He doesn’t have the time or patience to create a plan for his business to live on without him.
Fred has made a lot of money over the years, so he is not relying on the value of his practice to fund his retirement, and that’s a good thing. Since the system to generate new revenue is just his reputation, when he’s done, the business will be done. In situations like this, which I see way too frequently, his best exit plan is to give the employees sufficient notice, then lock the doors and hand over the keys to his landlord.
So I guess he actually does have an exit plan, it’s just not going to benefit anyone.
JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. https://www.amazon.com/Home-Pros-Guide-Selling-Business/dp/1599329239 . He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. The names and fact patterns above have been changed to preserve the parties’ identities.
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