“They offered $8.5 million for my company, and now you’re telling me it’s only worth $5 million. What did they know that you don’t?” Sandra (not her real name) was not happy with me. After reviewing her company's financial history and her forecast for 2018, I told her that her company could be sold for $5 million, maybe $6 million, if a couple of things fell in our favor. I could see her obvious frustration as she Read More
The Gambler Story: When on the Growth Scale Do You Sell?
“Kenny Rogers had it right. You gotta know when to hold ‘em, know when to fold ‘em, know when to walk away and know when to run. That’s great advice for gamblers, and for entrepreneurs. For me now, it’s time to fold ‘em and walk away.” Ross (not his real name) didn’t strike me as the type who would listen to country music. Born and raised in the Northeast, he came to Nashville when his wife took a corporate role Read More
The Earn Out: Painful Stretching to Make a Shaky Deal
“Will I have to take an earn out when I sell my business?” Drew (not his real name) was ready to sell his company but he was scared. “I hear horror stories about business owners selling on an earn out which ends up not being paid. I can’t afford to let that happen.” Not one to mince words, I decided to level with him. “Drew, a good business with a reasonable valuation represented by a capable intermediary will Read More
Entrepreneurial Hubris
Three days after I told him I might be interested in their offer to buy my company, I was sitting across a table from them. We were in a posh conference room at the Loews Vanderbilt Hotel in Nashville. It was one of me, and four of them. They had been calling for the past few months expressing interest in acquiring my business. The publicly-traded company was growing through acquisition, it was just a matter of time Read More
An Affair is Always a Bad Idea
Randy (not his real name) was about to make a life-altering decision. He had a need, and he wanted to fulfill it. The long term consequences were of less concern than getting what he wanted, right now. He called me, I suppose, wanting me to tell him it was a good idea. But with years of experience advising men and women in this situation, all I could do was tell Randy the truth from my heart. “Bringing in a minority Read More
Is It OK to Pay Too Much for a Business? (hint: yes, and it might even be a smart thing)
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 Laws of Supply & Demand Not Applicable to the Market for Privately Owned Business?
Professor Bentley (not his real name) was one of the most revered yet feared professors at Harvard Business School. Every time he entered the classroom, you knew you were in the presence of genius. But with one question, he could make you look or feel like the village dunce. I didn't learn the principle of supply and demand at Harvard, I knew that a long time before I got there. However, in the rigorous case study Read More
Why It Can Be Hard to Find the Right Business to Buy
Randy (not his real name) had been trying to buy a business in the Nashville area since early 2015. A few weeks ago, he called to ask if he could retain me to assist his search effort. Though he had met with about 10 business owners over the past two years, Randy had nothing to show for it. He was ready to be more professional and intentional about his search process. Randy was not a neophyte. He had run his Read More
How Can You Know Your Company’s Value?
“Cumbee, you don’t know what the heck you’re talking about, my company is worth way more than you're telling me.” Mike (not his real name) was about to tell me what to do with the valuation I prepared for his company, and he used a word other than heck. I could appreciate his frustration. Starting his company during the ‘08-’09 recession, Mike had done everything right to build his business to $9 million a year. He Read More
Does the Entrepreneur Know More Than the Corporate Titan?
“Who knows more about business, the corporate executive or the entrepreneur?” I didn’t expect to hear a question like this while in the Harvard Business School faculty dining room, but when Faith (not her real name) posed the question, I could tell she had a point to make. “Each role requires a unique skill set” I replied, “there are things a corporate CEO needs to know that isn’t necessary for an entrepreneur, yet Read More
