“I’ve been his CFO for ten years. I’m 55 years old, if I don’t see his plan for transition in the next few months, I’ll have to go find another job. Gosh, for all I’ve put into this company and the good people here, that’s the last thing I want to do. But I might not have a choice. Given the pace we’re on, I don’t see us making it much longer.”
David (not his real name) has been CFO of the company for ten years and controller for five years before that. He has dedicated the best years of professional life to helping Frank (not his real name) build this company to be a recognized leader in their industry. Though Frank’s company is almost forty years old, it hadn’t really grown until David took the operational reigns while Frank poured his energies into developing the customer base. That is, until about three years ago, when David began to see signs that Frank wasn’t functioning at full mental capacity. For a while, David and the other key staff just thought Frank was having difficulty bouncing back from the death of his wife of 47 years. But over time, it has become obvious that Frank has issues beyond that personal trauma.
“He needs to sell the company before he declines any further. His kids don’t want anything to do with it, heck, if they did, it’d be a disaster. We have to find a buyer who can bring back the focus we had when Frank was at full capacity.”
David and I spent a couple hours reviewing the company’s financial performance. I learned that annual revenue has declined every year since 2015, as has the number of customers and average order per customer. But, the company is still profitable, and as long as the company is feeding him the cash he needs, Frank doesn’t seem too worried about the future. But David and other members of the executive team do worry, and that’s why they called me. David was very honest about getting me involved, “We need you to get Frank to see that he needs to sell now.” I told David I understood and sympathized with the dilemma, but it’s not my style to strong-arm a business owner to do anything. My approach is only to respond when/how asked by a business owner. “Well, please talk to him anyway,” David said, “maybe something you say will lead him to ask you to sell the company.”
I recently met with Frank and David. Frank apologized as he came into the meeting 45 minutes late. He told us he had lost his cell phone at home, and had forgotten to use his home phone to call and tell the office he was running late. He looked like he hadn’t slept well and seemed kinda jumpy. When David’s secretary offered Frank some coffee, he said, “Thanks, coffee is what I need after being up all night looking at reports.” David looked at me and his expression said it all, there were no reports that David needed to be reading late into the night.
During the meeting, Frank told me he knew it was time to think about selling the company. But he added with a grin, “I’m not sure how I’d keep myself busy, you know, this job keeps me young.” I could sense David get more depressed by the minute. The longsuffering CFO might be about ready to throw in the towel. Sadly, I’m guessing his resume will soon be on the street.
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 principles above are true, but the story, names and fact patterns are changed to preserve the parties’ identities.
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