“If a buyer has just a bit of vision for this business, they could hit it out of the park.” Paul (not his real name) was asking for my help to sell the business. At the age of 75, you’d assumed he was ready to sell, but he wasn’t the decision-maker. His 92-year-old uncle still owned the business that had been in the family since 1972. Paul had finally convinced his uncle it was time to sell. You think?
Running a business for 50 years is commendable, but, the business was run down and had little more energy than its 92-year-old owner. Paul’s family had been able to keep it running due to its unique location and two generations of loyal customers. The fact it hadn’t been improved over the past 30 years didn’t seem to matter to anyone.
But now, Paul says the family is ready to sell it, and he thinks it’s deserving of a premium price. “We’re talking potential out the ying-yang,” Paul said with confidence. “Sure, it needs fixing up, but we’re talking potential, real potential if the buyer can just see it.”
I had to admit, the business did have a certain charm about it. It reminded me of a place I used to visit with my family when I was a kid. But my vision for its future had its limits. I couldn’t see how to bring it into the 21st century, much less make it relevant for the years ahead. As much as I tried to find a vision, all I could get was a blur.
Let me make a metaphor. We all know a dog owner who has had to put their pet to sleep because of an unrecoverable disease. It is such a sad moment when the owner, who so loves the animal, decides to put it down. But they do it because it’s the best course of action, they are out of options. Sometimes businesses can be that way, too. Whenever I hear an owner describe their business as “needing a vision” or “has potential”, I can usually assume the business is near an unrecoverable state.
Admittedly, the metaphor is not perfect. Unlike a pet, with the right amount of money, any business is theoretically fixable. But here’s the problem, Paul’s family wants a premium price for the business because of its “potential” despite not having a vision for what that would be. Expecting a buyer to come up with a perfect vision, then pay a premium is a long shot. I won’t say it could never happen, I’ll just say it’s a long, long shot.
Fortunately for Paul and his uncle, this business is situated on valuable real estate they can also sell. Whether the land buyer has a “vision” for the business is yet to be determined. But that’s ok; sometimes just closing the doors and selling the underlying real estate is your best option when you look for a vision and all you see is a blur.
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 names and fact patterns are slightly changed to preserve the parties’ identities.
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