Client’s Challenging Situation:
A local manufacturing company, nearing the end of its “start-up stage”, engaged us to assist them to prepare their business to either be acquired or receive 3rd-party funding. The company had two partners, a generation apart in age, with the younger partner holding a majority share. The younger partner was the founder of the business.
Scope of the Problem:
The company had an excellent product that was innovative in its market/industry sector. The product functioned as planned and an initial set of clients were using it. The owners of the company wanted to decide between:
- obtaining enough funding to grow and compete with much larger competitors in their market/industry sector or
- selling their business to a large competitor.
Our client had been approached by more than one large competitor and they believed the competitors were serious about acquiring their company. Our client wanted us to help them make the decision: To Sell or Not To Sell?
Our services were a combination of consulting and coaching. We understood the intergenerational implications. The older partner could exit easily. The younger partner, the founder of the company, faced a more challenging decision. We saw two partners who truly respected one another and each wanted the other to be happy with the decision between…To Sell or Not To Sell?
Discussions strayed as is often the case when facing a decision that is new and has significant implications. It is easy to miss the forest for the trees. As we observed the two partners discussing and debating between the two options, we heard a couple of comments that triggered us to believe they both favoured selling the business.
Our next steps:
- we took two 3”x5” [7.5cm x 12.5cm] cue cards from our pile and slid them across our boardroom table…one card for each of the partners,
- we asked each partner to secretly write the amount he would be willing to accept for the company shares if they chose to sell the company, and
- we asked each partner to slide his cue card face down to our side of the table.
When we turned the cue cards over, we learned that one partner had written a fixed price and the other partner had written a price range. The one partner’s fixed price was in the other partner’s price range. We showed the two partners the numbers and recommended we focus on exploring the possibility of selling at the fixed price that was acceptable to both of them. The partners accepted that recommendation. We completed the consulting and coaching services required to help them complete the sale to a competitor.
The Value Delivered:
When people are heavily invested with sunk costs in time, effort, and money, they can be so close to problems that they struggle to make decisions. When visions & dreams and careers are involved, it can be difficult to make decisions. When we have never experienced a problem or a major decision, we have no history to guide our decisions. These things describe the situation covered in this success story.
The partners were happy with the selling price. That was a piece of the value we delivered. The experience of working through this major “To Sell or Not To Sell?” decision will serve the young entrepreneur well…throughout his career. That is a major piece of value delivered.