Restructuring with the Sale of the Family Business

There is another element of transitioning that I haven’t been able to talk about until now, and that is the sale of our family business. We bought the business six years ago and closed on the sale of it in December 2009.

To give you some background on the business; Kris (my wife) went to work for the company when we first moved to California in 1990. As time passed, she took on more and more responsibility and eventually wound up running it for the last five years before we made the purchase. At the end of three years of owning the business, revenues had doubled. The dynamic of it was nearly out of control growth.

God has a fascinating way of working in our lives. I was quickly becoming disinterested in continuing in the corporate world. The whole gymnastic of managers jockeying for position within the organization and smiling to your face while implementing their secret agenda to manipulate you into their self-serving plans was becoming very tiring for me. I finally left the corporate world and pursued my own way in consulting. Meanwhile, back at the ranch, Kris’ business was bursting at the seams and her stress level was getting higher and higher. As we talked about it, it became evident that she was just experiencing growing pains from the growth of the business and not enough processes. This was place where all my time spent in the corporate world paid off. I knew management systems, how to crunch numbers 9 ways to Sunday (sorry, I think that may be a Texas saying!) and I knew how to manage people. I know that is a bit off story, but with all my talk about getting out of the corporate world, I had to also share some of the benefits of having been there. Finally, Kris asked me to leave my start-up consulting business to help her. I started working at the company just a few days a week . . . then four days . . . then 5 days. You see where this is going. Pretty soon, I was nearly as immersed in the all engulfing business as Kris was.

We both saw our lifestyle and social lives spiraling out of control. We had the income to travel, enjoy nice dinners with friends, enjoy expensive wine . . . but we didn’t have the time. When we did carve the time out of our insane schedules, much o it was spend with cell phones up to our ears, stepping away from whatever we were doing to solve one crises or another. We knew there was more to life than what we were doing through all of our faith-based learning and studies like “Seven Habits of Highly Effective People” by Stephen Covey and books like “Half time” by Bob Buford. We were enjoying making a great living, the adrenaline rush of doing the deals and just being entrepreneurs, but were we really doing what God put us here to do? We had always had a dream of running a bed and breakfast and so started investigating that more.

We found one in Shelby Texas which captivated our imaginations and creativity. We put in an over to buy the place and thankfully it was rejected. But the fruit of that offer was that it helped us to realize that we really wanted something more from our lives. So the start of our long and exciting and painful adventure of transitioning out of our roles as property mangers to freer spirits seeking God’s direction in our lives.

While I was doing my consulting work, I worked together with a lady, Susan who, when I met her I learned her husband was a realtor/property manager. Later, Susan and Larry eventually joined our small group bible study. One day Susan called me and asked if Kris and I could meet her and Larry for lunch. I didn’t think much about it and so we met. After some small talk, Larry expressed their interest to buy our property management business. He was not forceful, but rather just on a fact finding mission exploring if this was something we would consider. We told him we would have to pray and think on it and get back to them. We decided that God had put this opportunity to sell in our laps and so we owed it to him to explore it a bit further. We got busy consulting our CPA, or friends in business and our attorney just to figure out stuff like, how do you value a service business like ours, what are the tax implications if we sell it out right or carrying back a note, is the timing right . . . and on and on and on. We met again and Kris and I laid out the conditions under which we would consider selling . . . since we weren’t really sure we were ready to sell: We met with Larry and his accountant, Tim and went over the preliminaries. We explained that in order for us to realize our dream, they would have to cash us out and was also quoted them the price we thought we would be willing to accept for the business.

We executed confidentiality agreements and they sent me a request for documents . . . financial statements, client lists and tax returns to just name a few. After a few weeks I forwarded them a book with all of the documents they had asked for. We had another breakfast meeting with Susan and Larry and this time they brought Tim, their CPA. Tim went into an extensive and educational explanation of how service businesses are valued and how the price we were asking was way too much. We sparred a bit After some clarifications and a week or so, we received a letter of intent: the price was 70% of our asking price (sort of gave me perspective on the offer we had made on The Shelby B & B in Texas!). and they were willing to put down 20% of that and asked us to carry the note for 15 years (may as well have been 100!). I forget the other terms of their offer . . . in fact I am not sure that I ever got to them after reading the first two items!
The following weekend, I went on a men’s retreat and Kris stayed home . . . working. Some of the guys in my men’s bible study are pretty heavyweight entrepreneurs and businessmen and this weekend they zeroed in on me and really took me to task as to the reasons for wanting to sell the business and the way we were going about it. Normally, I would have been defensive and avoided them but I felt strongly that God was using these Godly men to get my attention and help keep me from making a terrible mistake.

After the weekend was over, I drove home (about 2 hours) by myself and prayed about what I had heard over the weekend. The idea of selling right now just became out of the question . . . it simply did not seem right . . . the timing, the deal . . . none of it!
When I got home, Kris met me at the door said she needed to talk. We sat down in the living room and she said the she hadn’t worked much over the weekend but spent a lot of the time in prayer and thinking about the sale of the business. She continued saying that it just didn’t seem right, the timing wasn’t right and in order for us to do what we needed to do we needed to be cashed out. My jaw dropped at the amazing way God was working in this. Here we had not spoken all weekend but God was speaking to each of us . . . giving us the same message!
I called Larry and thanked him for their offer and told him that the timing right now was just not going to work. Larry expressed his disappointment but was also gracious in accepting our declination to sell.

We continued in small group with Susan and Larry for another year and a half during which Larry stayed in touch with us about where we were with selling the business and so on. Finally, instead of e-mailing me, Larry called and asked if Kris and I would meet him and Susan for coffee . . .