This client has been running a high intensity business providing services to legal and other industries. The business was functioning well but the partners, each owning 50%, were seriously out of balance regarding both effort and responsibility. My contact, who is the company CEO and primary founder recognized that he was the driver of the business and was getting tired of carrying the entire burden. He thought it might be a good idea to determine the value of the business in the marketplace. We identified potential buyers and contacted them, initiated the necessary NDAs and followed up with a few meetings.
These meetings showed conclusively that the value of the company in the marketplace was significantly less than the value provided to the partners going forward. The next thought was to figure out how to buy the shares of the other partner who had been involved in the meetings with the potential buyers and knew the limited value of selling the entire company. A plan had to be laid out.
What did my client want from the business and was he prepared to continue shouldering all the responsibility and, if so, does he have a timetable and an exit strategy. He decided that he was willing to continue as CEO for a maximum of five years. We then developed a proposal for purchasing the other 50% over a five-year period. The total dollar amount of this proposal was significantly higher than that offered in the marketplace and my contact was willing to take either side. He would either buy the other 50% or sell his to the other partner.
The next step was to identify an employee or employees who could be approached as potentially buying into the company as an equal partner and thus providing my contact with an exit strategy.
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