Would you give away your entire retirement pot on a promise?

 

This is exactly what someone did and now regrets ever trying to sell his business himself. It’s left a man who is approaching 60 with no money for his retirement and no job. 40+ years of a working career gone in a moment of madness. So what happened?

I met this chap at an event I was speaking at. He came up to me afterwards and said that he had sold his business 18 months previously and had followed many of the principles I was outlining. I asked him, “So did you get the price you were looking for?”

“Yes,” he replied, “but I haven’t received any of it yet.” I was mystified as to how he could sell his business and not receive any money. He went on to explain that he had agreed an acceptable price with the buyer and he had been told that it was normal practice to split the sale price into 5 equal annual payments that would be paid out if the business exceeded specific profit targets in the future.

The 1st instalment would be due in 12 months’ time. So he signed over his company to the buyer and waited, and waited and waited. There was no upfront payment on completion of the deal and in fact nothing had ever been received, reportedly because after the sale the business had a drop in financial performance and failed to hit the prescribed profit targets.

He had given away the business he had been growing for over 15 years and which was his sole source of income in retirement.

There was no role for him post sale, so he has effectively made himself redundant from his own business. To compound matters he said he was suing the person he had sold the business to, which had so far cost him £60k in Lawyer’s fees. I queried why the Lawyer who was transacting the sale at the time hadn’t queried the deal structure and highlighted the pitfalls for him. He said, “I’m going to sue him too!”

It’s an immensely sad tale and it is surprisingly easy to be swayed by high offers for your business, but the devil is in the detail of the deal and, had he taken advice from those experienced in selling businesses, this situation could have been avoided.  His attempt to save money cost him more dearly than he could have imagined. 

 

 

 

 

Comments are closed.

© 2019 Evolution Complete Business Sales Ltd.

  Keep me updated
KEEP UPDATED

Dear visitor. Please subscribe if you'd like to receive updates and events on selling or buying a business

* we hate spam and never share your details.
×