Author name: Hamel

Hamel
Negotiations, Owner Conversations

Owner Conversations: You Won’t Pay for Customers?!

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Tom (Seller): Alright, Steve. I think we’re close, but I want to make sure we’re on the same page with a few points before we move forward. First off, we’re talking about an inventory transfer of about $1.2 million. However, there are some items that we’ve been phasing out and may be outdated. I’m sure we can agree that the remaining inventory has some solid value—around $900K—but we’ll need to figure out a fair way to address the less valuable stock. Steve (Buyer): Right. And, look, Tom, I’m aware of the inventory, but I think we both know that a good portion of that stock is essentially dead weight. Outdated product, expired materials—things I’m not going to resell. I’m not going to pay full value for that. I’m happy to accept a reasonable write-down on the total. Maybe, we cut the valuation of the inventory down to half—call it $500K? I’m sure you can understand that I need to protect myself here. Tom (Seller): I can see your point, Steve, but we’ve been working hard to move through those outdated items. I’d say a fair reduction would be closer to 30%, and that’ll reflect the items we’ve been clearing out over the last few months. But if you want to go lower, we can work something out on the back end, maybe in future performance terms or an earnout structure. Steve (Buyer): Hmm. I’m not opposed to some flexibility, but let’s not get too far from reality here. Now, about the customers—I’ve looked over your client list. We already have over 90% of those accounts. We’re effectively competing for the same customers, and there’s no way I’ll pay anything for those accounts. No goodwill. No transfer of value. Your customers are already my customers. Tom (Seller): But, Steve, my company has a well-established brand, and I’ve spent years building those relationships. Surely that has some value? Even if you already serve many of them, the transition is going to require some level of goodwill. I’d expect something for that. Steve (Buyer): Tom, I understand where you’re coming from. But honestly, my team has been handling those customers for years as well. There’s little incremental value in those relationships for me to justify a purchase price. And frankly, many of your clients might just stick with me because we have more competitive terms. There’s no tangible transfer of goodwill here. So, I’m not paying for customers. I’ll only pay for the assets, the inventory that I can actually use, and the employees that add value. Tom (Seller): Alright, I can live with that on the customer side, but let’s talk about the employees. I’m hoping that the key personnel will stay on board. I’d expect that there’s some value in them—especially the senior team. You’ll get stability for the transition. What do you think? Steve (Buyer): Employees are definitely important, but let’s be honest: not all of them are valuable. We’ll keep the core team, for sure—your sales manager, your operations guy, the lead technician. But I’ve heard there’s some tension, especially with your key manager, Kyle. You know as well as I do that he’s not exactly a fan of mine, or of my company. I’ve dealt with him before in direct competition and it’s been rocky. That’s a concern for me. Tom (Seller): Ah, Kyle. Yeah, I can see how that might be a sticking point. He’s been a top performer for years, but he’s definitely got a chip on his shoulder when it comes to you. I’ll have to have a serious conversation with him about the future, and if we’re going to close this deal, we may need to work out some kind of incentive to keep him on board. I’ll talk to him, but I can’t guarantee he’ll play ball with you right off the bat. Steve (Buyer): Look, I’m not trying to make this personal. But we’ve been competing for these customers, and now you want me to pay for an environment where the key manager doesn’t even like me? That’s a red flag. If Kyle doesn’t want to work for me, that’s a real problem. His team follows him, and if he’s not on board, then his department could fall apart quickly. Tom (Seller): Fair point. I’ll make sure to have a conversation with him. If I can’t convince him to stay, maybe we’ll have to adjust his compensation package or negotiate his exit, but I can’t have him being a thorn in your side, either. I’ll take care of that. But the rest of the team is solid. If we’re going to move forward, I think the employees—most of them—will be happy to join your company. Stability is a big part of what they want. Steve (Buyer): Alright, Tom, I appreciate your effort on the manager situation. Let’s circle back to the inventory then. If we agree on a reduction, say down to about $500K, and we’re on the same page with the customers—essentially, no goodwill there—I think we can move on to finalizing the structure of the deal. But I’m still not seeing the full value on the table. I’d need the inventory terms adjusted, some level of flexibility on performance post-sale, and a clean handover of the employees that matter. Tom (Seller): I think we can work with that. I’m not going to leave any stone unturned here. I’ll have those conversations with Kyle and the team. And I’ll also get with my accountants to adjust the inventory numbers and work out that reduction. But we’re close, Steve. Steve (Buyer): I agree, Tom. Let’s get this done right, and we’ll both be happy in the end. Tom (Seller): Sounds fair. Austec Pre-Diligence Risk Exposure System

Calls, Uncategorized

Buyer Attorney Calls – Hold Please… I’m Losing a Customer

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[Phone rings — click] Owner: Hey, this is Mark. Attorney: Hi Mark, this is Susan, counsel for the buyer. I’m following up on the HR benefit documentation—we still need the last three years. Owner: (exhales) Yeah… I’ve been pulling that together. I sent over 2025 already, and part of 2024— Employee (muffled, in background): Mark—sorry—there’s a customer out front asking for you, they’re upset about the order delay. Owner: (covers phone) Give me two minutes, I’ll be right there.(back to call) Sorry. It’s been like this all day. Attorney: I understand you’re busy, but we do need complete files—plans, amendments, enrollment summaries, everything—for 2023 through 2025. Owner: Right, and I’m trying, but every time I send something, I get another list of questions about why we changed providers or adjusted contributions. That’s hours I’m not on the floor. Employee (louder): Mark, he says he’s leaving if he doesn’t talk to you now. Owner: (frustrated) I said two minutes!(back to call, voice tight) Look, this process has been going on for two months. I’m running a business while digging through archives every night. Attorney: I hear you. But the buyer needs clarity—especially given some inconsistencies we’ve noted. Owner: (dry laugh) And now I’m hearing “price adjustment” because of it? Attorney: It’s just part of due diligence. Nothing final. Owner: It doesn’t feel like “nothing” from my side. I’ve already got customers noticing I’m distracted. I might lose one today because I’m on this call. Attorney: Understood. If you can prioritize the remaining documents, we can minimize further back-and-forth. Owner: I’ll send what I have tonight. But I need this to stop being a moving target. Employee (urgent): Mark—he’s walking out. Owner: (firm, exhausted) I have to go. I’ll follow up later tonight. Attorney: Okay. I’ll look for your email. [Call ends — silence for a beat] Owner (Mark, to himself):(quietly) When does this actually end… (pauses, looking toward the floor where the customer just walked out) Two months of this. Every document turns into five more questions. Every answer turns into a new problem. (shakes head) At some point, it’s not even about running the business anymore—it’s just feeding the deal. (sighs, tired) And now they’re talking about lowering the price… after all this. (under his breath) What if this thing doesn’t even close? Fade Out Austec Pre-Diligence Risk Exposure System

Stories, Uncategorized

When the Deal Is Not the Deal: Distribution Story

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A business owner in Chicago decided it was time to sell his manufacturing company. After 30 years of hard work, he wanted a “fair deal” and a smooth exit. One day, a polished buyer approached him—well-spoken, respectful, and clearly experienced. The buyer praised the company, called it “a legacy operation,” and said he wanted to “protect what you’ve built.” The owner was impressed. The buyer offered $8 million. Not the highest number the owner had heard, but close—and with something even more appealing: simplicity. “No messy earn-outs,” the buyer said.“No risk to you. Clean deal. Quick close.” The owner felt reassured. Other offers had higher numbers—$9M, even $10M—but they were full of contingencies, performance clauses, and long transition periods. They negotiated a little, settled just under $8 million, and signed. At closing, everyone congratulated the owner. His lawyer called it “a solid deal.” His accountant said the taxes were manageable. The buyer thanked him for his trust and promised to “take care of the company.” A few months later, the owner heard things had changed. Production had slowed. Then stopped. Most of the employees—people he had worked with for decades—were let go. Confused, he reached out to someone still connected to the business. “They didn’t really want the operation,” he was told. “They kept a skeleton crew for a bit, but that wasn’t the point.” “The point?” the owner asked. “The distribution.” It turned out the buyer already owned a competing product line—one that struggled to get shelf space and reliable market access. What they saw in his company wasn’t the machinery, or the team, or even the brand. It was the network. Decades of relationships. Contracts. Shelf placements. Logistics pipelines. Trusted channels that took years to build. Within months, the buyer had replaced his products with their own—moving through the very same distribution system he had spent a lifetime creating. The company, as he knew it, was gone. But the channels? More valuable than ever. That’s when it clicked. The buyer hadn’t been buying a business. He’d been buying access. And the $8 million? That was the price of a shortcut—one that would have taken years, and far more money, to build from scratch.

Strategy/Business Model

When the Deal Is Not the Deal

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A business man walked into a bank in New York City and asked for the loan officer. He told the loan officer that he was going to London on business for two weeks and needed to borrow $5,000 and that he was not a depositor of the bank. The bank officer told him that the bank would need some form of security for the loan, so the business man handed over the keys to a new Ferrari. The car was parked on the street in front of the bank. The man produced the title and everything checked out. The loan officer agreed to hold the car as collateral for the loan and apologized for having to charge 12% interest. Later, the bank’s president and its officers all enjoyed a good laugh at the business man for using a $250,000 Ferrari as collateral for a $5,000 loan. An employee of the bank then drove the Ferrari into the bank’s underground garage and parked it. Two weeks later, the business man returned, repaid the $5,000 and the interest of $23.07. The loan officer said, ‘Sir, we are very happy to have had your business, and this transaction has worked out very nicely, but we are a little puzzled. While you were away, we checked you out and found that you are a multimillionaire. What puzzles us is, why would you bother to borrow $5,000?’ The business man replied, ‘Where else in New York City can I park my car for two weeks for only $23.07 and expect it to be there when I return?’ Don’t ever underestimate a business deal! Take our time with our Austec Pre-Diligence Risk Exposure System

Owner Conversations, Wealth, Estate Planning and Taxes

Owner Conversations: “When Your Exit Becomes Their Burden”

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Characters: Martin (Business Owner) Elaine (Estate Attorney) Scene: Late afternoon in a quiet, glass-walled conference room overlooking the company’s headquarters. The last of the staff have gone home.  Martin sits at the head of the table, a thick deal folder open in front of him. Elaine stands nearby, reviewing documents, the weight of the decision settling into the silence between them. ______________________________________________________________________ Martin: I’ve been thinking seriously about selling the company. The offer on the table is solid—but part of the deal includes a seller note. That’s what’s giving me pause. Elaine: It should. Seller notes can be useful, but they introduce risk—especially from an estate perspective. What concerns you most? Martin: If I carry the note and something happens to me—or to both my wife and me—after closing, what does that mean for my kids? They’d be relying on payments from the buyer instead of a clean lump sum. Elaine: Exactly. At that point, your estate essentially becomes a lender. Your beneficiaries inherit the note, not cash. That exposes them to default risk, delayed payments, and even potential disputes with the buyer. Martin: So instead of a clean transfer of wealth, I’m leaving them a stream of uncertainty. Elaine: That’s one way to put it. And depending on how the note is structured, they may not have the expertise—or the leverage—to manage or enforce it effectively. Martin: What if the buyer runs into trouble? My kids aren’t exactly equipped to renegotiate terms or pursue legal remedies. Elaine: That’s another key risk. You’d want to consider safeguards—like personal guarantees, collateral, or even insurance to cover the note balance in the event of your death. Martin: Insurance tied to the note? Elaine: Yes. A life insurance policy could provide liquidity to your estate, essentially replacing the value of the outstanding note if something happens to you. It’s not a perfect solution, but it mitigates the timing and credit risk. Martin: I assume structuring the trust properly matters too. Elaine: Very much. You may want the note held in a trust with a professional trustee—someone capable of managing the asset and making decisions in the beneficiaries’ best interest. Martin: So the real issue isn’t just whether I take the seller note—it’s how exposed my family is if I do. Elaine: Precisely. The note shifts risk from the buyer back to you—and potentially to your heirs. The question is how much of that risk you’re willing to carry, and how well we can insulate your family from it. Martin: Then before I sign anything, I want a plan that protects them—even if the worst-case scenario plays out. Elaine: That’s exactly the right approach. Let’s build the structure first, then evaluate the deal within that framework.

Due Diligence, Owner Conversations

Owner Conversations: “What Stays Behind”

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Characters: Frank – Seller, late 60s, seasoned owner of a large plumbing company Evan – Buyer, early 40s, sharp, observant, cautious Scene: Late afternoon in a large yard behind the company shop. Rows of service vans and trucks are parked. Frank and Evan walk side by side. ______________________________________________________________________ Frank (gesturing proudly): This is the backbone right here. Twenty-three vehicles total—fully outfitted. Most of them rotated in the last five years. Evan (nodding, taking notes on his phone): They look well maintained. Service logs all included? Frank: Every oil change, every repair. We stayed on top of it. (They continue walking. Evan slows as they approach a newer, clean truck parked slightly apart.) Evan: That one’s in great shape. (checks his list) I don’t see it on the inventory sheet. Frank (glances at it briefly): Yeah—that one’s not part of the sale. I’m keeping that for myself. Evan (looks up): Keeping it? Frank: Just for personal use. You know… errands, getting around. Evan (studies the truck more closely): Was it used in the business? Frank (casual tone): Oh sure, but nothing major. Just my run-around truck. I’d take it to job sites, bring supplies if something was missing, check in on crews… that kind of thing. Evan: So… more of an oversight vehicle? Frank: Exactly. (Evan walks around the truck, peering into the bed. It’s stocked with tools, fittings, and equipment.) Evan: There’s quite a bit in here. Frank (shrugs): Yeah, I kept it stocked. Made things easier instead of pulling from the vans. Evan: Are those tools included in the sale? Frank (shakes head): No, I’m keeping those too. Goes with the truck. (A pause. Evan straightens up slowly.) Evan: So the vehicle you used to move between job sites… (gestures to the truck) …handle gaps, bring supplies, check crews— that’s not transferring with the company? Frank (slightly firmer): No. You’ve got everything you need with the rest of the fleet. Evan (measured tone): Maybe. (beat) But that sounds like more than just a “personal” truck. Frank (a hint of defensiveness): Look, every owner has their own way of operating. You’ll have yours. Evan: Sure. (pauses, then carefully) But it sounds like this truck played a pretty central role in how you ran things day to day. (Frank doesn’t respond immediately.) Evan (continuing): Filling gaps. Solving problems on the fly. Being present on-site. Frank (shortly): That’s just experience. You can’t put that in a purchase agreement. Evan (nods slowly, but his expression shifts): No… but sometimes you can see where it lives. (He glances again at the truck.) Evan: Help me understand something— if you’re stepping away… why keep the one piece that kept you so connected to everything? (Frank crosses his arms, looking at the truck instead of Evan.) Frank: I’m not planning to just sit in a chair all day. Evan: So you’ll still be… around? Frank (quickly): Not in the business. Just… around. (Silence hangs between them.) Evan (quietly, more to himself than to Frank): That’s the part I need to be clear on. (Frank finally looks at him.) Frank: You’re buying the company. Not me. Evan (meets his gaze): Right. (beat) I just need to be sure the company can stand without you driving that truck into every problem. (Another long pause. The confidence from earlier has thinned.) Evan (exhales slightly): Because if that truck represents how things actually get done… (shakes his head faintly) then I need to rethink what exactly I’m buying. (Frank says nothing. The hum of distant traffic fills the silence.) Fade out.

Due Diligence, Owner Conversations

Owner Conversations: Integrity Threatened During Due Diligence

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Sam – Owner of a small manufacturing company Jordan – Potential buyer doing due diligence Jordan: Thanks for sending over the financials, Sam. The margins look strong, especially the last two years. Sam: I’m glad you think so. We’ve worked hard to keep the operation lean. Jordan: I did have a couple follow-ups from my accountant. Mostly routine stuff. Sam: Sure. Fire away. Jordan: Could you provide direct access to the bank statements for the last three years? We’d like to confirm that the revenue in the reports matches deposits. Sam: Pauses. You already have the statements and the tax filings. Jordan: Right, and they look good. This is just part of our verification process. Sam: Verification? My CPA has prepared those for fifteen years. They’re accurate. Jordan: I’m not suggesting otherwise. It’s just our standard diligence checklist. Sam: It feels a bit like you think I’m cooking the books. Jordan: Not at all. When we buy a company, we verify everything independently. We do the same with everyone. Sam: Leans back. I’ve been running this business for twenty-two years. My reputation means something. Jordan: I respect that, and that’s actually why we’re still here. But my investors expect us to confirm the numbers ourselves. Sam: Sighs. I get the process… but this has been so irritatingly long. Jordan: I hear you. Let’s see if we can get this last verification done quickly so we can move toward closing.

Owner Conversations, People Considerations

Owner Conversations: Awkward Conversation with Key Employee About Sale of Company

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Characters: Owner –late 60s, founder and owner of a successful company Key Employee – late 40s, long-time employee, 20 years working together, still in his prime working years Scene: Owner’s office. Afternoon sunlight filters in. The mood is quiet, a little tense, but not confrontational. ______________________________________________________________________ Key Employee (KE): I… got a call today from Practwer. They said you might be thinking about selling the company. I have to admit… it caught me off guard. Owner (O): …They called you? KE: Yeah. And, honestly, I feel a bit hurt that this is the first I’m hearing about it—from anyone but you. After all these years, I thought we’d talk about something this big. O: (sighs) I see. You’re right. I… I didn’t think it was my place yet, and I thought it was still too uncertain to bring up. But I can see now that not telling you made it feel like I didn’t trust you. That wasn’t my intention. KE: I know you didn’t mean it that way. It’s just… I’ve been here through a lot of ups and downs with you. This company isn’t just a job—it’s part of my life. And now, hearing this from a competitor, it makes me wonder… what’s my role if someone else takes over? O: (looks down, thoughtful) I get it. Honestly, I hadn’t thought about how it would feel from your side. I should have at least mentioned that this idea was floating around. I’m sorry for leaving you out. KE: Thanks. It’s not about blaming you. I just… need to understand what comes next. My place here has always felt secure because we’ve built this together. But with a sale, it’s… uncertain. O: (leans forward) You’ve been the heart of this company. Any potential buyer would need you, absolutely. I don’t want you to even consider leaving. Your staying is crucial—not just for the company, but for me personally. I messed up by not involving you sooner. KE: (quietly) I appreciate that. I just need time to process all of this. It’s hard not knowing what the future holds. O: I get that. And you’ll have full clarity soon. I promise we’ll figure this together. I want you here, with me, no matter what comes next. KE: (nods slowly) Ok, thank you. O: And just so you know… you’re not going anywhere. The company doesn’t move forward without you. KE: (half-smile) That’s reassuring. Let’s just take it one step at a time.

Owner Conversations

Owner Conversations: The Question of What Comes Next

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Characters: David – Husband, late 60s, founder and owner of a successful company Linda – Wife, mid 60s, thoughtful, pragmatic, emotionally perceptive Scene: Evening in their living room. A soft lamp glows. Papers and a tablet sit on the coffee table. ______________________________________________________________________ David (staring at a document, sighs): I used to think I’d know exactly when it was time. Linda (looking up from her book): Time for what? David: To step away. To retire. Hand things over neatly, tie it all up with a bow. Linda (closes book, watches him): But now? David (shakes head): Now it feels… messy. Complicated. Like no matter what I do, something falls apart. Linda: Is this about the boys? David (lets out a quiet laugh): Who else? (pause) I always imagined they’d grow into it. That one day I’d look at them and just know—they’re ready. Linda: And you don’t feel that. David (firmly): No. I don’t. (leans forward) They’re good men, Linda. I’m proud of them. But running this company? It’s not just showing up. It’s… pressure. Decisions that can ruin people’s livelihoods. It’s instinct. Sacrifice. Linda: You think they don’t have that? David: I think they don’t understand it. Not really. (softly) And I don’t think they want it the way I did. Linda (quietly): I’ve wondered the same thing. (David looks at her, surprised.) David: You have? Linda: I see how they talk about it. It’s… casual. Like it’s just the next step, not a responsibility. David (nods slowly): Exactly. And this isn’t something you inherit like furniture. Linda: So what are you thinking? David (hesitates): Selling. (Silence.) Linda: You’ve never said that out loud before. David: Because it feels like failure. Like I built all this… just to hand it to strangers. Linda: Or like you built something valuable enough that someone else wants it. (He considers that.) David: If we sold, we’d be secure. More than secure. No guessing if the boys can keep it afloat. No watching things slowly unravel. Linda (carefully): But we’d be closing a chapter. For all of us. David: I know. Linda (leans forward): What about our retirement without selling? David: That’s the problem. (gestures to the papers) Most of what we have is tied up in the business. If they take over and it doesn’t go well… we’re exposed. Linda: So either we trust them and risk our future… or we sell and risk… hurting them. David (quietly): Yes. (A long pause.) Linda: Do you think they’d resent you? David: I don’t know. Probably. At least at first. They might feel like I never believed in them. Linda: And do you? (David struggles to answer.) David: I believe in them as people. (beat) I’m just not sure I believe in them as successors. Linda (nods slowly): That’s an important difference. David: I don’t want to spend my retirement worrying every day… watching numbers, stepping in to fix things, pretending I’m “retired.” Linda: And I don’t want us cutting back or stressing about money because we hoped things would work out. (She reaches for his hand.) Linda: We have to think about us too. David (squeezes her hand): That’s the part I’m worst at. Linda (soft smile): I know. (Pause.) Linda: Maybe the question isn’t “Do they take over or do we sell?” Maybe it’s… “What gives us peace?” David: Peace. Linda: Not pride. Not obligation. Not what we thought the story would be. (David leans back, absorbing that.) David: If I’m honest… (exhales) Peace looks like knowing we’re secure. That we can enjoy whatever time we have without carrying this weight. Linda: Then maybe we already have our answer. David (after a long pause): We just have to figure out how to tell them. Linda (gently): Together. (They sit in silence, hands clasped, both relieved and uncertain.) Fade out. Austec Pre-Diligence Risk Exposure System #BusinessSale #MergersAndAcquisitions #BusinessOwnership #Entrepreneurship #BusinessGrowth

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