The company founder is leaving and wants to sell me the company.

Discussion in 'Growing and Managing a Business' started by KC_Mojo, Dec 16, 2018.

  1. KC_Mojo

    KC_Mojo
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    Hey, everyone. I'm new here, but I find myself at a crossroads, and I need your help.

    Four years ago I joined a very young web design and branding agency that I'll call Nine Design. At that time there was only the founder (who I'll call Dean) and a very talented, disciplined developer (who I'll call Jasper). Both I and Jasper came on as contractors (nobody in the company would ever become an official employee. We all are independent contractors filing 1099s). My position is lead designer.

    The agency grew quickly. We went from $10k projects, to now having multiple $100k+ projects on the books. We've built a great culture, a solid reputation for high quality, and a respectful portfolio. We've organically came upon a few niches in the industry. We also have a burgeoning Support & Maintenance service that brings in about $4k/month in ongoing revenue. We now have 8 people "employed" for the company, most of us coming to a great office space everyday to work together--a green wall, our own coffee bar--and everyone considers employment at Nine Design their sole income. A couple years ago we brought on Sam, a very bright mBA who kind of does it all, working long hours, managing financial strategy, hourly reports, project management, client strategy, writing proposals, and attending networking events.

    Our sales funnel is shaky. Over the years I've been asked to delay a paycheck to help cover expenses. We've drawn from a $50k line of credit a few times (that I know of). We don't do any marketing, all our new clients come most from client referrals, and/or contacts Dean the founder has made speaking at conferences, etc. I've delayed my check a week or two just so others on staff can get paid. With that said, we probably will turn about $800k in clients this year.

    Dean is a restless entrepreneur. He now has another venture he is pursuing, a startup company servicing an app he has invented. He’s been putting all his time into it for the last 9 months, slowly separating himself from Nine Design, and has managed to get a few angel investors support.

    Dean and Sam met with me over coffee a couple days ago. He said he's only one significant investment away, before he does the following:

    Dean will leave Nine Design to head the new startup. He plans to take with him Jasper the lead developer, Sam the mBA, and the developer in charge of Support & Maintenance. I have made it clear that I'm not a big fan of this app idea and going with them doesn't seem an option. He wanted to know if I wanted Nine Design. He said his other option would be to dissolve it, or find some other interested buyer. I’m not sure the legal arrangements of how any of those options would proceed, but he assured me that he’d work it out financially whatever it took, as he believes the company would be in good hands with me as I know the culture and brand and have been there since the beginning.

    There’s tons to consider. Positives and negatives. Definite concerns.

    I'm concerned that I won't be able to replace all the talent/work assets that are walking out the door. Was the company's real worth in these people? We'd be losing the face of the company and major sales driver, the top developer, and the top manager. If I were to proceed with half the team (two junior developers, a junior designer, a new person to head Support & Maintenance, and myself), I'd likely be forced to accept fewer clients with a leaner team, although that might not necessarily be a bad thing.

    I'm very concerned with how much will fall on me. I understand that a business takes a ton of energy, as I saw Dean struggle all these years. I've been a part of writing proposals and have participated in pitch meetings, yet I have no real experience in sales and am not the most comfortable networker. However, I'm willing to learn. Dean promised his wisdom would be there for me to tap into, as well as Sam's. Most of all, I enjoy the thought of leading a small group of people, bearing the culture torch, and building the brand further.

    My greatest concern should probably be if we can keep new clients coming in.

    Some positives: I'd have all the processes in place. I'd hopefully have a lean team that I'm already familiar with (considering those remaining "'employees" stay). I'd have solid client relationships to hopefully build from.

    So what do I do? If I continue this conversation with Dean, what type of business agreement should I strive for that would be safest, best for me? Does this company have enough value to make it worth it? Should I consider starting my own business, offering the same services, perhaps asking the staff to come with me?

    Either way, my life's about to change. I am trying to remove emotion, which is difficult, as all these people have become good friends and I hate to say goodbye...

    Thanks so much for your feedback.
     
  2. fisicx

    fisicx
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    If it were me I go find another job.

    Your talent is designing not marketing and sales. If you were running the business 50% of your time would be finding clients and the other 50% would be running the business - something you say you have no experience of.

    And you are losing a major part of the talent and is also seems the inspiration and drive of the current owners.

    Pay for a professional valuation of the business. It's worth spending the money not to make sure you aren't stung and left with a lemon.

    But I'd still walk away. You would be taking on a huge burden and almost certainly not enjoy all the stress this particular business will bring you.
     
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  3. Victimo56

    Victimo56
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    you have a lot to think about, since design is one thing and marketing is a little more technical, my advice is to think carefully before making any decision. Analyze the pros and cons and put on a scale what you think is right.
     
  4. ontoptexas

    ontoptexas
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    Find a partner who compliments your weaknesses. Half the buyout... business owners work harder when their own money is at stake.
     
  5. VITS USA

    VITS USA
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    What is your goal? And what you want to do? It depends on this things.

    If you wants to do job in your field then you can join another company. Otherwise nature is giving you the chance to do something unique work which is not done by your boss in your company.

    The quality of successful person is - decision making. Now it is your decision what you will choose?
     

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