Horror Stories (Absolutely True)

Very large California firm is approached by big city outfit and agrees to enter into a contract to sell. Buyer leaks “sale is pending” before close of escrow. Seller’s key man learns of pending sale and sets up new company and informs client base of new business and location. Within 45 days 30% of client base switches to new firm. Critical employees join new firm and more clients announce their intention to move. Buyer informs seller that original offer is off the table and replaces it with inferior one. Too late. Subdivision of company breaks off when second key man sets up operations, gets bank loan for equipment and eventually takes most major contracts, employees and middle management. Final stroke is when seller releases remaining contracts and keeps third sub-division to maintain income. 70% of total equity is lost. Seller considering law suit.

Do, oh please do, due diligence!

Large and highly visible management firm in Southern California sees red ink everywhere and decides to sell. Buyer sees super contracts and large client base. Overhead is much too large but buyer agrees to continue process. Seller agrees to stay on. Prior to close of escrow buyer learns that company is far in arrears in employees tax deposits and fees have been taken one month in advance to pay bills. Little known to buyer and seller is that accounting (bookkeeping) department hasn’t a clue as to proper balances of more than 10,000 homeowners. Buyer is prepared to pull out but seller convinces buyer to stay and accepts price cut of 30% if buyer will pay bills, settle taxes and go forward. Sale closes and seller ends up with job, 10% net of the sale and a very tenuous relationship with buyer. Final act is when clients learn that books are unreliable and begin to terminate contracts. Seller and buyer both lose big-time.

“Take it off my hands, I’ve had it!”

Small management firm serves local community for years. But consolidation and competition leave company behind. Instead of realigning company for a growing niche market, owner approaches a big company owner and decides to sell. When sale is complete owner admits it was a huge mistake because buyer was unable to assimilate new business into existing one. Clients left new ownership leaving seller with reduced value in carry back financing. Both buyer and seller unhappy with outcome.

Hey, I hear your company is on the market!?

Through the industry pipeline, WCG learns former marketing client is up for grabs. A little concerned that we were not consulted (client was under contracts years ago) WCG contacts owner and says, “Hey, I hear [company name] is on the market!?”
Owner pauses and then says, “It’s news to me.”

WCG tells owner that if we have heard about it, then so have others. WCG advises owner to take immediate action and notify any involved party (that would a solicitation agent of the buyer) that there is no chance the company will be sold and any prospect of such a transaction is out of the question. Owner says they will do whatever should be done to squelch such a rumor.
Within hours WCG learns through the very same pipeline that agent is very upset at a prospective deal isn’t going to happen. Owner meets WCG at industry event and says, “Thanks.”