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Last Update: Friday December 15, 2017

Key Idea: Provide Buyers Continuity

Gary  Cantor is glad that he sold.  Bob Orenstein was, too.  Bob stayed with the buyer for three years after the sale was complete.  He recommends no logner than 18 months.

Key Question:

A: 

Don't be surprised if the buyer wants an employment contract as part of "the deal."  You recognized long before you thought about selling your business that your most important asset was the team you had put together. Every successful business owes its success to some extent or another to the people of the organization. And you are the most critical employee of all.
 
Q: When should you tell your employees that you are selling the company?

A:
Not until the deal is done. There may be some exceptions -- some very key employees that you feel you must keep "in the loop." But this should be kept to an absolute minimum.

Q: What will be the effect on your rank-and-file if you tell them you are selling the company and then the deal falls through?

A:
They'll probably wonder what you did wrong or what they don't know. Better to keep quiet until you have a signed letter of intent. Then, like Tracy, explain to them that for you, for the company, and for them, this is a good thing.

Think about it

What employees are so critical to the operation that they should be offered a bonus to stay with the new ownership?

Clip from: Sell To A Public Company

La Jolla and Dallas: Every day the press reports, especially The Wall Street Journal and Forbes, about how big business acquires small businesses in order to grow.

If you are running a good business and have market share in your industry segment, you should consider preparing for that call or knock on the door, "Can I buy your business?"   In most every episode of this show we explore how and why the founder of a business gets started and how they get over the hurdles. This week we look at how they received a very large check for the fruits of their labor.

Today, we spend time with Tracy Myers and Gary Cantor, the founders of Advertising Arts College, and Bob Orenstein, founder of International Wine Accessories (IWA). Both have completed all eight steps within the business cycle, and they define what it means to "Exit At the Top." You met Bob a couple of years ago when we did his story about starting IWA from the extra bedroom of his townhouse.

Both stories are important.

Gary and Tracy's story is for all of us who are not even thinking about selling, then there comes a knock on the door.  Bob's story is for the rest of us who know that we have created a substantial asset. Bob, however, knew that his "time" was coming. Bob was strategic and spent several years getting ready for the day, and then it took over four years to consummate a deal.

To say the least, every one of us should have an exit strategy.

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International Wine Accessories, Inc. (IWA)

Robert Orenstein, founder

10246 Miller Road
Dallas, TX 75238
2143496097

Visit our web site: http://www.iwawine.com/

Office: 2143496097

Business Classification:
Home products

Year Founded: 1988

Provide Buyers Continuity

HATTIE: You grew.

TRACY: We grew every year.

HATTIE: So, Tracy, why did you move to this second location?

TRACY: Well, we moved, because we were crowded, and we were growing. And it was a good thing, and we decided to double our space, and so we moved here, only about four blocks away from our original location, in 1984. And we were here until 1987. We were here for three years, and we outgrew this space as well.

HATTIE: So what do you do? What advice — I mean, does the space come before the customers, or the customers and then the space?

TRACY: The space comes before the customers. You have to be ready, and you have to impress your customer with your location, with your facility. Where we're at right now is in front of our third location. We moved here in 1987. We were tired of leasing. We wanted to buy our own building, and this was one of the few single-user buildings available in La Jolla at the time.

HATTIE: And how big?

TRACY: And it's 5,000 square feet. It was perfect for a school. All the bearing weight was on the outside walls, so we could do classrooms. The students loved it. There's parking underneath. It's deceiving. It's very long, so it goes back quite a distance. And we were delighted to own it. It was great. We were no longer having to deal with landlords and rents, and it was a very, very good move on our part.

HATTIE: So one more piece of advice you would give business owners as they grow their business is?

TRACY: Buy your own building as soon as you possibly can because that's a whole other business right there.

HATTIE: (Voiceover) Tracy and her partner, Gary Cantor, stopped by The Art Institute to get an update from President Dan Levinson.

DAN LEVINSON (President, The Art Institute of California): We've got about 823 students, and we're going to be over 900 in a few weeks. And then on top of that, you know, culinary just started as well.

TRACY: Right. DAN: We've got right now 75 students. Next week, we'll have about 98, 99.

TRACY: That's incredible. That's very fast.

DAN: Yeah, very fast.

HATTIE: Gary, are you still happy you sold?

GARY CANTOR (Co-founder, Advertising Arts College): I am, and I was. I feel it was, again, a fulfillment of something that Tracy and I started. The best job we did was with students who were alienated from public education. From 1981 till we sold the school, those are the primary students that I remember serving, and the ones I think that we were kind of born to serve, that weren't being reached by most other institutions of education.

TRACY: The sale's process started when were called in February of the year 2000. And the sale of the business closed in October, the end of October of 2000.

HATTIE: That was fast, don't you think?

TRACY: I thought it was long.
 
 

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