Q: My wife and I are considering selling our call center. I feel that I am capable of selling the business myself, while my wife feels we should get an intermediary or broker. What are your thoughts on this subject?
A: Let me answer your question by telling you a personal story. We recently built a small underground cement structure called an eco chamber to house a backup power generator. When I was ready to order the generator, the generator company told me the salesman I had dealt with was no longer with the company.
The new salesman informed me that the underground structure was not approved for use with the generator I wanted to buy. However, my contractor, my electrician, and I were told several times by the original salesman that, as long as it was vented properly, the generator would work fine. With no other recourse, I retained an attorney and sued the company.
The demand letter asked for $38K in damages, which was the cost of the structure. Since I had a contractor and electrician to corroborate my story, the case looked very favorable for me to win. However, to avoid a lengthy battle, the generator company offered me $10K to settle. I requested that my attorney counter with $15K, thinking that I would end up with approximately $12K.
When I followed up with my attorney, he said that he countered with $25K, not $15K as I had instructed, as he felt we had a good case. He was right; the company agreed to split the difference and offered a settlement of $19K.
I was thrilled, but I also realized that I would not have been able to negotiate such a favorable settlement myself. I was too close to the deal; because it was my property and my suit, it became personal, thus clouding my judgment. My attorney, however, was neutral and more objective, and thus able to get me a better settlement.
The same goes for selling your business. It is your baby that you’ve grown from scratch and owned for many years; all objectivity goes out the window when the seller is directly involved in negotiations. You should listen to your wife and hire an intermediary, such as a broker; you’ll be glad you did.