“I’ve got to get out of Dodge before it’s too late.” Joey (not his real name) had already met with his financial advisor to plan for allocation of the money he would receive when he sold his company. The Letter of Intent was signed three weeks earlier, and the buyer had started due diligence. Everything looked like we were on track to a successful closing in seven to eight weeks.

“We have a problem,” I said to Joey, “I just had a call from the buyer’s CEO and he is scared your customer base might bolt once they hear about your departure.” Joey had owned the company since 1999 and grown annual revenue from $2 million to $23 million. The key to Joey’s success was Joey. He might be the single most effective salesperson I have ever seen. Though he had built a six-person sales support team, he was always the center of the universe. But now, the buyer was concerned some customers might not be loyal to the company once Joey was gone.

I gave Joey the bad news, “The buyer’s CEO told me he needs you to commit to stay one year after the deal closes. He says they need your help transitioning your customers over to their platform.” Joey was stressed about the idea of making a one-year commitment to stay. The reason he was selling in the first place was his wife’s health condition, a respiratory problem requiring a move to Arizona. But now he was between a rock and a hard place: if the deal did not close, he obviously could not move, but if the deal did close, his move would be delayed at least a year.  Joey wasn’t sure what affect the delay would have on his wife’s health, but he knew it wasn’t good.

I was describing this dilemma to my wife one night over dinner. I explained it is common for a buyer to ask a seller to stay for some time after the sale to facilitate a transition, though in this case, the buyer had a higher level of expectation. The CEO wanted a full year because of Joey’s deep connection to his customer base.  My wife thought the CEO was being unreasonable to expect Joey to stay in light of his wife’s health challenges.

I don’t have a happy end to the story, just yet. Joey and his wife are evaluating alternatives, the most likely being that she’ll go ahead and move to Scottsdale and rent a condo. That solution isn’t perfect because there are a few things Joey’s wife cannot do for herself, but it seems this is the best alternative Joey has right now.  

Fortunately, Joey is  so he and his wife will not be living with any financial concerns. However, he could have had a smoother and faster transition had he started planning two to three years sooner. Most of his customers are loyal to him, but with some time to implement a pre-sale transition, we could have slowly eased Joey out of the center of the picture. In fairness to Joey, he could not foresee his wife’s deteriorating health condition. But the larger principle here, for any business owner, is you cannot predict the future so you should get ready to sell even before you are ready to sell.

While not a deal killer, Joey’s prominence in his business will complicate the first year of his post-sale life. It’s looks like Joey can’t get out of Dodge just yet.

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Tennessee Valley Group

Jim is an attorney (non-resident status with the Missouri Bar) and though he no longer practices law, he has read and negotiated enough legal documents to fill a cargo tanker. He has an MBA from Harvard Business School and knows how Wall Street and private equity operates. Jim is a Tennessee Supreme Court Rule 31 listed general civil mediator with tons of experience helping business owners (large and small) work through sensitive problems to achieve winning results. He is the author of "Home Run, A Pro's Guide to Selling Your Business, Seven Principles to Make Your Company Irresistible."

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