Life changing decision .... time to grow up fast

[Broncojohnny]

When handed a company with no assets and a name, make sure you aren't also handed a bunch of liabilities.

[zachary]

thanks for all input from the good and the bad.

I will say I have worked here for 8 years and been involved in every decision the company has made since that point forward. This is not them cutting and running away from an issue or liability. This is a passing of the torch to the next generation like we have been telling them to do for a while. I was just unaware that we would need to self fund.

People want to cut back, retire, not work so much, and enjoy life. Also there is a changing of the guard I guess you can say from the technical side of this business. New methods, new thought processes, new development ideas are different than they are used to or have ever done and more out of the box thinking is necessary to grow companies these days. These old school conventional cookie cutter corner shooter guys just have a hard time moving forward now.

Just because they are "handing over" a multimillion dollar company does not mean there are millions to play with or at hand here in the swap. I could lose everything just the same as gain it. My decisions moving forward either mean success or failure.

[Chili]

Then he says that they will pull there funding also and want us to start from the ground up funding wise. They have built there nest eggs and are out out. That we would need to go to private equity firms(we are in good terms with several already) and gather the 1-300mm to go forward. We would have to fund the entire company(45 employees) in daily operations and in participation on our deals.

So because they started from scratch, they want you to also? But at the distinct disadvantage that you have to start with significantly higher operating expenses? I doubt they started with 45 employees, and am willing to bet their overhead was significantly less.

I mean, I get what he's trying to do and all, but to me it's a bit misguided and naive.

[zachary]

I mean, I get what he's trying to do and all, but to me it's a bit misguided and naive.

Yup, kinda my point and what makes it hard decision

[Baron Von Crowder]

Yup, kinda my point and what makes it hard decision

Tell him "no"

They will then either fold, or try to sell it. You might get a better offer.

[slow99]

PE means they will have MGMT teams, is it the current owners making the deal to get paid as the walk out the door? Just watch out on the deal, the PE is there to make their return in 3-7 years typically...

This is a seeding screnario, not an LBO. They will close the fund though then aim for a liquidity event in 5-7 (likely) years and take a percentage over that period.


*meant to quote jakesford on the part about their own mgmt team.

[Chili]

this is a seeding screnario, not an lbo. They will close the fund though then aim for a liquidity event in 5-7 (likely) years and take a percentage over that period.


*meant to quote jakesford on the part about their own mgmt team.

ftfy

[jakesford]

This is a seeding screnario, not an LBO. They will close the fund though then aim for a liquidity event in 5-7 (likely) years and take a percentage over that period.


*meant to quote jakesford on the part about their own mgmt team.

I agree, I just know the PEs that I work with still have some MGMT talent. They could give two shits about long term operations, its all about the ROI which is created through a realization. Drill, prove the reserves, and bail.

I know one of the recent deals we are working on was funded ~$750MM, went IPO after 3.5 years, and the PE had liquidated completely 1 year after that.

[zachary]

I agree, I just know the PEs that I work with still have some MGMT talent. They could give two shits about long term operations, its all about the ROI which is created through a realization. Drill, prove the reserves, and bail.

I know one of the recent deals we are working on was funded ~$750MM, went IPO after 3.5 years, and the PE had liquidated completely 1 year after that.

Yes this exactly. Basically get the start up funds, flip turn, hope to make enough to self fund from that point forward

[Big A]

I'm not trying to be dismissive, nor am I the least bit grumpy, perhaps I over-simplified/statement the question. Or most likely I am missing something.

If I owned a lucrative company, I would certainly want to be compensated for turning it over, beyond simply emptying the bank account. The name and reputation is worth quite a bit I would think. If they do genuinely just want to hand over the keys, I'd consider that a damn good deal.