What do I offer my father for his company?

Monday, March 23rd, 2009

Dear Norm,
Five years ago, my father brought me into his company so that he could spend more time doing outside sales. Lately, he seems to be working less and taking more cash out. Once I was told I’d be given the company; now it turns out I’ll have to buy it. I’m thirty years old. I want to grow the business, but I can’t unless we start reinvesting our profits. So it’s time to make an offer. I don’t want to pay too much, but I also don’t want to insult my father with a low offer. Any advice?
Robert

Dear Robert,
Before you offer anything, you need to do some soul-searching and life-planning. Where do you want to be in ten years? What kind of life do you want? Then design an offer that will allow you to attain your life goals. Do some research into the value of comparable businesses, and figure out what you can afford. Your proposal should specify how much you’d pay, when you’d start paying, over what period of time, how much salary your father could continue to draw, and so on. You can’t fault your father for wanting to sell you the company. He built it. He has a right to get something for it. But you don’t necessarily have to buy it. In fact, you may eventually decide it’s better to leave. Just make sure you can leave on good terms. Tell your father, “Here’s my plan. I think I can do it if I buy the company from you under these conditions. I love you. I love the company. I’d like to stay. But I need a plan that’s going to let me achieve my goals.”
Yours truly, Norm

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