Check Your Sources on “Facts” – and I don’t mean look it up on Google! 

Who is fact-checking the information you are using to make decisions?  

Don’t you hate it when you read or hear someone repeating a “fact” that you know for certain is incorrect?   Please, no more posts from “garden experts” telling homeowners to use salt as a way to kill weeds!!  Salt to kill weeds myth There are some things that we all think are “facts” but can be argued from different perspectives because they depend upon the assumptions that are made.  Times change, information is collected, and facts are agreed upon by all.  Remember all the people that truly believed the world was flat?  

How about some of the “facts” you hear about selling your business?  I was just in Denver for a national meeting of business intermediaries (IBAA & M&A Advisors).  Hearing some of the “facts” that business owners have been told was almost unbelievable.  Here are a couple of the most distressing ones: 

  • You don’t need a lawyer.  Big mistake.  The business owner decided he would sell ownership shares in the business to his employees.  He didn’t consult with an attorney to structure that deal properly.  Turned out that he was selling securities without a securities license! 
  • You will get capital gains treatment when you sell your business.  I am not a tax person but even I know that most of these deals are done in an asset purchase structure.  You probably will get capital gains treatment on part of the purchase price, but not all.  (Inventory and recovery of depreciation, for example.) Imagine not knowing that fact before you close on your sale! 

I hate to add to the “festival of cliches” but it also can be “Lies, Damn Lies and Statistics” Origins of Lies, Damned Lies…when you are looking at charts and graphs representing a company’s financial picture.  Have you heard the one about the landscaping company that signed a $1million per year maintenance contract just a few months before they sold?  Maintenance revenues looked great.  Margins, however, looked terrible if you projected the actual cost of providing the service for the $1 million contract.  The worst part was that the contract could not be canceled! I guess you would have to go bankrupt.  None of that was evident in the Information Memorandum touting that company’s benefits for potential buyers.  We weren’t surprised to learn that the seller was not represented by an advisor who was from the landscaping business.  He was an absentee owner who had inherited the business and his advisor came from a company that did deals in financial services.  Most of the landscape company owners that I know wouldn’t be comfortable allowing that kind of information to be distributed without explaining it! 

The moral of the story is to be cautious about the information you read, hear, and see.  There are excellent resources online, but I tend to track back to .edu or .org sites for fact-checking.  Even then, if an issue is important to me, I will go to more than one trusted source.   

Have you wondered about facts related to selling or buying a business?   Feel free to give me a call.  If you would like to start your exit plan or start the process of selling or transitioning your business, please give us a call to discuss how we may be able to help you with that process.  

You can reach me via email: alison@harvestlandscapeconsulting.com or on my cell phone a: 224-688-8838. 

We’re here to help you Harvest Your Potential!

Alison Hoffman

has more than 25 years of experience in strategy, operations, mergers and acquisitions and delivering business-to-business client solutions. Her areas of expertise include managing operations for profitable growth, organizational design and strategy activation. She brings a wealth of experience through her work in evaluating, valuing and purchasing over 30 companies, leading company-wide cultural and business integration projects and consolidating best practices among business processes and corresponding computing systems. Read Full Bio