14
The Finish Line
The meeting with Print Technology Group was scheduled for Monday, November 16, at the EMG Capital Partners office. Marcus agreed to a closing date of November 30 and wanted to discuss the results of their due diligence process with Alex and Peggy in person. He got straight to business.
“Alex, we continue to be excited about the Stapleton Agency.”
Alex’s heart sank as the tone of Marcus’s voice revealed that a “but” was about to pass his lips.
“But the due diligence process has revealed some things that we’re not entirely comfortable with.”
After eight weeks of due diligence and six months of work with Peggy, Print Technology Group was about to yank the deal. Peggy sensed Alex’s disappointment.
Peggy asked, “What exactly are you concerned about?”
“My colleague David was not entirely comfortable with the methodology used to size the market.”
Instead of engaging in a debate, Peggy asked Marcus to lay his cards on the table. “So what exactly are you saying?”
“We’d still very much like to do this deal, but the valuation model we used to arrive at the original offer in our letter of intent doesn’t hold up based on the new information we gleaned from the due diligence process. As a result, we’re adjusting our offer to $5.2 million up front. We’re leaving the earn-out piece untouched.”
Alex couldn’t believe his ears. He thought they had a deal in principle. He knew himself well enough to know that he needed to leave the room before he said something he would regret.
Sensing that Alex was upset, Peggy quickly adjourned the meeting with a promise to get back to Marcus by the end of the week.
Alex spent most of Monday afternoon stalking around his office. He didn’t sleep well on Monday evening, so by the time he arrived at Ted’s office his nerves were frayed. He found it cathartic to rant to Ted.
“I can’t believe they want to change the deal two weeks before we’re supposed to close. We had a deal. I agreed to move forward based on an up-front valuation of $6 million and they’re lopping more than 10 percent off the price because some weasel in a back office didn’t like one of my spreadsheets.”
Ted let him blow off steam. Finally, sensing Alex had calmed down, he weighed in.
“Alex, I wish I could tell you I was surprised, but I’m not.”
“You knew this was going to happen?” Alex asked, directing his frustration toward Ted for the first time.
“It’s very common for a company to lower their offer price after the due diligence process. They know they have you cornered and your only two choices are to accept the lower price or walk. Of the four businesses I sold, three of them closed with a lower price than was originally proposed in the letter of intent.”
“I’m going to tell them to go to hell!” Alex exclaimed, still steaming about what he saw as Print Technology Group’s dishonorable negotiation tactic.
“Alex, that’s your right and I would understand if you chose to walk away. But before you do that, I want you to go back to your office and find the envelope I had you put in a safe place. Open it up and study it before you call Peggy.”
Back at his office, Alex unlocked his desk drawer and saw the sealed envelope he had left there almost a year ago. He opened the letter and pulled out the single recipe card inside. There, written in his own handwriting, Alex saw the number he had dreamed of selling the Stapleton Agency for more than a year ago: $5,000,000.
He held the card in his hand as he gazed down at the number. He thought about all of his work over the past few years. He remembered John Stevens and how dependent they once were on MNY Bank. He thought about Elijah Kaplan, Tony Martino, and the rest of the mediocre team he had settled for to create second-rate advertising campaigns. He thought about how good Chris and his team had become at creating logos. He thought about the late-night calls to Mary Pradham and why he wanted to sell his business in the first place, and how he went about calculating his dream check.
He smiled for the first time in forty-eight hours and called Peggy to give her the news.
“I’m prepared to accept the lower offer provided Print Technology Group closes on November 30. If they stall or delay at all, I’m out.”
“I think you’ve made a good decision, Alex. I’ll call Marcus.”
“Just make sure we get this done by the thirtieth.”
The morning of November 30 was spent at Print Technology Group’s law firm. Alex’s signature was required on a variety of documents. After he was finished and the obligatory congratulations were offered, Alex excused himself. He got in his Range Rover and drove with no particular destination in mind. The trees whisked by as he reached cruising speed. Suddenly he felt the vibration of his mobile receiving an e-mail; it was a message from Mary Pradham at MNY Bank.
Alex:
We’ve just received a rather large wire transfer into your personal account from Print Technology Group. Please call me when you get a chance as I’d like to give you some suggestions for investing these funds.
Alex smiled and kept driving.
