Dear Blog, it's been three weeks since my last entry. Please forgive me.
There's been a lot going on and my blog has taken the flack. But there's something really important I want to use today's blog post for. I'm writing it with someone special in mind and I'm sending it to them after I hit 'publish'.
On our Sloafer blog, we want to share our experiences and often have guests with amazing knowledge that we hope will help you. It's no exception to say that this week we have another one. It's just that he's my husband.
But credit where credit is due, if it wasn't for Mr Sloafer, we probably wouldn't have a company right now. You know how they say, "if something is too good to be true, it usually is?" Correct.
As a small company, we are always keen to explore the idea of securing investment. So how incredibly excited we were when we got an email, quite out of the blue from someone who we knew from the name alone, would surely be the start of our stratospheric rise to shoe stardom.
The first lesson here is accepting the professional advice of someone even if they are close to you. Disconnect the inner voice that screams "I'm going to ignore you because you're my mother, my husband, my next door neighbour" - particularly when they stop you from doing what you want to do. If it's their expertise, listen. Question (which I can't help but do) but be willing to learn.
After we received the email, the first thing we did was a Google search. It raised a red flag. At that point, my husband and I went different ways. He left the room, I became like a woman who'd found her bad boy and thought she could change him. A Google search, ladies and gentlemen, can be enough. If it smells fishy, leave it alone. But I had a gut wrenching desire to try and secure investment and I insisted, time and time again that we should continue the conversation, because surely it couldn't hurt.
And it didn't. We had a conversation. But it was painful. It was a conversation, followed by weeks of waiting for an offer. Followed by the offer which was instantly thrown out by my husband. I couldn't bear the savage coldness of it all, but had to appreciate that the 'no deal' blunt response was part of the game designed to make the other party up their offer. "But why can't we make a counter offer?" I would wail. Apparently that's not how it works. It's desperate. Gosh, this is really sounding like a dating blog. Oh the parallels.
This wasted time and head space for six months. I have learned more about mergers and acquisitions from one of the best out there. I learned, because I asked questions. I threw out scenarios. My husband held his head in his hands and said no, no, no, to every scenario I threw out there - that's what lawyers do. They find loopholes. For my every scenario that I thought would make this work, he found five ways for it not to, and for it to end catastrophically.
My classic mistake was thinking a contract would protect us. Make one, and make sure it's water tight. But a contract is only worth the paper it's written on if you are willing to take the time, the expense and the head ache of enforcing it. The only people that win are the lawyers.
So the top things to look out for, in no particular order are -
It's easy to get hooked with "you own 100% of a company worth X, what if you owned 90% of a company with a turnover of a million quid in the first year."
Easy to get carried away dreaming until you realise -
a) he'll buy 10% of your company for £3.57 if he thinks you'll believe that 90% will be worth £1m.
b) he won't turnover £1m. He's just saying it.
c) if you own 10% of your company you have entirely lost control. You own nothing. You have no rights. You've given your company away. It's 50-50 or 51-49 in your favour, or you walk away. And you never go back. Or you offer 100% for a good price. But then comes another complication.
No. Not if he suggests monthly instalments. Over 18 months. Wait. What? He wants to pay me A FRACTION of the amount he owes me, AFTER I have signed my company over to him? Yeah sure, I'll do that - if he wants 1/18th of my company each month.
There may be a good payment plan for a price that truly reflects the value of your company, but check this very carefully. Be painfully aware that you may only ever get the first instalment if they run away before paying the second. They will usually do this if they know you can't afford to pursue them in court. So the first instalment had better be a big one. But again - take advice.
So there we have it. It pains me to say my husband was right in his summary of the situation - "nothing will come of it, we'll waste loads of time, and it'll send you crazy."
PLEASE NOTE - this is an OPINION PIECE containing OVER SIMPLIFIED ADVICE written informally. THIS BLOG DOES NOT CONSTITUTE LEGAL OR BUSINESS ADVICE. CONSULT WITH A LAWYER BEFORE MAKING ANY DECISIONS.