And who knows what the crowd will do in 2025 given new cabinet etc.? Deductions don't really affect me much going forward. I care but not planning around specific policies going forward.
Yeah I'm not saying it is a determinant. But the new/old head of state is the only one in the admin who matters legislatively. I'm merely musing on the pressure to balance a budget and give away all of our money. I hear he isn't so good with that. Go big or go home tho.
I see older very skinny women who look old and frail due to being very skinny. You need some fat under that skin to plump it up to look youthful. Catherine Deneuve I believe was the one that said that after the age of 40 you have to chose between your face and your ass. I say all of this as a 40 something woman.
In case the author is reading this, I am wondering why Dad did not have a succession plan, and was it ever discussed in the family what should happen after? What was dad’s plan?
This is a big question tbh and the lack of a succession plan is a function of many things:
1. This was my dad's baby. He loved the engineering and the science of it and so the idea of retiring from it was difficult for him to conceive. Doing that also requires thinking about one's mortality which I also believe was difficult for him.
2. This was a small market business in a tier 2 city in India. Attracting talent that could take it over was challenging. And myself and my siblings having been born and brought up in the States and being utterly clueless about the engineering/science of the company made us a non-starter.
3. As others have pointed out, he was thinking about succession/exit because he knew it was required for the biz to live on and grow. But life unfortunately had other plans and he was taken away from us unexpectedly.
There are definitely lots of could haves, should haves, would haves, etc I've thought about afterwards, but this was clearly one of those "play the cards you're dealt" kind of situations.
I don't think there is an Indian social contract but having been born and brought up here in the USA, I'd be talking out of my a$$ on that topic :)
This was maybe more of an implied or expected contract I had with my dad and mom who built the business and by extension the Atlas team.
Job hopping is quite common in India, but that's probably more common in larger cities. In a tier 2 city like where my dad's business was, there are limited options for a plant engineer for example, and as far as I can tell, the skills they have in a fine chemicals plant may not be immediately transferable to a plastics manufacturer.
And finally, many were with my dad for 10+ years so probably some amount of comfort in knowing the domain, the job, the boss, etc.
Thanks for the story and for putting the employees first. M&A of your sort should always select suitors based on chemistry fit - so when I read your list of candidates, it was already clear to me you would sell to the one listed last, and I'm glad it worked.
Selling to Private Equity is almost never what any founder would have wanted, as their job is to slice and dice, "cut the fat" and sell the pieces to different highest bidders.
>Selling to Private Equity is almost never what any founder would have wanted, as their job is to slice and dice, "cut the fat" and sell the pieces to different highest bidders.
Depends on the founder, I'm happy that the OP decided to look after his workers, but there's no loyalty in business.
Many founders would just look at the largest payday and be done with it.
I guess you can have a George Lucas moment and criticize the new owners for destroying what you made, but you're sitting nice with your profits.
OP comes off as someone who was already really comfortable, and the business appears to of been profitable.
But it would have been a completely different story if they were losing money, at a point you might just have to sell the company for parts and cut your losses.
Maybe offer some of the lifers generous severance packages.
There are lots of family owned businesses in the US that look after their employees. I think it’s more that there are significantly fewer tech companies in general that are family owned businesses.
I think maybe it's because the tech industry is so young, and because it was mostly populated by the young when it exploded in the 80s and 90s.
In IT I've never has a boss a generation older than me. Folk were/are basically my generation. In the early days there wasn't an "adult in the room" so we made it up as we went along.
We (as people) tended to be more about "people" than "money" (although I'm sure not all ex employees would agree.) There's a fine line between caring for people and staying profitable. But one can do both.
I'm not one for job-hopping (and I've likely left cash on the table for that) but that seems to permiate down. (Half the staff are 10 years+ now). We're also only adding a few posts a year. We don't hire fast. We don't fire fast.
But the industry in general was build by narcissistic folk in their 20s, who had ideas like "young is better", grow-fast, high risk, break things etc. IT culture is still like that (despite us being in our 50s now.)
But I don't think this reflects the world in general, or indeed industries in general. I feel like most people want a stable job, a stable life, and dont feel the need to move all the time.
As an employer, the OPs criteria of caring what happens to our staff has been front and center when succession planning. Just cause we retire shouldn't mean they're out of a job.
Thanks for sharing. Curious how things are now 6 years later: do you still keep in touch with some of the employees? Has the outcome been good for them?
I'm curious if you can share: how were you raised in the US while your father was in India? You were raised by a relative, or your mother lived away from your father?
This was a great ride, a very gripping read and a very touching story. Congratulations on your adventure and I'm sure your father and his second family is proud of you.
From reading it, and the various references to various potential buyers his father had already been in discussion with, it appears his plan was to sell it before that.
This is a big problem with these kinds of businesses. A lot of these solo owners who build up a business over the course of many decades serious underestimate how hard they are to sell, and have an unrealistic idea of what valuation they'll be able to get.
There is a whole industry of those bottom feeders the author referred to, who's business is precisely waiting for these sole owners to either die, or better yet become incapacitated to the extent they are forced to sell their businesses (but not so much that they can't hold a pen and read a sales contract), so that they can swoop in and offer them 2x or 3x - "what's your best alternative?".
I'm not commenting on OP or their family business, but a multiple of 2x or 3x could be more than fair for a hands-on small business.
Consider that there are large public companies with established management systems that you can buy and hold, completely hands-off, for multiples of 5x - 10x. GM is trading at 5x, lots of banks are in that range, huge equipment rentals, mines, etc.
Perhaps, but investors are neither fully informed nor fully rational.
People get overexcited about new trends, then everybody jumps on the bandwagon, and good but boring stocks are ignored. Doesn't mean these are weak businesses though.
Why are the buyers referred to in derogatory terms? By the same logic, the seller should also be referred to in the same derogatory terms, for holding out for too high of a price.
Or one could do the sensible thing and leave emotion out of it, and realize business is just business. The market price is the price that results in a transaction.
>Why are the buyers referred to in derogatory terms?
Because they are taking advantage of the owner's impaired judgement due to their personal situation/ill health in trying to extract an unfair price. Such behavior is referred to as "morally reprehensible" at best, and is skirting the legal line of what would be considered a contract made under duress at worst.
> Because they are taking advantage of the owner's impaired judgement due to their personal situation/ill health in trying to extract an unfair price
I think you are assuming way too much - a lot of older folks sell things "because they are done", and much is upside from when they purchased or started originally. Even when they are ill, many folks just don't care enough about the money enough to wait it out, negotiate, etc.
I'm not assuming anything. I was answering a question based on:
> There is a whole industry of those bottom feeders the author referred to, who's business is precisely waiting for these sole owners to either die, or better yet become incapacitated to the extent they are forced to sell their businesses (but not so much that they can't hold a pen and read a sales contract), so that they can swoop in and offer them 2x or 3x - "what's your best alternative?".
It's not material to my answer whether that statement is true or not. If you think it is untrue, take it up with user "_rm".
So no one should ever buy from someone who is dying or ill?
That’s crazy. Supply and demand curves are in constant flux. The seller didn’t like the market prices when they were healthy, that does not mean they are entitled to a minimum price. Everyone gets ill and dies eventually, and everyone knows it. They are free to sell before that at the market price.
> So no one should ever buy from someone who is dying or ill?
You can do that. However there's an issue with basing a business around reaching out to people with bad-faith offers the week their parents died or they were hospitalized themselves.
Easy to see how specifically targeting the dead or dying for profit is worthy of derogatory terms.
If you think otherwise, maybe you shouldn't view "bottom feeder" as derogatory? They keep the seabed clean do they not? It's all just "business".
And yes, the sellers in this case are also in the wrong, best case being bad luck, mid case being failure to prioritize, through to ignorance, delusion, stubbornness, arrogance, etc.
There's vastly more profit in buying a few companies at 33 paise on the rupee than in buying lots of companies at 99 paise on the rupee. And coordinated punishment of any newcomers - who try to disrupt a status quo of systematic underbidding - does not even require communication between the incumbents.
Then who is buying at 33 paise? You are contradicting yourself.
If something “worth” 1 rupee is not selling for 1 rupee,then the logical conclusion, absent collusion/cartel/monopsony behavior, is that it is not worth 1 rupee or even 99 paise, but rather the 33 paise that it is selling at.
The established players - and occasional well-behaved newcomers - are buying at (say) 33 paise on the rupee.
The "1 rupee" is what the business would be worth, in a highly efficient, open market. Which this market clearly is not. And the regulars are quietly colluding to keep it that way.
The context of _rm’s post is not about the OP’s dad’s specific business in its specific regulatory environment which may or may not constitute a “highly efficient, open market”.
> lot of these solo owners who build up a business over the course of many decades serious underestimate how hard they are to sell, and have an unrealistic idea of what valuation they'll be able to get.
From this, I get the sense that _rm was talking about owners of niche businesses that are surprised to find a smaller market of interested buyers, and hence are surprised they cannot sell their business at a price they hoped to get.
My point was simply that just because a seller cannot get a buyer to pay the price they hoped, that does not make the buyer a “bad” person.
Quite true. And it's possible that (due to regulatory/tax/social/etc. factors in India) small businesses could only be sold at large discounts to their "Wall Street theoretical" values - even in a perfectly efficient market.
I originally commented in response to amadeuspagel saying "If there's a whole industry of them, shouldn't there be lots of competition to buy these companies?" - by pointing out a simple way in which the market could be very inefficient.
Yes, even if there's a carved-in-stone rule that businesses sell for (say) 10X their annual profit, there will be plenty of business owners who imagine that their business is somehow the exception.
Related is the problem of owners misrepresenting their businesses to potential buyers. Which would lead perfectly rational and honest buyers to offer them far below 100 paise on the rupee, due to the risk of being swindled.
The author mentions that his father was in touch with a PE-backed chemical company a month before he passed, who re-engaged a month after- sounds like that might have been his succession plan?
This was in India where succession planning for small business is non-existent and if kids don't pick up their family business, it's over. However, even in America, this situation exists for small businesses. With so many baby boomers retiring from businesses like HVAC etc, their kids don't necessarily want to continue the business.
I was curious as well and most sources I found point to a similar structure above. Basically the more money they get, the bigger the fee, and then there is some sort of retainer to cover their costs.
Do you roll your eyes at yourself whenever you, say, drive a car?
We're surrounded by things that have their company's branding prominently plastered on them. Hell, stuff like luxury bags (eg: Louis Vuitton) exist specifically to flaunt a company's branding.
Of course, it would be nice if we weren't surrounded by marketing and advertising everywhere all the time, but that's beside the point.
Uh, no, I don't; obviously aesthetic judgments are much more subtle than that.
> but that's beside the point.
uh that is precisely the point. Hence if there is some trivial way to avoid it, I like people who do it.
For instance yeah your car has branding you can't avoid. But you know what you can avoid? Those stupid license plate holders that dealers put on to advertise themselves. Better than nothing.
In some jurisdictions you can avoid this problem by having no licence plate at all and if you upgrade the car frequently enough, you can avoid ever having a plate.
People who are so image conscious that they care about that kind of thing in themselves or others really seem like they have their priorities in the wrong place.
It ends up being a great filter, leaving things around to bother the kinds of people you don’t want to impress.
I understand that, but keeping the default email signature might also mean that said person is so busy or detached from technology that they don't even know/have-time-to change their email signature.
When I read "Sent from my iPhone" I feel sorry they don't have a proper keyboard and that they have to touch cold, hard glass instead; what an unpleasant tactile experience!
And then I remember I now have to do the same, because someone switched off my fantastic BlackBerry (R.I.P. until resurrection comes!)...
No, they don't do slowly. Very few of them will buy and hold, it's money being tied up doing nothing. And you have to be fast, longer you wait greedier people get, we've done this many times, the same story repeats itself every time.
As per what is land worth, for a developer, it's a an x amount per buildable square foot (which they need to approximate based on the guidance of their planners, before they rezone).
They are not trying to get it for cheap though, they are paying large premium to what it would sell for individually. But, of course, there is a limit to what they can pay. So, either everyone gets more than they would individually, but if they are too greedy, no one gets anything.
8 out of 10 can work if the 2 are at the ends, and that often happens, greedy one makes herself an island. Doesn’t work if they are in the middle. Then they ruin it for everyone.
Unwillingness to sell isn’t greed. The landowners aren’t part of the dealflow. There’s no quid pro quo. It’s an arms length transaction.
The reason people hold on to land is that it’s less bother than finding an alternative repository of wealth. Stocks go to $0. Land doesn’t.
And there’s emotional attachment that isn’t there for stocks and bonds. Some people are happy to cash out and see the place the kids were raised paved.
Some aren’t and it would hardly be a surprise if such folks don’t cotton much the sort of change to the land that’s on the table.
Like I said long term.
Go back in time and take that lady a pie after church fifteen years before the developers come town…’out of town developers’ that’s the phrase you’re up against.
