Sold My Engineering Company To... 9

[StructuresRule]

I recently sold my structural engineering firm to another engineering firm. I was a one-person firm, no employees. I will be staying on-board for 1 month for training.
Here's my issue: I did my due diligence and checked up on the firm buying my firm and checked up on the owner. He has 3 engineers, 1 of them licensed.
This transition has been a disaster. The new owner won't introduce himself to the existing clients. He's apparently too busy doing other things, but that isn't the worst of it. The engineers he has working
for him are not understanding the calculations, at all. I am attempting to train them, but one of the engineers doesn't even know what a beam or column is!!
I'm here to train the ins and outs of the company, not to train some engineers in engineering.

He assured me before I sold my firm to him that his engineers were well-experienced and I provided many sample calculations for his review to be sure
that they could perform the calculations. He told me that they reviewed the calcs and had no problem understanding them. The calcs they send back to me for
review & comment are horrible at best.

I have 1 week of training left, and at this point I am ready to just walk away.

What would you do? By the way, the owner won't discuss this situation with me. He thinks there is no problem, and has better things to do. He is a licensed engineer as well.
Can I legally tell the clients to find a different engineering firm? This company does not deserve these clients, if you ask me.

 

[glass99]

1 times revenue is a really interesting datapoint. Thanks for sharing.

 

[StructuresRule]

Thanks again everyone. I do have another question. How would you handle any revisions that come in? Keep in mind, I was not kept on as an employee. I completed the 30 days of training, and met all other obligations, I feel that I have no further obligation to the buyer. The buyer is claiming that revisions are my problem to deal with since I had E&O insurance when I originally completed the projects (I know, ridiculous right? E&O is a claims-made insurance, not perpetual). All we do is argue and the clients are getting nothing completed, which, again, is not my problem.

In my opinion, revisions are not my problem either. They bought the company, did not keep me on as an employee, so they need to deal with it. Agree or am I way off base?

 

[LittleInch]

I agree.

Maybe a compromise is that you say, well you (the new owners) deal with the revisions, do all the changes and calculations and then you can review it to see if you're happy with the changes made. but refuse point blank to be the initial interface with the client or whoever is supplying comments or revisions or make the first go at responding to the revisions or comments. That's for the new Owners to do.

A little messy, but at least moves things on and you can then refuse any new items coming your way.



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[phamENG]

You mentioned it was a legally drafted purchase agreement. I'd check with your lawyer about it.

Though based on what you described, it shouldn't be your responsibility. By buying the opportunity to absorb the profits from your operation, they also bought the risks embedded in your company. Sounds like they want their cake and to eat it, too.

 

[Sparweb]

The buyer is claiming that revisions are my problem

This would explain the previous lackadaisical attitude of the other employees to the quality of work. They thought you'd always be there to do it for them.

Ummm... how do I put this? Is there a 3rd party that would like to benefit from your buyer's misfortune?

http://www.sparweb.ca

 

[SteelPE]

Yikes, sorry you have to deal with this.

If these are true revisions to projects, doesn't that constitute a change to the initial design contract with additional fees paid to the company? I don't understand why the buyer is angry with this. It's not like he is missing out on gaining additional revenue from the revisions. They do the additional work and get paid the additional money for the work performed.

Now, if the revisions you talk about are not in fact revisions but going back to clarify drawings etc, then that's a little different (although, I still tend to agree with you).

You might almost be at the point where you wish you just gave everything up and never agreed to sell in the first place.

 

[LittleInch]

It's a fair point - define "revisions". Small amendments / additions of vendor information or large scale changes / redesign??

Remember - More details = better answers
Also: If you get a response it's polite to respond to it.

 

[glass99]

@structuresRule: What kind of revisions are you talking about? In my mind the general principle is you should be getting the new owners staff up to speed, not so much dealing with the project issues yourself.

 

[StructuresRule]

Thanks, what I thought, but because the new owner is being so arrogant about it, I thought that maybe I was in the wrong.

SparWeb - Yes, I now believe they bought my company thinking I was some pushover, that I was going to keep doing all of the work while they made all of the money.

SteelPE, LittleInch and glass99 - The revisions are minor, and not due to any errors on my part, they are client requested changes. This is a typical example: There is a stair that I did the calcs for (before I sold the company) and instead of bearing the stair on the CMU wall, the client's customer decided they wanted a post added instead, thus the client is requesting revised calcs. So all the buyer has to do is calculate the post size needed and charge the client accordingly for their time! And yes, I am definitely at the point where I wished I would have just walked away and never sold my company. I am also at the point where I am considering going back to my attorney and seeing if there is a way to get these "engineers" to stop harassing me. You should have seen how angry they got when I reminded them that my 30 days of training was up.

Here's another doosie with these LICENSED "engineers". They recently asked me to provide them an electronic copy of all of my seals so that they could just put my seal on projects as needed! (I am licensed in multiple states) I told them absolutely not, and that that was illegal. THIS is what I am dealing with. And yes, I keep records of all communication.

This is unbelievable, and disgusting, that things like this even go on in the professional industry of engineering.

 

[RVAmeche]

I feel like the new owners requesting stamps to forge documents is grounds enough to alert the state board.

 

[glass99]

My response to the stamping thing would be to send the new owner an email stating that stamping documents was not on offer, though you would help to work towards getting his engineers licensed, or help find a stop gap solution of having another PE supervise and stamp the work.

 

[SteelPE]

I understand the idea of reporting to the state board, but if he is a Registered Engineer then I don't know how far you would get.

Kind of odd that they want you to size a few posts for stairs. I have designed my fair share of stairs and the clients usually used L4x4x3/8" posts which usually have about 5 kips on them and are 6' tall.... and can support 4x as much load as required (Pn/omega = 23.2 kips). I literally pull this out of AISC table 4-12. If they can't do that then they can't do much.

 

[RVAmeche]

Requesting a stamp to forge documents would surely draw some sort of reaction from the state board? I get the new owners and stuff are also licensed engineers, but to me that makes it more egregious (blatant ethics issue, etc) that could result in them being penalized.

 

[SWComposites]

Um, SR, I dont see why you have a problem. You sold the company. Done. Dont answer their phone calls. Put their email addresss into your spam filter. Get on with what you plan to do next in life.

 

[IRstuff]

Dont answer their phone calls.

If it's your cell, you can simply block the number and it'll never ring the phone.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

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[LittleInch]

That's probably the best plan.

Don't think of it like an owner, think of it like an employee. You've done your notice period, tried to hand things over, but now your contract has ended, you've moved on, they need to do the same.

Or same as selling your house. You've tidied up, fixed the broken door and now you've handed over the keys and moved out. Does the new owner now expect you to fit a new kitchen for free??

Remember - More details = better answers
Also: If you get a response it's polite to respond to it.

 

[phamENG]

The hazard with that, though, is that the last 50% of his sales contract is to be paid out over time as a percentage of revenue/profits. If the OP can do without that 50%, then walking away is probably best - as long as walking away doesn't give the buyer grounds to sue to get the first 50% back. But if he wants it, some sort of reasonable understanding needs to be reached. Not renegotiating the deal, but making the buyer understand what the deal really was.

With regard to the revisions - how does your state handle transferring EOR responsibilities? Is there any chance that there reluctance to do the revisions is because your seal is on the drawing? Given their desire to keep using your stamp(s), I doubt this is the case, but you never know.

 

[LittleInch]

Given the information supplied it sounds like the last month has been unpaid as such as part of the initial 50%. How long can you go on doing that?

The understanding bit is probably what's missing, but unless the new bosses lawyer can explain tit to him in words of one syllable, it probably won't go in.

Sounds like SR is quite happy to forget about the second 50%.

Hope the SPA was drafted well.

Remember - More details = better answers
Also: If you get a response it's polite to respond to it.