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.

 

[BrianPetersen]

Does your bank account reflect the sale of the company?

Have you fulfilled your obligations and documented that you have done so?

If so ... walk away. Not your problem any more. Your former clients will figure it out ... quickly, by the sounds of it.

The underlined phrase is important in case the lawyers come calling when what you sold them (your client list) is found to have been made worthless, even though through no fault of your own - but you may find yourself in a position of having to prove that.

It would be interesting and potentially useful to arrange for a spy to find out what the client experience is like from the perspective of one of your former clients.

 

[GeoEnvGuy]

I would fulfill your obligation to stay on for a month. You are an employee currently and you do not want to do anything to undermine the company as long as you are employed there. During your employment your interactions with your clients should inform them of your transition and who the next point of contact will be for the company. Once your employment has been terminated you can contact whomever you want to discuss your transition.

 

[EnergyProfessional]

So much depends on what the conditions and the agreement of the sale are.......Hope you got cash and not some % of future profits...

But you should fulfill your obligation and attempt to train them, and not bad-mouth the new firm or employees to clients. how bad they are is for the clients to find out. If you don't fulfill the agreement, or bad-mouth them, you could be in legal trouble.

a bad transition sounds more like the new owners problem, not yours. You have one more week left, how bad can it be?

 

[moltenmetal]

It often puzzles me as to what people think they're buying when they buy an engineering firm, irrespective of how many people work there. But buying out a sole proprietorship...Take the money and RUN!

 

[BrianPetersen]

Yup. There have been a number of threads in the past about this but from the other side (someone proposing to buy such a firm). I work in such a firm. We consider it to be worth nothing, and we operate as if it is worth nothing - no assets of any significance, but no debts beyond current credit card account balances - it just brings in cash flow.

 

[SteelPE]

Complete the terms of your sale agreement then leave. Be prepared for some questions to come in from the new owner after you leave. Handle those as you wish. Do no bad mouth the new owner to your existing clients as that may cause you issues.

In regards to the sale of a sole proprietor engineering firm. Some say it's worth money, from a class I took during graduate school, it's not worth a penny. You hit the lottery and made chicken soup out of chicken s**t. Be thankful you were able to find someone to give you money for your practice. FYI, I am not belittling your company, I am a SP as well and figure my company is worth $0.

 

[StructuresRule]

Thanks everyone. Yes, my bank account reflects the sale, and there is a legally drafted Purchase Agreement. All training and communications are being documented.
I have informed the clients of the transition & new ownership, and have said nothing negative to them about the new owner or his engineers.

I got half of what I was asking up-front, the other half is supposed to be a % earn-out. I'm just happy I got what I got and honestly do not
even care about the earn-out at this point. I just want to be done with this company.

 

[BrianPetersen]

https://www.youtube.com/watch?v=CkcrndYye60

 

[msquared48]

If the situation is as serious as you claim,
I would be writing a letter to the state board!

There is a due diligence and possible safety issue here. Don’t just walk away.

You might also consider removing your name from the company.

Mike McCann, PE, SE (WA, HI)

 

[Sparweb]

I assume you wanted to get out of consulting, or you wouldn't have sold your company.
But I wonder what your loyal clients will do if they:
a) are under-served by the new company,
and
b) still have your personal cell phone number

Did you sign a non-compete agreement?
I'm done wondering now: I know exactly what they'll do.

If you need to work for another structural engineering firm now, is anything stopping you from informing them of that fact? If you are recruited as a new employee, having loyal clients who will bring their business to your new employer gives you a strong case for a "signing bonus" or similar incentive.

Whether you are starting a new company, or need to be an employee, you can see your position as one of strength right now.

If you have also been witness to professional incompetence I would normally encourage you to act, but, currently, appearances could turn sour on you. The company you complain about could turn around and turn this into a war. It would be easy for them to make you look like the bad guy. And they have the names & numbers of your most loyal clients.

http://www.sparweb.ca

 

[verymadmac]

The only thing that seems to be missing from the replies is the usual keeping some evidence that he did assure you his engineers were well-experienced, that you suggested he should meet the clients, that you did attempt to train his people, etc, etc. The general proof you meet your side of the contract and a bit more.

 

[NorthCivil]

how much money does a 3 man band pay to a 1 man band for their business? I'm very curious.

You are only engaged for 1 month of handover. how the buyer wants to spend that handover is up to him. I would just shut up, help out as much as you absolutely could over your hand-over period, and then get out of there.

Do not bad mouth your purchaser to your clients. You owe your clients nothing. You owe the purchaser of your business good will, and bad mouthing them to the clients you effectively sold to them would be the most unethical behavior you could possibly engage in.

 

[StructuresRule]

Thanks again everyone. Although I do have one more question on this situation. I am not getting paid for the training period, so I don't consider myself an employee, but correct me if I'm wrong. So what I am supposed to be doing is training, but because these engineers don't know their you-know-what from a hole in the ground, when projects come in, they're just dumping them back on me. I sold this company to get away from this, not to keep working in this industry. I think it is just plain laziness on their part. Do I have to complete these projects? I don't consider this training, I just consider this free help. Agree?

 

[BrianPetersen]

Nope. No free help. "I'm here to train you, not to do your job."

That reminds me of something I had happen a couple decades ago. I was leaving where I worked at the time, and I was the only one who knew how to use a particular piece of software. Part of the training that I offered (similar situation as you described) was to provide a worked example. They wanted that example to coincide with a particular project that they needed it for at the time. I insisted on it being a fictitious example.

 

[glass99]

Also very curious about the sale price - what is it as a multiple of revenue even?

 

[StructuresRule]

Any offers always came in at 1.0 x yearly revenue, BUT they would only ever put 50% down and the remaining 50% was in earn-out over the next three or more years. When I finally sold my company a few weeks ago, the sale price was for 1.0 x sales revenue, 50% down and the rest in earn-out over the next year, which is better than waiting 3 to 5 years, so I just took it. Already had it for sale for almost 2 years, and was just tired of trying to sell it. Like I said, at this point I don't even care about the earn-out, I just want to be done with the engineers that bought my company.

 

[ldeem]

I am a one man operation myself and 1 x revenue with 50% sounds pretty good. That is like 6 months income for a months worth of work and then some more on top of that.

 

[Nalzoe]

1.0x revenue seems high to me?

 

[johnie134]

what is your revenue? more or less than 1 mn?