Buying a Business

Then came the crusher: once the debt from the acquisition was added on, at the current level of sales there was no money for me to take any salary. None. Even assuming I could get the sales back up to the average of the past three years, I could still take out only half of what my family and I were used to.

I was despondent. And furious. And scared. I was glad I'd found all this out; but I also didn't want to hear any of it. Could I really just walk away from the deal at this point? What about all the time and money, not to mention the emotional energy, I'd already expended? Did I really have to start over again from scratch? My worst fears had materialized. My severance pay had only another five or six weeks to go. After that, we were out of time. My heart and my head were waging war with each other. I'll start over. . . . No way, there's no time. . . . Maybe I can find a job. . . . Good luck, turkey. Better tough it out with this company. . . . But there's nothing there. . . . I wonder if any of the other companies I was interested in are still on the market. . . . I was beside myself.

I sat down to write a letter to Lauren Finberg. I was seething, but I tried to keep it as unemotional as possible. This was a far different company today from what it was a year ago, I wrote. Peter Klosky was going to have to eat all the '88 receivables and any from '89 that turned out to be bad as well. The inventory looked way high; there were some payables that hadn't hit the books that we needed to put in; Peter had to work out his compensation differences with the sales manager and another employee as well. Based on everything I had learned, the purchase price had to come down -- a lot. As I wrote the letter, I wasn't sure if I wanted my new offer to be accepted or not. But a few phone calls and some minor changes later, the word came back: the adjustments were acceptable. We still had a deal.

Then Peter Klosky called me at home one evening to tell me that the sales manager was "considering" quitting and maybe I should talk to him. Klosky mumbled something about "commissions" being the problem. I called the sales manager at home and arranged to meet him at a Dunkin' Donuts shop a few miles from the office. He said he wasn't considering quitting -- he had quit, given notice in writing, packed up, left. Why? I asked. Because he felt he was never going to see the $5,000 in commissions he was owed if he didn't apply some pressure now when Klosky was vulnerable. We talked for several hours. I asked if he would accept binding arbitration if I could talk Klosky into doing the same. He said he would. Would he come back to work in the meantime? He wanted to think about it, but the answer was probably yes.

That weekend was the company picnic. I had gone back and forth about attending because I thought it would be inappropriate if the deal was going to fall apart. On the other hand, it was a good opportunity for Judi to meet everyone and for the employees to get to know me as a husband and father, not as the boss. We decided to go late and leave early.

Toward the end of the afternoon, I had my first chance to have a private conversation with Darvin Brothers, the company's senior employee and senior installer. He was a soft-spoken man in his late forties. In our brief first meeting with Peter Klosky, he'd struck me as one of those rare individuals who was genetically incapable of avarice, malfeasance, or lying. I had been told by other employees that Darvin was the greatest single asset I was purchasing, that his knowledge, reputation, and experience were invaluable and irreplaceable. I needed him. I could believe him. And what he told me gave me chills.

Darvin was not a happy man. He had almost quit in January. He said there was a lot of junk in the shop that Peter Klosky would try to get me to pay for. Once upon a time, Darvin said, Peter had given him some stock for his many years of service. Darvin sold it back to him for less than its full value, and Peter had suggested that he would be compensated for the difference in the future. It never happened. And Darvin would get nothing out of this impending sale. Why had he stayed? I asked. He looked me in the eye. There was a lot of pain behind his answer. "I've spent 25 years helping to build this company. Stock or no, it's mine as much as his. I couldn't just walk away." I asked if he would stay at least for a while and give me a chance. He looked at me again. After a moment, he said he would.

On Monday, the sales manager did not return to work. I called him at home. Had he talked to Peter? Did he know Peter had agreed to binding arbitration? It didn't matter. He wasn't coming back. He couldn't work for another single day with or for Peter Klosky, even if the company was going to change hands soon. He would come back and work for me after I bought it, but not for Peter Klosky no

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