Fisher turned on the computer and demonstrated how he enters figures from balance sheets and income statements into spreadsheets that pop onto the screen. For other information that he needs, Fisher said that he consults a book of Standard Industrial Classification codes and a Dun & Bradstreet compendium of key business ratios. Fisher said he can handle one evaluation an hour, on average. When he started doing evaluations for Great Western, 12 years ago, the pay was $150 each, he said. The company cut the rate back to $75 a few years later, according to Fisher. When he agreed to add color charts to his reports, he said, Great Western hiked the rate to $100.
Among others who performed Great Western evaluations in recent years were owner John Binkley's son Hal and brother Daniel. In February 2001, Daniel Binkley became Great Western's vice-president of customer relations, a full-time position. Before that he had done the evaluations part-time while working in western Oklahoma, where he sold house siding, windows, and kitchen cabinets for Sears, according to his former supervisor, Cubby McMenamy. Fisher says that he "vehemently" objected to the two Binkleys' doing evaluations because "it destroys the credibility of third-party independence." Daniel ceased doing evaluations when he joined Great Western full-time, according to the company.
The method employed by Fisher and Bivins for Great Western differs from the standard business valuation in that they don't visit the company in question, usually don't talk with the owner, and don't research the local market and industry. I asked Glen Cooper, an experienced business broker in Portland, Maine, to look at the evaluation of C&G Fence Co. The Great Western approach "is not in accordance with anyone's accepted method of valuation," notes Cooper, who heads Maine Business Brokers' Network. For a full-fledged valuation, Cooper says, he charges between $5,000 and $10,000. McCreary, however, responds that Great Western clearly explains to its customers what they are getting for their money. "We believe 99.9% of our customers are happy with our service," he says.
Besides taking issue with Great Western's evaluations, Brown and Hutchens object to the number and quality of the leads for prospective buyers that the Great Western dragnet turned up for them. Instead of leads to prospects in foreign countries, as he expected, Hutchens received an eventual total of five referrals to buyers in Pennsylvania, Nebraska, Ohio, Illinois, and Iowa. Great Western makes much of its potential to generate referrals of interested buyers who live overseas; an application form for prospective buyers is even printed in Chinese. Yet a review by Inc of 98 leads referred to 10 Great Western sellers in recent years showed that only one prospective buyer was from outside the United States. That buyer was from Riyadh (which in the referral was misspelled Rujadh), Saudi Arabia.
So what, after all, is Great Western's record on businesses sold? Given that last year the company had about 3,000 customers and $15 million in revenues, and given that it collects a $5,000 deposit on average from each customer who signs on, simple arithmetic suggests an answer. Based on Great Western's own numbers, it appears that the company derived its $15 million in revenues entirely from deposits -- and none from sales. The company did not respond to a request for comment on that line of reasoning.
McCreary says that 90% of the sellers who enlist with the company for two years or more receive at least one referral to a prospective buyer. When pressed to say how many referrals lead to sales, McCreary recalls a conversation he says that he once had with Hal Binkley about a survey of Great Western's customers. The survey showed that "20% to 40%" of them succeeded in selling their businesses as a result of Great Western's matches, McCreary recalls Binkley saying. However, McCreary had no further details about the survey. When Hal Binkley died, in January, the company apparently lost its only possibility of documenting the survey results.
Postscript
Brown, who still has C&G Fence Co. on the market, hired an operations manager last year when it became apparent that his company wasn't going to sell quickly. The change has allowed Brown to hit the road three days a week as a salesman. "I'm getting a good percentage of the jobs I quote," he says. Brown took time off around the Fourth of July to be with five of his eight grandchildren at Rangeley Lake in western Maine -- the first weeklong summer vacation he has granted himself since he started C&G.
Disenchanted with Great Western, Dewayne Hutchens and Joe Jarles tried to sell Fern Creek Mini Storage themselves by contacting several ministorage chains. "They didn't think we were serious," Hutchens says. So he and Jarles listed their company with a business broker that specializes in marketing ministorage companies. That led to a deal in June, with a buyer agreeing to pay $1.75 million for the company. After Inc inquired about Hutchens's complaint, Great Western refunded Fern Creek's $10,205 fee.
Great Western has recently adopted a different kind of business-valuation software and is offering a new contract. Now customers pay an initial fee when they sign a contract but owe nothing more unless they're "100% satisfied" with the company's services, says McCreary. As for McCreary, his time as Great Western's chief operating officer lasted less than five months, and he has returned to his law practice, still representing the company. On August 27, McCreary's last day at Great Western, John Binkley brought his 33-year-old son, Ryan, aboard as senior vice-president.
Joseph Rosenbloom is a senior editor at Inc.
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