How an Entrepreneur Was Able to Jack Up Profits Only to Be Sued After the Business Sold

A commercial janitorial business dramatically increased their gross margins and profitability the year before it sold. However, the source of the profits wasn’t from excellent execution or dramatically increases sales. When the buyers found out why the performance was so good, they sued the seller.

A juvenile based sports manufacturing and import company had multiple offers on the table but decided to aggressively the countered all the offers. The counteroffers were all rejected. A year later the business was sold for the book value of inventory.

Get multiple strategic bidders at the table and interesting things can happen. Sometimes being in the right place at the right time just happens. You can’t plan for it, but when it happens you need to focus on not doing something that will screw the sale up. 

Ian MacLachlan

Ian MacLachlan
BTI Group
Santa Cruz, California
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