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Sold My Engineering Company To...

Sold My Engineering Company To...

Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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?

RE: Sold My Engineering Company To...

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!

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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)

RE: Sold My Engineering Company To...

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,
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.


RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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?

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

1.0x revenue seems high to me?

RE: Sold My Engineering Company To...

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

RE: Sold My Engineering Company To...

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

RE: Sold My Engineering Company To...

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?

RE: Sold My Engineering Company To...

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.

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

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...


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?


RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

@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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

RE: Sold My Engineering Company To...

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.

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