Yet another Doper's travails

Miscellaneous and Personal Stuff I Must Share
1

Life just refuses to stand still. This may bore the majority of y’all, but there’s likely one or two that may offer insight.

A situation developed during the Great Board Blackout (Hackout?) that I must deal with very soon.

A little background… My partner and I have not completed a business plan for this year. This is a common story in my business (oil & gas exploration) this year because nobody knows what the hell to expect. Things are in major disarray. I know some of you have heard news stories about rising oil prices, but industry activity has failed to respond to what might seem to someone outside as prime times. Mergers abound and the layoffs continue. Part of the problem is having the drilling dollars all busy playing tech stocks, but I’ll not try to sum up the grease business. Suffice to say, times have been tough, we hope 1999 was the worst we’ll see for a while, but who knows?

To move ahead… my largest client (representing 40-60% of my business over the five years I’ve consulted for them) is (a rare animal) bullish on exploration right now. They decided that their commitment is such that they need to stop outsourcing and hire a permanent geophysicist. Their obvious choice is me and they have offered me full time employment. No interviewing necessary, they’ve been drilling my wildcat locations for five years now and they are happy with what I do. Their precise proposal is unknown, but will be on Monday.

The stuff I’m wrestling with:

1.) The dissolution of my company. Manny factors involved here. Part of it is unquestionably an ego thing - I hate to let my baby go. And I’ve grown accustomed to not having a boss (yeah, rant available re: clients). There’s also the omnipresent realization that jobs in this industry come and go on a rapid basis - so, do I really want to put a 10 year old organization down for a job that could easily vaporize in 10 months?

2.) Continued existence of my company. The guy that is pushing me locally is the head of the prospective employer’s Gulf Coast division. When he hired on, they bought out his oil company, in his words, “…pictures on the wall and all.” I don’t really want them to buy me out, but I realize they are probably approaching it from this perspective. I would like to leave the entity and its assets operating under the aegis of my partner (in whom prospective employer has no interest) in case I need to resurrect self-employment in a year or so. I guess one option there might be to sell them assets of the company that I will need while in their employ, while leaving the corporate entity intact.

3.) Remuneration for activities rendered - i.e., they’ll pay me real money twice a month (predictable checks - something I haven’t seen in over 10 years). As I said, the specifics are not on the table until Monday, but I know what to expect - and it’s going to be enough money that I’ll be hard pressed to walk away. Probably around 3.5 times what I made last year (I already know their big bennie is stock options). If I can structure the deal such that my company (sans me, (?)temporarily(?)) remains intact, I would prefer that. Dual reasons therefore: 1) my partner is not getting picked up in this deal - I would like for her to have a continuing source of employment 2) as stated above, I would like to have a place to come home to when it all vaporizes (added note: yes, I could just start another company, but this one has a clean and long, well, 10 year, history with trademarks, vendor histories, etc - i.e., beyond start-up), if it in fact vaporizes. Facts o’ the matter are, it could also be a 20-year career deal.

4.) If I can keep the companies together, what kind of deal do I make with my partner?

We’ve two companies, one a data supplier and the other a data generator, workstation services and interpretation firm. Business has turned such that, over the last 3-4 years, the interpretation and workstation services have generated 80+% of the income while data supply (marketing) has dwindled to near nothing. So, my partner is the data marketeer and I’m the geodoggie - i.e., I generate all our income and she is profoundly frustrated. Not that she is not good at marketing - she’s one of the best. But it has worked out that she can’t sell too manny buggy whips in a car market. She is urging me to do this deal; she has said, “I can’t provide my 50%,…take it!”

So what kind of exit deal do I make with her?

Or, if she continues to run the companies, she obviously deserves remuneration, but I provided the bulk of the funding, so I should (and if you know the IRS, must) make something as well.

A bit to think about.

I’ll appreciate y’all’s comments.

2

I’m no business person beatle, so what I’d like to ask you to think on till the real brains in this outfit show up again, is WHY did you start your own business ten years ago?? What has changed so much that you would consider giving up on that reason now.

If you’re just tired of the uncertainty, no steady paychecks, then that is one thing, but if there is a deeper reason, just solving the business end of the question won’t get answered completely. In five years you might be just as tired of the steady paychecks and want the edgy excitement and independence again.

So, just think, Why did you start your business ten years ago, and why isn’t that reason valid today?

Okay, bring on the brains.

“Cheat is TEACH, backwards!” Doodlebug’ Up the Down Stair Case

3

This board is a major reality check. This isn’t trivializing the OP, it’s a respectful nod to the assortment of bright people who live a lot of the issues we BS about…

Don’t have an answer for you, and would hesitate to offer one even if I thought I did. Frankly a lot of the business issues (and all of the industry specific ones) are totally beyond me so, little of real worth follows.

Don’t know what your liquidity is right now, but it may behoove you to pay for an expert if possible. Sounds like a big choice you’re facing, and a good hired gun in your corner could help. (Finding that honest gun is whole 'nother problem.) I’ve been underwhelmed with the quality of consultants around, but a contracted outsider could possibly help.

Purely off the wall, uniformed and with no stake…I automatically suspect “corporate comfort” as a shelter. Unless you can drive a deal that shelters both you and your partner (rotsa ruck) I suspect that the comfy offer is a “swallow and spit out at leisure” deal. The security is, at best, a facade.

No easy answers here. If you’re enough of a threat/attraction that you’ve attracted notice then it’s a weighted decision. Do you have enough clout to negotiate genuine security? Do you have a defendable niche carved out if you decide to stay independent? Do you have a back-up position if you get spit out of the system once you’re neutralized as a competitor?

Strictly my opinion: loyalty very rarely exists anymore in work. Someone absorbed into a larger system is digested, not integrated–and never usefully included. Legal help is crucial, but not a failsafe; those with better connections and deeper pockets win the litigation game. Security is a chimera.

All to easy to say, when I’m not the one living with the consequences. But does your industry have a grapevine, a source for tapping into those who’ve been “done wrong and wrung out”? There is no finer partisan than someone who’s walked the path before you and lost; they have the experience and the fire in the gut.

Whatever you choose and however it comes out, all the best to you. Purely a pisser, ain’t it, when life comes down to nerve, hopes and cunning?

Veb

4

After too many years of self-employment, I’ve found that the biggest problem with owning yer own company is that yer boss is still an asshole.

Actually I can sympathize with the struggle here, especially after a tough year. I’ve been tempted myself on a few occasions, especially after my business was gutted by a messy divorce in the middle of a recession, but my advice would be to stay the course.

Corporate clients trying to hire their consultants as full-time employees are generally looking to cut costs and cut-out competition. Which would be to say, your interests are not theirs. I’ve lost two exceptional people to big companies in the last few years, and both were back within 18 months.

The major deciding factor for me remains that owning the business allows me to decide the future, rather than riding along on an often rudderless ship guided by a committee I’ve never met.

A bad year is just an early warning signal, and without intending insult to yer partner, it sounds like she needs to employ her marketing skills on behalf of the company instead of the clients, and get out there and establish a bit more diversity in the client mix and the lines of business. When only one partner is producing, and more than 40% of the income stream is coming from a single client source, the firm is just too vulnerable. Forget what happens to her if you jump ship – what happens to you both if you get hit by a car and end up out of work for 6 months?

I’m in danger of steamin’ the place up with all this hot air now, but I recommend sticking with the devil you know and making a five-year business plan aimed at creating the stability and security that is only an illusion in a corporate job.

(And offer your biggest client a cut-rate deal in exchange for a longer-term contract – that might make the local manager look good while allowing you to keep both the contract and your firm.)

Dr. Watson
“We should all do what, in the long run, gives us joy, even if it is only picking grapes or sorting the laundry.” – E.B. White

5

At least you have some say in your future. Us dilbertfolk just try to survive mergers and takeovers. The velcro logo on the labcoat.

Ever think of going back to drumming? Or maybe that’s an option next time the business of drilling goes bad.

6

One big question is what they mean by this.

If they mean this straightforwardly - if they’re going to hire a permanent geophysicist, even if you turn them down - it looks like you’re out half your income if you say no. Do you have realistic prospects for recouping that business elsewhere if you stay put? A lot hinges on that.

How badly do they want you, and how badly do they want your company? If they really want you, then you’ve got some negotiating leverage to keep your business going without you. If not, it’ll be an uphill struggle. Either way, I second Veblen’s advice: if you can find a skilled negotiator to represent you, do so. It would cost, but I think that would maximize your chances of getting what you want. At the very least, you should expect a substantial lump-sum, on top of salary, if they insist on buying out your business.

If you can keep the shell of your business alive while signing up with them (hell, even if they don’t), the fact that they’ll pay you 3+ times as much definitely counts for something. If they fire you or you want to ditch after a couple of years, you’ve got money in the bank while you reinvigorate your business or start a new one. Again, how much that should count is up to you.

The problem with your partner is a whole 'nother thing. Her side of the business has dried up, you say, due to forces beyond her control. If you jump ship and she runs the business, can she do the things you were doing? Because otherwise, even if you stay put, she sounds like she needs to get a new start somewhere where her skills are valuable.

Good luck!

7

Well, in a worst-case scenario, there is always someone needing a mudlogger somewhere! (At least that’s what I keep telling myself…)

8

beatle, if you want to, drop me an email telling me with whom you’re speaking. I’ll ask my oil and gas analyst if he knows the company and whether they’re likely to keep up the exploration work or resume “drilling for reserves on Wall St.”

I hope that will at least be helpful in allowing you to evaluate the odds of being self-employed in 10 months.

This is a toughie, and having never been there (never having had my own company) I really can’t be of much help beyond that.

Change Your Password, Please and don’t use HTML, as it has been disabled

9

Thanks, all, for some good input (something I need right now).

Anti Pro (that’s a cool user name), the entire industry has experienced fundamental changes such that the smaller independents just can’t operate effectively as easily as they could ten years ago. Before 3D seismic was common, a single drilling opportunity’s geophysical investment in a smaller operator’s realm might have been on the order of $6-20K, now it’s approaching, minimally, $60-70K and can easily get into the millions. Ten years ago a consulting geophysicist could operate with a phone number, an engineering rule and some pencils. Nowadays you cannot function without at least access to a workstation (~$30K for a minimal setup, it can easily swell to $150K; you can rent time on’em for $60-125 an hour). It’s very difficult to sell a deal w/o 3D these days, although it can be done. Nevertheless, to answer your question, the deal has changed and the smaller parties, who have historically drilled the overwhelming majority of exploratory wells, are having a much rougher time of it.

TVeblen, you make some good points, but frankly, introducing a pro negotiator at this point would likely queer the deal. There’s a market excess of interpretive geophysicists out there right now, so I’m kind of walking on eggshells. And no, I’m not really looking to this to provide long-term security, just near-term money. Which leads me into (did y’all script this?)…

Dr. Watson adresses the key issue I’m fighting - I need the money but I want to keep the corporation alive so I have a home if it all goes poof. This area of thought also ties into some very good observations made by RTFirefly:

I think that is the guts of the issue - they’re not so much interested in taking out my company as they are in having a full time wiggle doctor (sorry, industry term for an exploration geophysicist). And no, we do not have a very good opportunity available to replace the income we’ll lose if they pursue another course.

Yes, sunbear, I still have the kit,…I hope that’s not where I’m going. And Pantellerite, man, do you really want to mudlog? I think not, but we do what we have to do, n’est pas?

Finally, manny, thanks, I really do appreciate the offer and I will probably take you up on it once I’ve seen their proposal.

10

Well, it develops that the situation is just about as complex as real life gets, and I don’t envy you yer choices.

It sounds like you’re leaning towards maintaining independence, but whatever the outcome you don’t appear to be a man to be makin’ rash or unthoughtful decisions. Please do me the favor of lettin’ me know what happens, now that ye’ve got my interest piqued . . .
Dr. Watson
“There’s no free will,” says the philosopher;
“to hang is most unjust.”
“There is no free will,” assents the officer;
“we hang because we must.”
– Ambrose Bierce

11

Actually, beatle, mudlogging is my greatest career fear! But jobs always seem available (more from turnover, I imagine, rather than industry expansion), and it pays the bills…

Good luck with whatever decision you make. I have neither enough knowledge of business nor enough knowledge of petroleum to offer you worthwhile advice. I don’t envy your sitiation, however: the volatility of your field is exactly what has kept me away from petroleum!

12

As I’ not much of a business head, take my ideas with a pinch of salt.

Would it be possible for you to leave your partner with the majority stake in the company, and then hire out your own company for the equipment, therefore maintaining your companies corporate identity, providing business for your partner and keeping your equipment?? sounds a little too perfect to me…

J
Because Fido ate the Hand Grenade for me,
When the Tans came round to search the house at tea,
I said, “Take this, dog, and eat”,
He thought it was a can of meat,
It was the hand grenade that Fido ate for me.

13

John, nice idea; a little too cozy for a public company.

For the half dozen or so who picked up on this thread, developments…

No real specifics on the table yet, although we’ve gotten around the hurdle of my company’s continued existence. I expressed my desire to let it live and they’ve, so far, said they can live with that. Their board (and they are public) will render a decision on that tommorrow. That, of course, lowers what upfront money I’ll see. Since I had that discussion with them Monday PM, my partner, Monday evening, expressed her feeling that she might not like to carry it forward. Great! I would have liked to have known that beforehand, but, really, how would it have changed things? I might have been more willing to just sell out, but now I’m thinking take the salary for a year or so, look to a cheap buyout with her, and have the company in my pocket, all assets paid for, for future use (there’s more, there’s a whole damned Peyton Place if I thought it was relevant).

It’s not easy to build a consulting practice, and pulling the plug sets you back close to ground zero. Nevertheless, I currently have a “name” in the business and could survive a less than a year exclusive employment.

Well, we’ll see what they offer tommorrow. Thanks, six-pack, for offering attention.

14

And they’ll have those 500 business cards printed for you, which you won’t need much.I have 300 with the wrong e mail on them.