Other than selling a Shell, where else can a CEO totally fail, destroy a company and still end up pocketing several hundred thousand dollars on his way out the door? Well, maybe CEOs with golden parachutes, but lets’ face it, this is not a common occurrence. The reason for my writing on this subject is because I frequently run into CEOs who are selling their Shells under the misapprehension that they are the ones who will dictate the terms and conditions of the sale. Most of them are clueless as to the golden rule: “The person with the gold rules”. When I am speaking with a prospective client and the conversation starts moving in a direction about terms and conditions that is totally unrealistic for most buyers to accept, I quickly end the conversation with “thanks, but no thanks”. With today’s pricing of OTCBB Shells, buyers are getting more and more particular when it comes to the terms and conditions outlined in their Letter of Intent and Final Purchase Agreements.

Back in 1998, I purchased my first Shell for $25,000. Today, that same Shell would cost a minimum of $500K to $600K and that’s if I was buying it direct from the seller and not through a daisy chain of “finders”. Today’s sellers are getting top dollar when they sell their Shells, but with that sale comes more conditions, scrutiny and due diligence. This type of sale requires experienced professionals on both sides of the transaction. Due to increased pricing there is a whole new cottage industry that has sprung up comprised of accounting firms, attorneys, investment bankers and broker dealers conducting PIPE transactions. Believe me, these guys know what they are doing. However, there is always going to be that seller who thinks he is smarter than everyone else. As the old saying goes, “a person who represents himself has a fool for a client”. In this case a seller who is not properly represented in the transaction ends up a lamb being lead to slaughter.

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