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Boeing executives should have, “Kept their mouths shut. I’m sure their labor lawyers were banging their heads.” Charles Craver, labor law expert at George Washington University Law School. This was in reaction to comments Boeing execs made about the recent NLRB investigation about Boeing’s decision to open a plant in South Carolina.

In buy-sell transactions I see similar things all the time. People say things they shouldn’t; not usually devastating things but things that cost them.

When a business sells for more than the value of the assets the difference is called goodwill and goodwill is based on profits. When there is goodwill, it’s customary for the seller to provide transition training as part of the price. They are teaching the buyer how to run the business so it generates those profits. Twice in the last month buyers have said to sellers that they fully expected to pay the seller for his or her time training them. I’m guessing they said this because it makes sense that someone gets paid for their time and because these buyers are not experienced in business buying they don’t know different (or have forgotten it).

In another case the seller’s team put their foot in their mouth by suggesting a high amount for the non-compete agreement (ordinary income to the seller, not capital gains). While we were nice and pointed this out, it did open the door for the buyer to ask for some of that allocation to go to training (immediately deductible for the buyer and still ordinary income for the seller).

Be careful what you say are words to be heeded.

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