I would like to share more stories than I do in the blog, but I’m also bound both contractually and ethically not to share too much. Some of the stories I don’t tell are of greed, for during an M&A transactions there is often a lot of money up for grabs. As good capitalists we will all do a little grabbing, some of us more than others, and I find it interesting to witness the struggle with greed that many endure as a deal progresses.
Some swear allegiance to their employees and talk of the bonuses these employees will receive. However, as the closing gets near, the talk gets quieter and eventually dies away. Others talk little, but end up delivering in a big way to key employees.
Some inherently know what their responsibilities are after the sale (unfortunately, you can’t completely walk away after selling a business – there are often tax, environmental and other liabilities that stay with you for a while). Others fight hard to the end, trying to slide as much responsibility as they can to the other side of the table. Although that may not be viewed as honorable versus just owning up to the responsibility, it is ethical as long as the conversation is open and transparent. However a couple of business owners I have dealt with (years ago – really) have gone too far by not disclosing a potential liability, and that has caused problems and ill will.
I know it is obvious, but the very worst time to try to settle company ownership issues is when there is an offer on the table and there is money up for grabs. Because between being fair and reasonable and walking away with a hundred thousand dollars, many will choose the money. Ah – in my experience anyway, your results may vary. This is why when we take an engagement we’ll explore the ownership structure and try to ferret out any issues. If there are issues we’ll recommend they get an attorney involved and resolve or at least properly document the ownership of the business.
After years of experiencing these types of situations I’m rarely surprised over someone’s actions when there is a large amount of money involved. I sometimes tell M&A war stories to friends and family and they are sometimes surprised at the actions of those involved. Even condemning. Maybe I’m jaded, but my opinion is that you can’t positively say what you would do until you are in that situation of being able to make a grab at a large pot of money.