As they say, some of the best deals are the ones we walk away from. Those can be easier, particularly if you think you’ll never give it a second thought or if you hope the other side will never darken your door again. But, after the deal is nearly sealed with a handshake or verbal acquiescence, both sides think the heavy lifting is done and it’s only a matter of crossing the “t’s” or dotting a few “i’s” and getting signatures on a contract. Then, out of the blue, something internally goes haywire, or a seismic economic change suddenly emerges.
After you have affirmed a deal in principle, it can be difficult to change a “yes” to a “no” and remain on speaking terms with the disappointed counterpart. It’s hard to forget the innumerable hours that have been devoted to the accord, as well as the serious money expended in performing due diligence involving bankers, lawyers and accountants, many of whom can’t take a joke if they don’t get fully paid.
There’s usually no easy out that will result in the opposite side being happy. From my experience, the best way is to be brutally honest instead of creating a straw man on whom to blame this negative last-minute decision.
Even if you’ve used an intermediary such as a banker or an attorney, if you’re the ultimate decision-maker, you must pick up the phone or meet with your counterpart to explain why you dropped the bombshell that you’re reneging, because your decision will be perceived as just that.
One of the darker days in my dealmaking history came after three brutal months of negotiating for a chain of retail stores with a price tag of $350 million, only to have the investment bankers call on a very late Friday evening to tell me that the seller turned tail and left me standing at the altar.
The side that dissed me had no gumption and made the bankers call me, but I nonetheless immediately telephoned the seller at home to try and get the real story behind the story. His sheepish response was to blame everyone else without fessing up to the real justification. After I demanded the gospel truth, the bottom line was revealed. He had received a Hail Mary lucrative offer from a mutual competitor that benefitted him, not his shareholders, with a disguised sweetener and continuing employment with a fancy title, but no real work.
My parting words were, “You’ve just made one big mistake and when your deal ultimately fails, call me.” I was still unhappy, but I did get over it after he came clean, even though I thought he was a weasel.
The P.S. to this saga was just as sure as God made little green apples, this same equivocator resurfaced 10 months later with hat in hand, as things hadn’t worked out as planned. Success was the best revenge in this case because we bought the company for $100 million less than the original offer.
When you must walk away from a deal, for whatever the reason, man up and just tell it like it is. This provides the best opportunity for both sides to continue to at least be civil to each other and also leaves the door open for future opportunities.
Michael Feuer co-founded OfficeMax, and in 16 years as CEO, grew the retailer to sales of $5 billion in 1,000 stores worldwide. Today, as founder and CEO of Max-Ventures, his firm invests in and consults for retail businesses. Feuer serves on numerous boards and is a frequent national speaker and the author of business books “The Benevolent Dictator” and ”Tips from the Top.”
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