My $500,000,000 Fail: Maximum Effort or Regret the Outcome.



An example of when I didn’t exert maximum effort that still chaps me today was when a company I consulted with was in discussions on a sale of a majority of their business to a competitor for nearly $500M. Their successful company was in a great sellers’ market. They received several bids, and when all were in, three were considered.


One of the greatest concerns of the owners was what would happen to their nearly two thousand employees. The company with the third highest bid said they would keep all employees on for at least one year and management on board for five years before any layoffs due to overlap would begin. The top two bids made minimal concessions for the employees. I also knew that the owners would set aside a sum of the proceeds to pay out as bonuses to the employees.


In a private meeting, they decided to accept a cash offer from the company that offered to keep on the employees. It was the lowest bid of the three. I suggested they do something different. Their sole focus was on taking care of their people, but I believed in a better way that addressed this concern.


There was a significant difference in the first bid and the third. Additionally, the first-bid company had an equity exchange option. My thought — the one that I failed to communicate properly to the seller — was to accept a stock offer from the first company to eliminate a taxable event, then put the difference between the first and third bids into a fund for the benefit of the employees that would grow and pay out over time. This way, the seller wouldn’t have a huge tax bill. And that, combined with the difference in bids, was nearly a $100 million difference! Plus, the employees would receive more money over time rather than the much smaller one-time bonus the owners were prepared to give. I even devised an IRS-acceptable plan to hedge away most of the non-systematic risk from the concentrated position the seller would have in the acquiring company.


I failed to deliver the message effectively. The seller didn’t take it. The benefits got lost in the various moving parts and “bird in hand” mentality. They were too fearful to take the risk even though I explained most of the risk away. Even when I informed them that the highest-bid company was already discussing the acquisition of the company they were choosing, which in my mind was a much bigger risk to their intended result, they still didn’t budge from cash in hand and a promise that their employees would be taken care of.


I failed the owners. I failed the employees. I failed myself and am still chagrined when I think about it. I should have put more effort and more emotion behind my presentation. I should have done a number of things differently but didn’t. I failed, in my mind, because of my effort, and I told myself that I wouldn’t do that again. BTW, I’ve never before used the word chagrined in speech or in text. I feel much smarter now😊. We’re always growing or dying.

My client took the third highest offer and got their taxable cash payout. The highest-bidding company acquired the acquiring company (the one with third highest offer) and laid off most of the employees — just like I thought would happen.


There’s another lesson in this. People make their own decisions, and you should accept that. We’re all individuals. No one is emotionally linked to another person. The decisions I make should have no emotional impact on you. But yet, we all feel these decisions. The important thing to know is that while someone’s decision may directly impact your life or the lives of those you love, it was their decision and their decision alone to make. There’s nothing you can do about it after it’s made, and no amount of crying, screaming, complaining or “I told you so” will change it. It happened and now you focus only on what you do next — which, of course, is the next step of our strategy.


Excerpt from Achieve: Overcome Obstacles. Find Time for Greatness. Develop a Framework to Achieve Anything.


@_michaeljlee

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