Before I tell you the one thing you should never ever bring to an acquisition closing, I need to give you the background….
Company X was a successful company. Especially when you consider that on $3MM in revenue it spun off 30% in pre-tax profit. For over twenty years the owner, (we’ll call him Harold) ran and grew his business with savvy planning and shrewd decision-making.
Harold’s only son, (we’ll call him Donald) worked in the business and had spent time in each discipline as he was being groomed to take over when Harold was ready to pass the baton.
Best laid plans and all that.
Harold was hospitalized after being diagnosed with advanced cancer and 24 yr old Donald was put in charge.
Fast-forward five weeks and Harold is back in the office part-time while working through his radiation and chemo regimen.
(It is important to know that company x is a small, 10-person niche manufacturing business with long-standing employees)
Harold is in his office when five of his employees come in and shut the door. They say that they speak for rest and tell Harold that they will not work for Donald. Donald has been derogatory and denigrating to the ‘peons’ for years. They had laughed Junior off as they were treated wonderfully by Harold, generously paid, and received abundant benefits for their good work.
However, during Harold’s hospitalization, Donald’s attitude had sharply worsened and more importantly, was observed doing cocaine at work.
(We are guessing here at Donald’s state of mind: he’s the only child, his father is losing a fight with cancer, his mother was never active in the business, the business is highly profitable – he’s about to inherit a company that practically prints money)
Harold had some hard decisions to make. It had long been discussed over the dinner table that Donald would take over. But what would happen?
How could Harold plan this transition to provide for his wife and his son? Also, what about the employees that had worked so hard with him, built this with him?
For the first time ever, Harold entertained the idea of selling his business.
(Often times, the best companies aren’t for sale, until suddenly they are.)
Prepping for a non-family transaction like this is heady work when you’re at your best. Harold was losing his fight with cancer and started each day with less and less energy.
A match made in heaven. So similar in background, philosophy, business culture – just about everything between the two men was identical except that Harold was almost 5’10” with a slender build and Joseph (the buyer) was 6’5” and 250 lbs of beefcake.
The details were hammered out. The employees were quietly notified. The closing was set.
What is the thing you should never ever bring to a closing?
A snotty young asshole with a drug problem and an entitlement complex!
(I will never forget. Donald … standing face to chest with Joseph … looking up at him … his face contorted with anger … threatening to kill him.)
Donald was quickly manhandled from the room by Harold’s lawyer and long time friend. Amazingly, he and Donald weren’t gone that long. Would Donald sign the non-compete and let this transaction close?
(I’ve always wondered what was said to little Donny in that conference room down the hall. Was it an appeal to respect his father’s wishes? Was it the carrot of millions coming into his family’s coffers?
I’ll never know. And that bugs the hell out of me.)