It didn't happen yesterday, or even a couple of years
ago, but my memory of it couldn't be clearer. With my
brother, Rich, beside me as best man, we stood
in the front of the little Maine church on Bailey
Island watching the matron of honor walk down the
aisle. Then the organist began the Trumpet
Voluntary, the guests rose as one and Annie, my
bride, appeared at the entrance to the church, radiant
on the arm of her father.
They had proceeded perhaps eight or ten steps
down the aisle toward us when, totally without
warning, the music stopped. I looked
over to see if the organist had had a heart attack. She
said later that it looked like I was going to have one.
Annie, recognizing bad karma instantly, headed
back for the exit.
But Rich saved the day. Eyeballing the
power cord, he traced it along the floor to the wall
socket and — showing a flash of the
mechanical brilliance that earned his grandfather an
MIT degree at age 19 — plugged it back in.
The organ was back in business, the trumpets were
volunteering again, and Annie decided that
— what the heck — it was worth trying
again. All in the space of about 15 seconds.
I whispered to my brother words to the effect of
"I'm glad I brought you along."
* * * * *
The music stopped for one of my clients last month,
and as it turned out, the power cord wasn't just
unplugged, it was severed.
After a full day in their lawyer's office signing away
the company that the four partners, my clients, had
built over the course of three or four decades, all of
the paperwork was done. The buyer was to close
out the deal the next day with a reciprocal signing
followed by a wire transfer to fund the all-cash
agreement. Though I hadn't been part of the
negotiations or structuring, I was pleased that my
long relationship with the group would end so
positively…
…until the next afternoon, when I received the
email message: "…our deal just blew up.
After they [the buyers] received the distribution
schedule this AM they told us that they did not
understand that the balance sheet would have a [line
of credit] balance on it at closing. We reviewed this
with them last week, early in Feb, and early in Jan.
Their lawyers told [our attorney] that they 'did not
understand the deal.'"
"Maybe they were just trying to give us another
haircut on the price."
* * * * *
Totally coincidentally — and perhaps ironically
— the very next day I sat in an attorney's
conference room with another client, involved in
another buy/sell deal, unrelated to the first. This
meeting brought together just "the bean-counters,"
two from the Buyers and two plus me representing
the Sellers.
The objectives of the meeting were
distributed to both parties:
- To understand [the Seller's] financial
accounting policies plus closing and reporting
processes;
- To understand [the Seller's] chart of accounts and
internal controls;
- To establish cut-off procedures at closing
while ensuring accuracy of working capital
together with an accounting integration plan.
Based on the experience of my other client, closing
the cracks — before anything could fall
through — was critical. Fortunately (but not
accidentally) our accounting had been meticulous.
As we passed across the table each requested
document, most of them produced right from the
accounting system, the Buyer's representatives
became more and more confident that they were
seeing what they were actually going to get (see
shopping list in sidebar). Communication among us
developed collaboratively. The discussion became
less historical and procedural and much more
anticipatory: what will the financial statements look
like after the deal is closed? How will we integrate
the two systems of accounting and administration?
This deal closed two days ago. The two
partners of my now-former client company enjoy the
kind of personal financial freedom that can only be
described as truly liberating. Based on their
successful close in the context of my other clients'
disappointment, there are three critical elements
in the financial area (among a number of others
overall) which stand out as success factors:
- Hands-on, joint involvement by the
accounting and financial managers on both
sides established a level of mutual rapport, trust, and
respect that helped to neutralize the suspicion that
inevitably surrounds high-stakes negotiations.
- Our face-to-face, unfiltered conversations
resulted in a continual confirmation of the basic
deal elements — and their financial
implications — as we moved down the
audit agenda.
- Two people on one side and three on the other,
all with the same accounting and financial
predisposition, became an internal resource to
the negotiating teams.
In the event, with the finance teams keeping the
organ plugged in and the music playing, and the
lawyers continually smoothing the carpet, my clients
and their successors not only made it to the altar
successfully, but still (two days later) have no
regrets.
Thirty-one years later, the same (and then some!)
can be said about Annie and me.
