This is a passage we thought we’d share from Mark’s upcoming book. It’s not in its fully edited form but we thought readers of the blog would like to see parts in the process.
V.V. StreetCry Media
From the chapter with the working title “You Think You’ve Been Screwed!”
Many entrepreneurs as well as C-level executives believe (fool heartily) that once the formality of a signed agreement is completed that both sides are now in agreement. Nothing could be further from the truth.
Many times signed agreements to the unethical or ruthless are nothing more than an opportunity to exploit business laws through the court processes (and more) that the counter party never dreamed of.
When entering any agreement regardless of how ironclad one believes the contract to be one must remember: When money is involved, only money is worth the paper it’s written on. All else is subject to negotiations at any time during the so-called “under contract” time provisions.
Non-payment, delay of payment, circumventing supply requirements, project funding support rescinding, and much, much, more can be used by an offending counterpart to bring one side to their knees paving the way for “renegotiation.” And those newer terms might be far removed from your first agreement.
You may think you have a bulletproof document protecting you from harm. The unethical or ruthless see your belief as folly and may use it against you knowing full well it will never stand up to their Howitzer.
Contracts should be viewed as tools to help both sides remember past agreements however, just like tools – they can break under strain. Believing you had a tool that shouldn’t fail means nothing if that “tool” represented plugging a dike which then suddenly broke under pressure at the most inopportune time.
Let me illustrate this point using myself as the example.
I was involved in a leverage buyout of a prominent specialty manufacturer. My tenure began when this company was in dire straights and I was hired as the person to turn it around. Subsequently within a year not only did the company return to profit, it had its best sales year to date. During this demanding time it was insinuated by the owner that he should sell me the company. For it was obvious (he insisted) I was the guy that could move the company forward, and he just didn’t have the fight for it any longer.
Once the company had turned around and I had revamped the management and other particulars where the company seemed on sure footing an offer was presented for me to purchase the company as to pave way for the current owner to retire. Everything seemed to be going according to everything the owner insinuated. There was no reason to doubt his sincerity. I would later learn to regret that last line.
An agreement was made, preliminary paperwork signed with formalization of the remaining documentation residing between both law firms. Bank approval was in the final stages and we were in the proverbial, “hurry up and wait” stages of the process. Then, out of the blue, things changed. Light-speed might be an understatement.
Suddenly the owner became uncharacteristically hostile in his demeanor with me. Sharp outbursts out of nowhere, arguing points just recently agreed to as if I were lying or making things up. His tone and posture around me turned from one of “best friends for life” to outright disdain. I was not only left perplexed, I was genuinely wondering: “Did I insult his mother or something?” The change was that dramatic.
During this period I genuinely believed the owner must be experiencing something within his family life I was not privy to was the cause. Delays in paperwork from his attorneys were making it obvious something just wasn’t right.
Finally in desperation (for things were nearing madness in my view) I made an offer to end the purchase of the company if that was putting pressure on his family, and since it would be in both our interests to go our separate ways I made an offer to stay on in a lower position with differing terms (that were beneficial to him more than myself for I really was concerned about his mental well-being) till he found a replacement. For if I was no longer going to buy, there really was no reason to stay.
He heralded me as the best person in the world. Told me he was, “So happy for someone with my insights and character.” Then asked if I could write down what we just discussed in simple terms and sign off on it and he would do the same later. I agreed feeling relieved that maybe this was the best and we both could get on with our lives.
In less than 15 minutes I wrote out the simple points, signed it, and handed it to him. He replied, “Great! Let me give it a once over first and I’ll give you it back later today or tomorrow morning.” Feeling relief this was now moving in the right direction I reluctantly agreed. Boy, will I learn a life lesson from this.
The next morning when I drove into the parking lot I noticed the owner’s car. For nearly a year he never arrived before me. I was always first. Something in my gut said somethings wrong but I had no idea what I was about to witness.
Upon entering the building I was greeted by him at the door as he sat in waiting. Abruptly he notified me to, “Pack your things, you’re done.” Then escorted me where I haphazardly threw my belongings into a box and left the building. No explanation forthcoming, no response to questions. Dead silence.
In utter disbelief I drove home questioning whether or not I was hallucinating within some form of dream/nightmare. Once I regained my composure I immediately drove to my lawyer’s office and told him the news. He himself was left dumbstruck.
I asked what were my options and discussions of legal suit were contemplated since the buy out proceedings were still ongoing from a legal stand point. We decided we would both think more on the issue but first off, I needed some time to digest everything that just happened and make arrangements for I was now suddenly – unemployed.
I was entitled to file for unemployment insurance since I was an employee during this process not an owner, so as anyone would I filed my claim. And it was here during this process where it became vividly clear exactly what had been transpiring and why. During this process it was revealed becoming quite apparent, I had been nothing more than an unsuspecting “fly” caught in a trail leading to a spider’s web.
I was notified my claim came back denied. The reason given “why” I was let go was pure fiction, and I decided even though I didn’t want to set eyes on this person again, I would not let this stand regardless how inconsequential the money was. So, I asked for the adjudication process where both sides are heard with the ability to counter any assertions. What happened in that room still leaves me shaking my head on the boldness and outright contempt of decency.
Being the aggrieved party I was told to state my case first with no interruptions from him. Once I made my case he would be allowed to counter any point he disagreed with. So, with that, I went about describing what had taken place.
He sat there listening seemingly uninterested in anything I was saying. Although he looked at me as I was speaking, I could tell there was something wrong. He just seemed to not care as if what I said he didn’t need to counter, or prove wrong. I found it a little surreal only for the fact that I was making a very logical, step by step case and outlining the process in a very detailed manner. If you wanted to take issue with anything of what I was saying, it would be hard to remember every point by memory alone. Unless – you didn’t care. And when I finished, I found out exactly why.
When I finished giving him his turn, he stated, (I’m paraphrasing but I’m not far off, this is near verbatim as I remember it)
“I have no idea what he’s talking about. This is absolute fiction, made up. I’ve been in business for over 20 years. I own a well-respected business, a leader in my market. I would never make agreements or such as he’s stating. Look, to prove what I’m saying here’s a list of demands he gave me the day before I let him go stating if I don’t sign this he was leaving me flat, leaving both my business as well as my livelihood at risk. (Then he produced the agreement he asked me to make.) I’m not going to be held hostage by anyone! If what he says is true, why in the world would this be needed?”
I was shell-shocked. I could feel the blood running out of my face by the sheer witnessing of pure unadulterated ruthlessness. I turned to the adjudicator and simply said, “I’m finished here, I have nothing more to say.” Packed up my notes, and left the building. I was the walking equivalent of an android. Emotionless, walking via autopilot only. Even driving back I was an automaton. I don’t remember anything till nearly the next day at my lawyer’s office.
I told him what happened and once again we both sat there dumbfounded by the sheer ability for deceit. When I asked if we should pursue any legal actions any further he said something that has stuck with me to this day. “Well, you do have options however, this guy your dealing with is not a businessman. You’re asking him to be something he’s not. He’s just a guy in a business. He wont make decisions or actions based on business principles. He’s unprincipled to begin with. You could spend a fortune proving you are right, but in the end, guy’s like him don’t care. His actions already proves that. He’ll make you spend a fortune. Chalk it up as experience, and move on is my best advice.”
On aside note. My lawyer is also a personal friend and one of the best in business law in New England having argued cases in front of the Supreme Court so it’s not as if he wouldn’t like the fight and spend my money doing it like most others would. That’s the importance of having true, authentic, counsel.
Suffice to say years have gone by. In retrospect it’s funny how life turns things in ways where at the time, you think they’re absolute calamities. Yet, in the end, the door that closes needs to be slammed shut so the door that needs to be opened gets unlocked.
I wanted to purchase this company as to build for retirement in later years. The owner wanted to sell it to me as to retire early. As of this writing, I’ve been retired for nearly a decade. He is still there working.
To this day I still laugh when someone states “Yeah, but they signed a contract.” as if they are guaranteed. Nothing is guaranteed, only the guarantee of arguing your case may be guaranteed. Winning a legal battle regardless of how iron clad one believes their argument to be: is quite another.
© 2014 Mark St.Cyr