Sewitch Etcetera Corporation

Dear Stan,

We have been negotiating with a strategic buyer of our company for about a year now.  The year has been full of business challenges that could have derailed the sale, but we addressed them all and the buyer is still at the table with a good deal for us.  Our team has been stressed and there have been occasions of emotional disagreement, which we have been careful to keep among ourselves.  We recently met to discuss next steps with the buyer.  While the interaction was very positive, he did ask how our senior management team and shareholders were handling our conflicts.

What concerns me most is that that he detected erosion of teamwork between the senior executives. I was with him more than anyone so I’m wondering how he got that impression. I know how important it is for investors to have a comfort level in the management team of a potential acquisition. I have repeatedly raised the issue that each of us must know our roles and responsibilities and how we interact for the benefit of the company.  I can’t think of anything that would have raised his concern.  How did the buyer get this impression?  And what do we do about it?

Signed,

Revealed in San Diego

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“Dear Stan,

We’ve been negotiating with a current partner to spin out a business entity from the partnership as our separate ownership.  It’s a segment of our joint business activities that is no longer congruent with the partner’s mission and is also incompatible with their business practices.  We agreed in principle to do so last December, and had been working together pretty well towards a June 30^th separation date.  We created the separate legal entity, drafted a separation agreement that seemed to be acceptable to all parties, notified our customers and began receiving advanced orders and deposits against shipments due after July 1^st.  About two weeks before the separation date, our partner suddenly came to us with a new set of financial reports that essentially said we owed them a lot of money for activities prior to the separation date.  The amount that they said we owed, oddly enough, was almost exactly equivalent to the sum of our advance order deposits.  We don’t believe we owe the amount they claim, but are uncertain as to whether or not to move ahead.  What would you advise in this situation?

Signed,

Chain Yanked in San Diego

Dear Yanked,

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Since money was invented around several thousand years ago, and probably before that, people have been dickering over trade.

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