When Good Negotiations Go Bad
It was just like in the movies, he recalled.
"I was in the middle of a negotiation to acquire a small agency. Then, all of a sudden, the agency owner got up in the middle of our negotiation and just left the roomhe stormed outside, got into his car. Now, I was watching him from the second-story window of a building," Scott West, chief executive of the Houston-based Pathfinder/LL&D Insurance Group, LLC, said about an acquisition negotiation that had unexpectedly gone sour.
Mr. West continued: "He drove away in the middle of our negotiation. Then he called me from his cell phone and said everything is called off. Of course I asked why, and he started screaming about things that hadnt happened, and I said, Wait a second, I can assure you, that is not the case."
Not surprisingly, in the end, the deal was not consummated, but Mr. West said the buyer should look out for such rude or strange outbursts, because they can reveal aspects about the seller that due diligence may miss.
"It turned out that the owner was not a reputable person, and the state board later yanked his license," Mr. West said. "If sellers are prone to odd or rude remarks during negotiations, you have to take that as a signal to walk away, because inevitably, in any one of these transactions, you do hit a bump on the road, and it can happen after you close the deal."
Mr. West also advised that buyers should take time to get to know the people they are doing the deal with and trust their own instincts. "If your gut says I shouldnt be doing this, but your mind says, Boy, look at all the money I am going to make, you should probably go with your gut."
Reproduced from National Underwriter Edition, July 22, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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