I watched my first movie in a long time on Saturday. It was The Social Network which tells the story of the creators of Facebook.
The movie itself was pretty good but there were a couple of things that hit home whilst watching and reinforced a few that I had been involved in during the past few weeks.
The story basically is that Mark Zuckerberg deceived many of the original co-developers of Facebook. Mark took an idea that was provided to him and ran with it, expanded it and developed the original concept into what it is today. During the process he hid what he was doing from the original idea men and then surreptitiously diluted the investment of the original funder of the project – who was also his friend.
So what did this tell me.
1. It is NOT alright to try to take advantage of your business associates/partners.
2. It is NOT acceptable to engage advisors and instruct them to work against another equity partner.
3. It is not alright to step on everyone with a view that the “end justifies the means”
Recently I was engaged by a company with the sole purpose of exiting a silent partner. However this was not the original brief. My engagement was signed off by a Director and was to provide a valuation for a Victorian real estate business as a means of raising additional equity to acquire an additional business. Once the hard work was completed the idea of now exiting the silent partner was tabled.
During the discussion it became obvious that my client did not value the contribution of the silent partner. He felt, and a little justified, that the agency was successful solely off his personal efforts and that the silent partner was being rewarded without contributing and he wanted him out as cheaply as possible and that to aid this I should amend my valuation down to a more friendly level.
At this point I highlighted that the engagement was with the company and that I worked for all of the Directors and my report would be provided to both of them at the same time and would be a true position of the value as I had determined. After much heated debate between us (over 3 weeks) my client came to see the error of his ways and we began negotiations with the silent partner who felt happy with the valuation and the deal has been accepted pending final review.
Trust is a very important factor in business and importantly in partnerships. The minute that you break it is the minute that the demise of you as a person, leader and business professional begins. More importantly though you should never deal with advisors that see it as acceptable to work with once side versus the other in business when they have been engaged to work for all. Yes an advisor will sometimes have to take a position that is best suited to the right outcome, but be careful of ones that want to assist you to work against people that you should treat well.
A final word on the use of silent partners. Never underestimate the value and worth that a silent partner has brought to your business. In most cases that silent partner has allowed your business to actually exist as without them you did not have the funds to operate. That support requires that when it is time for them to exit that you do it properly, respectfully and remain associates. You never know when someone in business may come back to be very valuable.
