#1 Deal Making Tip – Being Able to Walk Away

In 2002 I was running MWI’s predecessor, Mindwire Interactive, but I had made mistakes and was ready to walk away and start over. Another business offered to buy us out. We started negotiating to try and come to a deal. And then I made a mistake. I assumed we would get a deal done…soon. The company buying us out said we could have the deal done in two weeks. When you believe you’re going to sell your company and walk away in two weeks, you may start running your business differently, as I did, and I don’t mean in a good way. Two weeks came and went, and no deal had been signed. But they told us it would just be another two weeks. Two weeks became four, then six, then eight, and finally turned into about four months.

By the time we signed a deal, two things had happened; 1) the deal had gotten much worse, and 2) I had mismanaged the business during those four months to the point where I more or less felt forced to do the deal (in retrospect I wasn’t in any way forced to do the deal, but that’s how I felt at the time). I was in a bad spot, and the buyer knew it and took full advantage of the situation–not just to get me to sign a bad deal, but afterwards the buyer didn’t even attempt to meet their contractual obligations. I ended up not only losing my business, and not only did some of my employees lose their jobs, but I ended up losing tens of thousands of dollars. I literally paid somebody to take my business. And the sad part is I didn’t have to. But hindsight is 20/20 as they say.

The main problem, as I see it, was that I wasn’t willing to walk away from the deal. By not being willing to walk away, the buyer was able to manipulate me into doing whatever they wanted me to do. Fortunately, I’ve learned something from the experience. I’ve learned that there are always other options and it’s worth checking them out. I’ve learned that others aren’t always looking out for your best interests. And I’ve learned that no matter what great opportunity looms on the horizon, you shouldn’t jeopardize the very real things you have in your hands today for something a vague chance at something tomorrow. But the biggest lesson I learned is that if you’re doing a deal because you have to do it, then you’re probably going to get a bad deal.

Right now I’ve got a potential deal on the horizon (no, I don’t have any plans to sell MWI or anything like that), but I’m in a much better position than I was in late 2002. For one, I’m not neglecting the business I have because of the potential opportunity. I haven’t stopped working on various internal projects, even though if this opportunity comes to fruition it may render those projects useless. But best of all, I can take this deal or leave it. If it goes through, then it should be fun and a great opportunity. If it doesn’t, that’s fine too. I’ve got enough opportunities that I can pick and choose, and be perfectly contented with any of them.

And wow, what a difference it makes. Six years ago I was a stressed out basket case. Today I’m calm, contented, happy, and excited about where things are going–no matter which way they go. When you’re able to cheerfully walk away from a deal it’s a nice place to be.