You gotta know when to walk away

I'm no gambling woman, but the Kenny Rogers hit seems like just the right song for the dilemma we find ourselves in. Let me explain.

When my business partner and I send in an LOI (Letter of Intent, or offer letter) to a potential seller, what we get back is typically a redlined version with changes that are known as "comments." As a sidenote, the comments don't explain any of the changes; the changes are made directly to the text, and are simply called comments. We then go through the seller's comments, and respond with our own comments. And so on. There are lawyers and advisors on either end to help each side understand the consequences of the changes, and the process chugs along at the speed at which the seller team and the buyer team move, hopefully towards an agreement that both buyer and seller sign.

As you can imagine, this process feels incredibly slow to us. And oddly formal. I'm tempted to add in bubbles to explain each change that we put in, but I'm told that is not The Way Things Are Done. Fair enough. Formal processes do bring order to complicated exchanges, and a consistency in style can allow one to focus on substance. But what if the process can be hijacked? Then what does the hypothetical gambler do?

Well this is exactly the situation we encountered recently in an exchange with a seller. After some back and forth comments, we got back a redlined copy, and also a clean copy of the latest seller version. We were puzzled to find that the clean copy was actually already signed by the seller. Then we read the wrapper text. This was apparently the seller's last stand, and we had a week to respond yay or nay.

We weren't sure how to feel. If we were closer to agreeing on the terms, these actions would make sense to us. But several key items in the offer were nowhere near the point of settlement, and we thought we'd be addressing them through verbal discussion or more LOIs. Now the process was out the window, and though it looked like we were about to go a lot faster, we were in uncharted territory. It was hard to figure out what to do next:

     a) ignore the power play and just send back comments as before
     b) ignore the power play and not even respond
     c) choose yay or nay and respond as directed
     d) choose yay conditionally, presenting a third option that is better
     e) choose nay on principle and say we don't work with bullies.

The options ran the gamut, but we didn't know how to choose from among them. This was a whole new world. We still don't know, but we've got some questions for ourselves as we work through this period of the deal cycle:

• When we encounter a bully or a bullying action, do we respond in kind (escalate), do we try to change the tone (mitigate), or do we walk away (terminate)? This sounds like a strategic decision but it's as much a gut check. I'm not sure I can stomach the escalation option.
• What do we consider appropriate reasons to walk away? Quitting isn't fun, and given sunk costs of time and effort, it's hard to let go of anything. But when do we really need to? (And why?)
• And finally, if we can figure out when to walk away, then how do we actually do it? There are reputation issues, and breaking up is never easy besides. So when push comes to shove, how do we shove off?

So many questions. Answers to follow.