What NOT Do In Business Rule 45: Don’t Pitch To The Designated Hitter

Gary and I were in negotiations with a rather large company in efforts to secure an investment and to form a strategic partnership.

Our negotiations seemed to go very well and we arranged a follow up meeting the following week to discuss matters further. After the second meeting, it seemed that both parties were eager to continue.

Things started to drag on a bit for no apparent reason, as it seemed that we had one too many meetings and I felt the need to start moving forward legally. I knew, however, that it was a big decision for them as it dealt with a significant capital investment, so I expressed continued patience in our negotiations.

The following month, in what I hoped was one of our final meetings, their representative (also an owner in the company) told us that everything seemed OK and they were prepared to move forward as soon as his brother returned from a trip overseas. He told us that his brother made all the decisions for the company and would need to be brought up to speed upon his arrival back into the States the following month.

There was one problem, however. We never even knew he had a brother! … Let alone the fact that it was his brother that made all of the decisions!

As it turned out, we only met with his brother for a brief and pointless meeting upon his return, as he was completely in the dark and hadn’t even been told about us or any of our negotiations while he was away!

We never spoke to him or his brother again.

The Lesson:

Always know who is sitting across the table from you.

There is a decision-maker in every company and you need to know who that person is before starting any negotiation. Don’t ever assume who that person is from the title on his (or her) business card, because often enough, it isn’t him. A friend of mine is one such decision-maker. Though his company does several hundred million dollars in revenue, his business card does not say Chairman, CEO or President, other people in his company hold those titles. Anyone else in their right mind would assume the ones with those titles are the decision makers, and that is exactly how he wants it. This is one of many reasons why I never put a title on my business card .

In this case, I was talking to the brother with zero decision making power, and the person who I really needed to be speaking with was five thousand miles away and hadn’t ever heard of either me or my company. Was the guy I was talking to all that time one of the owners? Yes. Did he own just as much of the company as his brother? Possibly. Did it matter? Not even a little bit.

I have seen countless cases since where this situation has revealed itself. Luckily, I now know to find out these things out in advance. For this reason, it is always important that you do your homework (due diligence) before walking through the door and into the first meeting so you know exactly who you are dealing with. I have found that, contradictory to Gordon Gekko, time, not information, is the most precious commodity we have in business. After all, information without putting it to use is, well, USELESS. Time on the other hand, once we spend it, we can never get back.

My questions for you today are:

1-    Has this ever happened to you? If so, what was your experience?

2-    Do you do your due diligence on your prospective investor beforehand?

Have a great day!


The following is an excerpt from How To Ruin A Business Without Really Trying… To receive complimentary chapters, sign up at the top right of the page to get a download link. For more information about the book, Click Here


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