REINHILD NIEBUHR

AN OBSERVATIONAL ANALYSIS OF FAILED NEGOTIATIONS

Anyone remember the famous line in the 1992 movie “The Player” – when – in a decisive scene – after a sequence of extremely dramatic events, Bruce Willis as The Hero, runs in to save a movie star, Julia Roberts, in the role of a wrongfully convicted murderer, from execution. “What took you so long?” she asks, and Bruce Willis answers “Traffic was a bitch.” It was super funny at the time… such an understatement to sum up the whole disaster preceding the rescue!

This line came into my mind this morning when I woke up, but with the variation: “Dealmaking is a bitch.” Now, hopefully, those of you who know me, know that I don’t use this kind of language… as in ever! I grew up in an environment, where you would be threatened to NEVER speak an ugly word, under danger of having your mouth washed out with soap – a practice, which I believe is sadly being neglected in contemporary, popular society…

So, the fact that the ‘b’ word came into my mind this morning, shows the intensity of emotion that a recent dealbreaker caused in my psyche. But this particular negotiation, which fell apart very suddenly, has inspired me to write this blog, sharing my experience with deals that never make it to the signature phase, or even deals that are broken, after a couple of years of effective collaboration…

In my experience, this always happens on the basis of PRINCIPLE: no matter how positive a relationship starts, nothing breaks it as quickly, as one party not acting in a way that is in alignment with the VALUES and PRINCIPLES of the other.

For instance, in the field of commodities buying and selling, there is often a referral chain of individuals or companies involved in identifying suppliers and bringing on board buyers. As a matter of PRINCIPLE, my company, Young Africa EXPORT, honours every relationship along the dealmaking value chain, meaning that we keep track of every connection – every link in the chain – and once the deal has been finalised and money starts flowing, each member in the chain shares in the commission available, either in equal part, or – where there was a specific agreement commited to from the beginning – we uphold the commitment throughout the lifetime of the contract negotiated.

But not everyone in the value chain shares this commitment. And so, early in the dealmaking process, it is critical to clarify this principle and explain the commission fee structure available, to anyone entering the dealmaking process, be it in introducing a buyer, a supplier or an investor, who provides the production or trade credit funding.

A week ago, I was introduced to a party by one of the referrers or facilitators I work with, and this sounded like a potential relationship made in Heaven! From the initial discussion it appeared as if both the referrer and this new party were aligned to the values and principles of “Young Africa”, meaning that they carried the interest of the ‘little guy’ – in this case junior miners and individuals involved in the commodity value chain – at heart.

Six ‘happy dating’ days later, when the pricing had been agreed to and we were standing shortly before the signature phase, the true colours came out: neither the referrer, nor the facilitator had any understanding of why the available commission fee included in the pricing structure should be shared with anyone else in the referral value chain.

I pointed out that without these parties, there would never have been any introduction and that this is why every dealmaking relationship started with the signing of a “Mutual Non-Disclosure And Non-Circumvention Agreement” (MNDNCA)… In my personal capacity, and as the Managing Director of Young Africa EXPORT, I simply cannot and will not act in any way that dishonours the relationships, as well as the terms of any MNDNCA signed with any party. My ethics won’t allow this.

But the more I tried to explain this, the more the two parties started sounding like sibling piglets at the Trough of Greed…

It was quite exhausting – especially, because I was the one defending one of the parties’ referrers, whom this party was happily motivating to throw under the proverbial bus!

After three hours of increasingly acrimonious attacks on my character (!), I pulled the plug.

The damage?

• All the jobs created by supplying the product
• All the value created by the referrers in the referral value chain
• All the jobs created by transporting and shipping the product
• Ongoing delays for the manufacturers, who need the product… as in yesterday!
• A ROI of 51% per annum for the funder (whose interest was supposed to be protected by these facilitators)
• A week’s valuable time of all of us involved…

All of the above amounting to over $1 million in weekly turnover… not to speak of the value of the ongoing fulfillment of this contract…

The moral of the story: PRINCIPLES have a cost. But it is a cost that I am willing to pay.

PS: If you share my values and the values of Young Africa EXPORT, and you too are tired of dealing with individuals and companies who don’t, let’s do GOOD BUSINESS TOGETHER! Please DM me – no matter how small a role you can play, or how humble a contribution you can make: for me, YOU ARE WORTH IT!