Tuesday, March 1, 2011

Get in the Game

(Applying business experiences to our personal lives)

I was the Chief Financial Officer of a soft drink bottling company. We grew primarily through acquiring other bottlers in adjacent territories and merging them into our operations. One company we acquired was twice our size and in financial difficulty. Their lenders had foreclosed and taken over operations.

My assignment was to review the company and arrange financing to pay for it. In discussing the takeover with the CFO of the “target” company, he proudly showed me his cash flow schedule pinpointing the month in which the company would have insufficient funds to make their payment to the bank. I thought “That’s nice, but what did you do about it?” The obvious answer was “nothing”.

At my request our international CPA firm sent in their highly regarded “Acquisition Expert” to assist me. He reported that we would have problems obtaining the $40 million needed to buy the company, we were not working with the right lenders, the interest rates would be very high and the terms unbearable. Worse than that, his report went to our Chairman, not to me. Believing the expert, our Chairman called me into his office and ranted like I had never seen before. I tried to assure him I had lined up good lenders who understood our business, and a workable commitment would be forthcoming soon. But, alas, there I was pitted against someone who carried a briefcase and was more than 50 miles from home – “The Expert”. I knew if I didn’t get the financing I promised, I would be history.

I contacted the lenders suggested by the expert. He was right - the terms they wanted were unbearable. I also worked continuously with my lenders, answering their questions and providing whatever they needed to make their decision. A week later I must have looked like the cat that swallowed the canary as I walked into the Chairman’s office. My lenders had provided a loan commitment with rates and terms the expert said were impossible to obtain. I never heard the name of that expert again.

As we were merging the larger company into our operations, the President of the acquired company made a plea to our Chairman. His CFO had more hands-on experience with a larger company and on that basis he should replace me. The Chairman asked me what I thought. After all, the President did make some excellent points. I was perturbed that our Chairman would make me defend the position I already held. Then again, I was in corporate America where this stuff happens every day. I kept my calm and replied “if you want someone who can tell you exactly when your company will be foreclosed upon by the lenders, you should replace me. If you want a CFO who can get the job done on terms that are better than experts think possible, you should keep me.” I stayed; the other guy went.

Why this long preamble? Because this business situation has many similarities to life’s challenges such as credit card debt, loss of a job, loss of a home, or seeing our retirement age move further into the future. We can sit on the sidelines and watch the problem develop like the other CFO. Or we can become proactive and work to solve the problem. As for the experts, remember they are generalists who address “average” issues. When listening to them, especially the ones on TV, make sure their recommendations fit your situation before you act. From the sidelines, you can watch your life disintegrate before your eyes. If you want to control your own destiny, you must get into the game and make the plays happen. Which do you choose?

Originally Published in Meta Arts Magazine, March, 2011

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