Competitive Gamesmanship is Not a Sport that Professionals Should Participate in at Closings
By Phil Villegas
There are just some things in life that we don’t expect to be pleasant or enjoyable, like visiting a Dentist or getting audited. Then there are things that always leave me scratching my head as to why they become as painful as they do without need…like dealership Buy/Sell closings.
I’ve taken part in dozens of Buy/Sell closings, and while each transaction will have its own nuances, timelines and complexity, the issue that I have found to be at the core of the stress factor in closings rests on the “competitive gamesmanship”. It’s in this gamesmanship environment where individuals from each side of the transaction might try to “get one over” on the other side, regardless of how refined the terms of the asset purchase agreement are. Irrespective of the specificity and definitiveness of the terms or the language in the agreement, at the closing, the spirit and interpretation of the terms will be tested, and more than often abused.
Most often, this gamesmanship comes from either the outside professionals or parties to the transaction as an apparent attempt to please their respective employer with either their ability or their loyalty. The reality is that more often that not, this is actually a greater disservice to their respective employer and can cause additional lingering and unnecessary issues. While many sellers and or buyers may want their agents to try to squeeze the deal in every area possible, the reality is any hired professional should abide and follow the governing terms of the agreement and not try to artificially please their employer by compromising their own judgement or ethics.
Most dealership asset purchase agreements are hammered out months before a closing by a pair of attorneys over several days or even weeks, mainly to eliminate any confusion as to terms. Considering that these agreements are executed by both parties, why would professionals feel it’s advisable to deviate from these terms for a small financial gain for one party or the other?
I’ve personally witnessed a CPA get sued months after a closing for some of this “gamesmanship” at the closing table by tilting some of the figures on the closing statement to his client’s favor. In the end, the reputation of both the client and CPA were forever tarnished, and the other party ultimately not only recovered their funds, but also legal fees and damages.
Experience has taught me that even if the opportunity exists to take advantage of an unprepared/unskilled party at the other side of the table, don’t do it. The best service you can provide to a client is coming prepared to a closing by having a thorough understanding of the terms of the purchase agreement and follow those through to the end.