Tuesday, July 12, 2005

Tightenin' the thumbscrews (It's always about brinkmanship)

So that $2 million deal we were working on still hasn't closed. Client is still trying to strong arm me on my fee, which he knew from 4 months ago, was a percentage of the maximum authorized credit, payable on close.

Lender is getting pissed off (which is expected) and called up my client and told them that they have to 5pm today and the deal is off the table - which I suggested they do. The lender is starting to get a bad feeling about my client (and quite rightly) and I told my client this in an email this morning. The client knew enough to know that the lender wouldn't kill the deal back on the 30th. If I was the one funding the deal, I would have killed it - That is the difference between working for a large company and running your own show.

The last time I spoke with my client, on friday of last week, I told him I would be glad to renegotiate my fee to fit his "timing" needs. The fee goes up by 0.5% and I will take my fee over 3 months. This was in addition to my offer to keep my fee unchanged and take 67% of it on close and 33% 30 days later. I initially made this offer to the client back on June 30 when he called me and agreed to this arrangement. He even went as far as to tell me to fax him over a letter authorizing the changes and he would sign back the approval letter.

He then tried to pull the "fool" act on me as in, I didn't understand your fee agreement when I signed it. I told him a fool doesn't build a 15 million dollar a year business and a fool doesn't sign something he doesn't understand.

He also told me that I he doesn't close, my fee goes bye-bye - which is true. My response was that I don't care, this deal died for me back on the 30th, you don't sign it, its your problem...........Hope that 45% a year interest on your current factoring facility works out for you.

I have to give the guy credit though, he tried to push - even tried to play the lender against me (rather transparent, but never the less, it takes guts). Asked the lender to pay me out over a year (this was up from 6 months on friday).

This was, and is, a simple deal on paper, however the glaring personality issues are making it quite complicated. Part of me is tempted to call him and ask him what his deficit is, but that is just playing into his game. He is waiting for me to cave - but I am not the one making a $15 million bet, he is.

So I am going to sit tight. At this point my client has 4 options

1. Walk - Yes some people are this crazy
2. Sign the approval letter back
3. Sign the approval letter back along with my letter stating that I will delay taking a portion of my fee.
4. Accept my new fee proposal, boosting my fee to 3% and getting paid out over 60 days

This my friends, has been a long, painful poker game. Which reminds me, I am playing in my first real poker game this wednesday. Everyone is kicking in 20 bucks and the winner takes all at the end of the night................stakes are a little less painful


Anonymous Anonymous said...

don't ya love this, it's true blood 'n guts storytelling.

I recall similar stories about a certain Canadian real estate mogul, who steadfastly refused to make payments to his general contractor for multiple major 8-figures projects, in progress, with dozens of trades and sub-trades on the job. Literally forcing the hand of the contractor -- but he did not blink. He tells me the mogul's secretary would call at about 4pm and say, "there's an envelope here for you"

12:26 PM  

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