When a firm is in the middle of an acquisition or being acquired, the firm can be especially challenged.  It may be unclear who is in charge.  In many cases decisions are delayed until the acquisition is resolved.

Last week’s letter from TXU and the subsequent letter from the investors in the acquiring firm are a bit unusual.

It seems as if the two entities missed a handoff.  While this can be unavoidable in some complex projects, it seems a bit odd that such a big handoff would be missed.

When a negotiator is handling a complex project, it is important to ask questions.  In a case like TXU, a negotiator might have a discussion with clients along the lines of…

It seems to me that our strategy in this situation should be to make the path forward as painless as we reasonably can.  Does this sound reasonable?

If my thinking is aligned with yours, let’s consider the issues that might arise so that we can develop a plan.  This way, we can be proactive, rather than reactive.

An obvious issue that we need to think about is the possibility that the Texas Public Utility Commission might find that TXU has done something that warrants a fine, perhaps a substantial fine.  Do we have a list of all the administrative matters that are currently pending against TXU with the Texas Public Utility Commission?  Which of these issues will need to be dealt with before the deal closes or for three months after it closes? 

It is difficult to predict how the Texs Public Utility Commission is going to act.  Let’s suppose that the Texas Public Utility Commission says that TXU acted properly.  In that situation, should a press release be issued?  What should the tone of that press release be?  Who will have to approve the press release?

Conversely, suppose that the Texas Public Utility Commission assesses a fine against TXU.  How should we deal with that situation?  Who will need to be involved?  How will TXU respond?  In light of the pending merger, is it appropriate to have the response reviewed by the proposed future investors?  What process will be used to respond to an adverse finding?

Logically, there should be a list of all matters that are pending in front of the Texas Public Utility Commission or any other state or national agencies involved.  Does such a list exist?  Who is tracking this information?  How can it be maintained during the acquisition?  Which of the matters will require action by TXU before the deal closes?  How will the action be handled?  By whom?  What approvals will be required?  In which of these matters will the agencies allow a delay of, perhaps, 90 days so that we can complete the deal before we have to respond to the issue?

What other issues might arise that would need to be addressed?  Let’s see if we can identify a process that will meet the needs of our customers, our employees, the Texas Public Utility Commission, our investors, and other key stakeholders.  At a high level, what tone do we want to take?  What process do we want to rely on?  How can we build our reputation as a wonderful company that, while not perfect, genuinely cares about the environment and our stakeholders?

If an announcement is needed by either TXU or the investors with regard to this deal, what process will be used to expedite the issue?  If a clarification or retraction is needed, how will that matter be handled?  By whom?

Suppose this discussion was overlooked to start with.  Is that a fatal flaw?  Of course not.  “Oh Shit!” moments like those do occur from time to time.  When one of them occurs, the best thing to do is for everyone to take two steps back and collect their thoughts.  Then, the people have to go back to the table and talk about what has occurred and what they can do as the path forward to deal with the current situation and to make sure that they learn from the issue so that, on their next major negotiation, the issue does not happen.

Issues like what has occurred with TXU often occur in complex deals.  The issue is most often a problem when the negotiations are conducted at the top levels of a company and there is a barrier that prevents subordinates from walking the issue to the Chairman’s desk, if necessary.  Aren’t politics fun?

Filed by Coleen Davis at 2:08 pm under Achieving Goals, Business Acumen, Current Events, Negotiations, Solving Problems