Boardroom Auction settles business partners’ dispute

Not exactly conveyancing, however it is interesting to report on how two partners in business for 10 years, which turned over $2M, settled their irreconcilable differences by bidding for the other’s 50% share in a board room auction.

Via the accountant, these partners had for over 4 years being trying to sort out their problems but nothing was really working and neither talking to the other that much. Probably sounds familiar to a lot of people.

When I was engaged last November, my client made it clear to me he had hit the end of the road (as far as he was concerned the partnership was finished). The problem was the other partner still wanted to maintain the status quo despite the deep seated issues.

My summation was that this was going to either end in tears or the business partnership was terminated by one party buying the other party’s share. I made it clear upfront I was not interested in acting if this was going to end in court and protracted litigation or just as worse appointing an administrator.

Interestingly, the best negotiations take place around the table. It avoids the endless rounds of exchange of letters, each side trying to point score.

After a couple of stalled moments, a Heads of Agreement was reached, each side had arranged their finance and the parties were in the position to seriously focus on the moment of truth and face each other in a board room auction. The parties themselves determined the auction rules.

1. The Heads of Agreement was signed before the auction began
2. No bid was to be less than $20,000
3. Each party could take at any time a 5 minute break to consider their next bid
4. A 20% deposit to be paid
5. There were very extremely serious penalties for the winning bidder if they defaulted.

I must say there is a certain thrill in witnessing such events, bidding tactics only reveals themselves as each bid is made and the outcome was completely unpredictable. I think I could warm to becoming an auctioneer.