Disintegrated

The three-way partnership at the inception of our agency, Integrated Communications Corp., came unraveled in our fourth year of operation.

My two friends and partners had reached a dead end in their relations, thanks to a vociferous client who did not want one of them on his account. Since that account generated more than seventy-five percent of our revenues at the time, this was a very bad situation. One of the partners, Todd, was the business guy, the other, Kate, was the science maven. We each owned a third so nobody outranked anybody. But when a dominant client proclaims one third of your ownership persona non grata, a dismal reality sets in.

Todd pointed out that the only way to placate the client was for Kate to take a diminished role at the agency. This was unacceptable to her.  She was exceedingly bright, hard-working and motivated, so having her responsibilities narrowed was insulting. The two of them were both headstrong, which is part of what made them good at what they each did, but it was not allowing for any easy solution. The business conflict turned personal, as they often do, and ruffled feathers and hurt feelings soon festered into a toxic atmosphere in the relative confines of our small company. The tension between them quickly reached the boiling point.

Coming from a family riddled with divorces, I was familiar with those awful moments when a united front fragments. I got along with both of them, but the two of them were at a breaking point. The three of us gathered in a neutral room at one point and the moment had come. Kate and Todd would split. They each looked at me and said they’d like me to join them. I wasn’t expecting that, but I realized this was now a decision I had to make. I could not bring about peace between them, and I could not partner going forward with both. I had to choose. Kate wanted an educational projects and scientific publications company. Todd wanted an ad agency. As a creative it was clear that my path forward was with Todd as my skill was in branding and conceptual creativity, and there is comparatively little need for that on the clinical communications side of the industry.

Todd started Integrated Communications Corp as a consulting service in 1985, and he owned the certificate of incorporation. So Integrated would remain his, and Kate would have to exit the partnership and start her own enterprise. She sought fair value for her portion of the company. She was certainly entitled to that. We all agreed.

But the agreement ended the moment any of us put a number to the concept of fair value.

Todd and I would remain partners in the agency, while Kate would start her own company with the money she got for her third of Integrated. Each side stated their position, and nobody wanted to bend too far. We didn’t want to give away money that was vital to our company going forward, and Kate didn’t want to walk away from what she felt she had coming to her.

We were at an impasse. We based our offer to her on the actual business we were doing at that time, while her formula included future earnings. We were poised for growth even though our actual billings at the time of the divorce were modest.

After several futile months of volleying back and forth to each other, Kate retained the services of an expert in all things financial, a certified public accountant named Marty who was also a self-proclaimed brilliant negotiator. Being a brilliant negotiator, Marty called for a face-to-face get acquainted meeting.  He would solely represent Kate, without her there, as a means of defusing the emotions that paralyzed our communications.

Todd and I were summoned to Marty’s office, a supposedly neutral site. We went without our lawyers or financial people, as we understood this to be an initial encounter. Todd was a pretty good business guy, and I was there for moral support and comic relief. Since we would each own half the debt we were about to take on, we both had to be there.

After keeping us waiting in his lobby just long enough to show that Marty was indeed a very important man, we were eventually ushered into his inner sanctum. It was one of those first impressions you never quite get over. Marty was seated at a desk that was situated at the edge of the upper half of a two-tiered room, while we were shown to chairs before it on the lower level that seemed child-size. I hadn’t thought to bring a tape measure, so I could only do a rough estimate. His desk and chair were a good eight inches higher than the level at which we sat.

We felt like we were in front of a judge for a crime we didn’t know we committed. It was Kafkaesque.  I believe we were supposed to feel subservient. Perhaps we weren’t supposed to negotiate as much as plead for mercy.

This judge had a most arresting shape to his face.  Marty’s mouth was wider than his eyes, giving his countenance an unfortunate resemblance to a fish, a large-mouth bass.

His determination to assert his authority was expressed through an attitude as condescending as his altitude. With financial acumen seemingly beyond that of mere mortals, this Prophet of Profits immediately rebuked what he termed our pathetic and insulting so-called offer to our soon-to-be ex-partner.  He delivered his critique with all the charm of a headmaster scolding delinquent schoolboys. “Drop trou, lads, and assume the position.”

When he spoke, I could not take my eyes off the mouth from which his words came. I watched to see if bubbles would emerge.

Marty was eager to establish that he was now in charge, and we would be foolish not to heed his declarations. He would settle for nothing less than a deal that was, in his words, modest compared to what he would demand if we dared disagree. The number he dropped on our heads had several more decimal places in it than any yet discussed. Furthermore, he would appreciate it if we would accede right there and then and not waste any more of his time, as he was a very busy man.

The Great and Powerful Oz had spoken.

Todd pretty much responded that his request or demand was hallucinatory. It was neither realistic nor acceptable. I wondered if Marty preferred freshwater or salt.

The meeting lasted for all of ten minutes. Marty’s attempt to seize the upper hand was both pathetic and futile. We were neither intimidated nor impressed and told him so as we got up from our itty bitty chairs and exited his silly office.

We left wondering if what we just experienced was real. The impasse we thought we were going to resolve had now escalated into a full-fledged crisis.

We passed word to Kate that Attila The Negotiator had dramatically expanded the gulf between our two sides. While we did not want to drag out the stalemate, we flat out refused to deal with Marty. Unless or until she had him stuffed and mounted, we would not revisit the terms of the deal.

In a small company a civil war between the owners was hard to ignore.  Business as usual wasn’t. Work needed to continue to meet client deadlines and expectations. But the positions the three of us had staked out were clear. 

Employees, like children in a home torn by a parental rift, were supposed to carry on as if nothing odd was happening. “This doesn’t involve you, so just do your work.” Right. The 800-pound gorilla that now sat in every meeting should be ignored. More secretive discussions took place behind closed doors that had typically been open, and since nature abhors a vacuum and we weren’t telling them very much, rumors and misinformation filled the air. A seismic shift in the bedrock upon which our company was built was giving everybody a nervous and shaky feeling. 

Business life muddled on for a few months with no resolution or even constructive dialog on the partnership or dissolution thereof. Kate realized that her retention of Martin the master negotiator had backfired, and she got rid of him. Once that happened, negotiations resumed. I told Kate that for her to get the best deal she ought to consider waiting a year or two as we were poised on the threshold of some big account wins, expanding our client roster and growth.  She was not willing to delay, so numbers got put down on paper, terms were proposed and after a few iterations we finally arrived at a solution that would allow Kate to begin her own business without crippling our shop financially.

Everybody breathed a big sigh of relief and, once the lawyers etched it in stone and checks were cut, we each went on our way. As I had told Kate our agency went on a big growth trajectory, doubling in size each year for the next four years.  From time to time I wondered how Kate felt as the agency gained in size and stature, and in my idiot mind figured she was regretful for not sticking around to be part of it. Eventually our agency started attracting attention from the much larger, multinational advertising holding companies, and one made us an offer we simply could not refuse.

After we sold Integrated, I reconnected with Kate, and learned she had started over from scratch. She built a company of her own design that not only outpaced our growth but, in fact, ended up selling for more than we sold Integrated.

Touché, Kate. Well done.